This MoU will legalize the transnational shipment of CO₂ for storage within the territories of the involved countries. Previously, cross-border transport of CO₂ for storage was not permitted. Reversing this is critically important in the development of the Longship project.

– We have always had strong believe in Norway, Belgium, the Netherlands, Denmark, and Sweden would reach an agreement on CO₂ transport for storage, regardless of the borders between the countries. With this, another barrier has been cleared, allowing CO₂ to find its way to the storage facilities on the Norwegian shelf. This also highlights the importance of Longship as a demonstration project and the renewed interest in CO₂ management as a climate solution in Europe – says Aslak Viumdal, senior advisor at Gassnova and responsible for benefits realization in the Longship project.

In a statement from the Norwegian Ministry of Energy, Minister Terje Aasland emphasizes the agreement as important for the climate, Norway’s attention to the energy sector, and the country’s focus on CCS.

A proposal for how the project can be implemented has been prepared in collaboration between a number of key actors within the Norwegian policy instrument framework – Innovation Norway, the Research Council of Norway, Siva, Eksfin, DOGA, Enova and Gassnova.

The policy instrument actors have committed to the work of classifying and reporting on green projects. This effort is not only a response to the government’s mandate but also an expansion of the existing cooperation to promote green growth. Through close dialogue with the NFD, which acts as a coordinator among relevant departments, it is ensured that the project is developed in harmony with the overarching goals for the environment and climate.

Three ministries are central

Ministries such as the Ministry of Climate and Environment (KLD), the Ministry of Education and Research (KD), and the Ministry of Energy (ED) play key roles in this process – through their ownership and management of respective entities such as Enova, the Research Council and Gassnova.

Starting this year, the actors will implement a classification of projects assumed to have a positive effect on climate and the environment, based on six environmental categories. This includes a commitment to develop a guide for green project classification and reporting, which will facilitate case handling and ensure involvement of relevant departments in an appropriate manner.

The further development of the reporting solution will also focus on the “do no significant harm” principle, which lays the groundwork for a differentiated assessment of the projects. There is a push for a dynamic development of the reporting system, which can be adjusted based on experiences and general development within the field. 

Norway takes the lead

In a time when climate change poses one of the greatest challenges for global sustainability, Norway takes the lead with this new initiative. The core is to promote sustainable growth through a systematic approach to project categorization based on environmental impact. By providing detailed statistical data and clear guidance for environmental categorization, the aim is to enhance project developers’ ability to carry out measures that are both innovative and environmentally friendly. This occurs in line with the EU taxonomy for sustainable economic activity – ensuring Norwegian projects to meet not only local but also international sustainability standards.

Challenges and solutions

One of the biggest challenges in the implementation of green project classification is the complexity related to evaluating projects’ environmental impact. Therefore, simplified assessment criteria are proposed balancing the need for thorough environmental assessments against the feasibility of the projects. This will ease the burden on project developers while simultaneously improving the availability and quality of environmental data for the public and decision-makers.

A differentiated system ensures that projects of various scales and nature can meet sustainability requirements without being overwhelmed by the complexity of reporting requirements.

The way forward

To ensure that progress and experiences are shared, the policy instrument actors will report to the NFD by the end of May this year, with a status update on the implementation of classification and reporting. This will be followed by an evaluation to measure the effectiveness and impact of the measures, forming the basis for decisions and adjustments in the work going forward.

 

Germany’s Federal Minister for Economic Affairs and Climate Action Dr. Robert Habeck is proposing political measures to carbon capture and storage (CCS) and carbon capture and utilisation (CCU) technologies can be utilised in the future. This is according to a proposal issued by the Bundesministerium für Wirtschaft und Klimaschinistry on Monday 26 February. Habeck’s view is conveyed through a CO₂ management strategy. Together with a proposal to amend the law on CO₂ storage. This complements today’s other climate measures and will enable Germany to meet its climate targets and the EU’s recently proposed 2040 target.

An all-encompassing plan

Germany’s climate plan is not limited to the implementation of CCS and CCU, on the contrary, Germany is facilitating a range of other measures. Germany has a comprehensive plan that includes developing renewable energy, developing a hydrogen economy, phasing out fossil fuels, improving energy efficiency and promoting the circular economy.

Germany in close dialogue with Norway

In recent years, German government officials, public bodies and companies have made several study tours to Norway. Therfore to learn from the experience of developing the Longship project. Gassnova, among others, has contributed with planning and technical input. In 2022, Habeck visited Heidelberg Materials’ cement plant in Brevik, which is one of the key players in the Langskip project.

Without compromising industrial competitiveness

The German initiative is an important step towards tackling industrial CO₂ emissions. That are difficult or impossible to avoid. The strategic focus on CCS and CCU for industrial processes, such as cement production and waste incineration. By capturing and storing CO₂. Germany can move closer to its goal of climate neutrality without sacrificing industrial capacity or competitiveness.

Germany’s plan emphasises responsibility for the environment and promotes technological solutions. By excluding marine protected areas from offshore storage of CO₂. Germany is taking a stand to balance industrial needs with its marine considerations. The measure signals a willingness to protect the climate and to set strict requirements for the use of climate measures. These include ensuring that CO₂ can only be stored in geologically suitable areas without the risk of leakage or damage. It also allows for the cross-border transport of CO₂ for permanent storage, reflecting both Germany’s limited storage capacity and the fact that the country is looking beyond its own borders for storage solutions.

LCA enables decision-makers in industry and other sectors to assess the environmental and climate footprint of products and services before they are used or implemented.

Further LCA can also be used to assess the environmental and resource efficiency of different ways of managing waste resources and emissions such as CO₂. It also plays a key role in assessing whether a value chain can be considered carbon neutral or whether it contributes to carbon removal (CDR).

Need for harmonisation of LCA

“The literature clearly shows that there is a need for international harmonisation of LCA. In the field of carbon capture, use and storage. This is particularly true for the documentation of avoided and negative emissions. And the choice of system boundaries. The choice between extended system boundaries and the distribution of burdens and benefits among different actors in the value chain requires careful consideration. Both approaches have advantages and disadvantages”, says Hanne Lerche Raadal from the Norwegian Institute for Sustainability Research (NORSUS. Adding that “physical equalisation or mass balancing is also an important issue”.

LCA methods are an important focus of the international Mission Innovation Carbon Dioxide Removal (MI CDR) collaboration. Launched by Barak Obama during the UN Climate Change Conference in Paris 2015 (COP21). Mission Innovation is an international ministerial-level collaboration. The CDR mission was launched by Mission Innovation at COP 26. The Ministry of Energy is responsible for Norway’s participation in Mission Innovation. Gassnova continues this work on behalf of the Ministry of Energy.

LCA project with link to Mission Innovation

In January this year, NORSUS and its partners received funding from CLIMIT-Demo for the project: “Development of LCA methodology for documentation of negative emissions and allocation of burdens and benefits in CCUS value chains“. “The project will be an important Norwegian contribution to the LCA work of Mission Innovation CDR. Where Norway and Japan (METI) are leading the CDR within Biomass and Storage (BiCRS)”, says Senior Advisor at Gassnova, Jørild Svalestuen. To ensure broad experience and professional insight. Therefor the project includes a reference group of international LCA experts who will follow and contribute to the work.

NORSUS is one of Europe’s leading LCA research centres. For several decades they have been working with circular economy and the mapping of environmental and resource efficiency using LCA.

The project has solid industrial partners represented by Borregaard AS, Carbon Centric AS, FREVAR KF, Hafslund Oslo Celsio AS, Heidelberg Materials Sement Norge AS, Returkraft AS and Statkraft Varme AS.

New targets from the European Commision

The European Commision has committed to a target of ‘net zero’CO₂ emissions by 2050. This will require a significant reduction in emissions in the coming years. In addition to the development and implementation of technologies for the capture and storage or use of CO₂. This is particularly targeted at sectors where reducing CO₂ emissions is difficult or costly.

European Commission has presented a strategy on industrial carbon management. The strategy will be important for how different CO₂ management solutions (CCS, CCU and CDR) can contribute to reducing CO₂ emissions in the EU. And achieving climate neutrality by 2050. “The EU is proposing that government and industry strengthen their cooperation on carbon management,” says Aslak Viumdal, Senior Advisor, Strategy and Business Development at Gassnova.

Increased CO₂ Storage Capacity

In the “Net-Zero Industry Act“, the European Commission has decided, among other things, to require oil and gas producers in the EU. To develop at least 50 million tonnes of CO2storage capacity per year by 2030. Based on the recommended EU climate target for 2040. This capacity will need to increase significantly in the future.

The EU’s approach to industrial CO₂ management involves a series of measures. This will enable rollout of technology and infrastructure to establish a common market for CO₂ in Europe in the coming years. As part of the strategy. The European Commission will prepare for possible regulation of transport and storage services for CO₂. This could potentially cover areas such as market and cost structures, third-party access, standards for CO₂ quality. And investment incentives for new infrastructure.

The EU Commission’s Joint Research Centre (JRC) in addition published a report on the future CO₂ transport network in Europe, and related investment needs.

Storage Atlas suggested by the European Commision

To help scale up the CCS market, the European Commission will develop guidelines for project permitting and an atlas of potential storage sites in Europe. It will also work with Member States to develop a platform to map and aggregate demand for CO₂ infrastructure services. This will be matched with transport and storage operators or CO₂ receivers. The Commission aims to establish a carbon account with a clear framework for the use of captured CO₂ as a resource for sustainable industry.

Incentivews

To create a solid foundation for a CO₂ value chain within the EU, the Commission is considering several incentives:

• Investment and financing: The EU and Member States will support industrial carbon capture projects through their energy infrastructure programmes. The Commission is considering whether some carbon capture projects can already be supported by market-based financing mechanisms, such as the Innovation Fund.
• Research, innovation and awareness-raising: The Commission is considering increasing funding for research and innovation on industrial CCS through existing programmes. In particular, Horizon Europe and the Innovation Fund. The Commission also supports the establishment of a knowledge exchange platform on carbon capture, utilisation and storage (CCUS).
• International cooperation: The Commission intends to strengthen international cooperation with partners involved in industrial carbon management. This applies to the reporting and accounting of carbon management activities. This will help to ensure that international carbon pricing frameworks consider sectors where carbon capture and storage is particularly challenging.

COP26: Where do we go from here and what might this mean for the EU’s climate efforts? 

Many have expressed disappointment with the results of COP26, among them UN Secretary-General Guterres. He believes that it is time to go ‘into emergency mode’ over the climate crisis.

Failure to live up to promised climate support

The final battle in the negotiations was over the wording on phasing out coal, with some emerging economies such as China and India wanting to tone it down. Developed nations in particular expressed disappointment with this outcome. Many have pointed to the correlation between coal as the way for developing nations to affordably meet their energy needs, and the failure of developed nations to live up to their promised climate support for developing nations embodied in the Paris Agreement. The issue around the $100 billion annual climate finance was also thought to be an underlying cause of tensions during the final negotiations.

A change in focus for upcoming climate negotiations?

Carnegie, an international think tank for global peace, points out that the situation which has unfolded might lead to a change in focus for upcoming climate negotiations – more concerned with climate justice and less with concrete actions. Carnegie also points out that the situation which has emerged will increase the pressure for everyone to achieve their own climate goals. At the same time, it will increase pressure on the EU and other developed nations to fulfil their obligations on climate finance. If it does not, writes Carnegie, the EU may succumb to economic breakdown of supply chains and migratory pressures resulting from climate disruptions. If the EU wants to be a constructive leader on the climate going forward, it has been pointed out that it will be crucial to focus on climate justice, rebuilding the trust of climate vulnerable nations and reducing international tensions in the run up to COP27. 

The EU Innovation Fund: €1 billion invested across seven projects – including four CCS projects 

After almost eighteen months of competition and 311 submissions with €1 billion up for grabs, seven projects emerged victorious in November. This was the first of several announcements from the Innovation Fund up to 2030 – expected to add up to €25 billion collectively.

Should contribute to significant reductions in emissions up to 2050

The supported projects must be particularly innovative and act as major contributions to significant reductions in emissions up to 2050. The Fund aims to support a wide range of technologies, industries and geographical locations in the EU. The projects selected this time around had profiles in industries regarded as ‘hard-to-abate’, and where the project itself will result in significant reductions in emissions. 

4/7 projects incorporate CCS as a part of their solutions

6 out of 7 projects feature a large element of renewable energy or a transition from fossil to renewable energy. 4 out of 7 incorporate CCS as a part of their solution. 5 out of 7 were based in Northern and Western Europe, with none in Central and Eastern Europe. 3 of the projects include elements on the production/use of hydrogen, such as the Swedish HYBRIT project using green hydrogen for steel production. One project involves capturing biogenic CO₂ (CCU) from waste for use in chemicals and biofuels. Announcement no. 2 from the Fund is ongoing, with a €1.5 billion pot. 

IEA cautiously optimistic about the development of CCS  

In November, the IEA’s Head of CCUS provided some general reflections as to why CCS has largely failed to be seen as an important climate initiative in the past, and what will be important for it going forward. The IEA outlines three important conditions behind their optimism for the future development of CCS.

Three conditions behind the IEA’s optimism for the development of CCS

• projects are now concentrated around industrial hubs with shared infrastructure for transport and storage
• more robust public financing schemes are available creating greater predictability for operators 
• and tougher and more binding climate policies have been adopted. The IEA is cautious about claiming this will guarantee the success of the well over 100 projects that are currently being planned. Even if all the projects currently being planned are realised (something the IEA itself does not believe will happen), the combined capacity of these projects in 2030 will only constitute about 10% of what the IEA believes is necessary to be on track to reach net-zero by 2050.
  
  

Imperial College: The value of CCS will fall with increasing competition from renewable energy 

An analysis carried out by Imperial College and published in a scientific paper in November concludes that the societal value of CCS will fall in the future due to increasing competition from renewable energy.

Historic reductions in the cost of renewable energy are greater than predicted

Essential to understanding the results of the analysis is the emphasis it places on the historic cost reductions in renewable energy (wind/solar + battery) being greater than predicted in most of the analysis models (‘integrated assessment model’) that are used internationally. That the IEA and others have systematically underestimated the reduction in cost of renewable energy in trend projection analyses matches with a range of experiences in the sector.

However, the conclusions drawn in the article are easy to understand

The value of CCS is more stable when it is employed in areas that are less exposed to competition from renewable energy – such as from process-related emissions (i.e. cement works) and carbon negative solutions (BECCS and DACCS). ‘Value’ here means the marginal reduction of societal costs provided by a climate initiative compared with not adopting the initiative. The value of CCS is less stable when CCS is used in combination with fossil fuel-based energy as it is in direct competition with renewable energy – such as gas power with CCS and blue hydrogen production. In these areas, the value of CCS is reduced by between 61% and 96% compared with what the authors believe to be more normal assumptions about the cost development of renewable energy. 

The EU’s hydrogen strategy is materialising; €2 billion for the EU Clean Hydrogen Partnership 

At the end of November, the President of the European Commission announced a new initiative to foster research and innovation in hydrogen through a public-private partnership with both parties providing €1 billion each.

Will reduce the cost of green hydrogen down to less than €2 per kg H2 in 2030

European priorities will be adjusted with this new venture, focussing less on hydrogen-powered private vehicles and more on green hydrogen and use in the processing industry. The goal of this is to reduce the cost of green hydrogen down to less than €2 per kg H₂ in 2030. Under more normal energy prices than those we are seeing in the EU today, hydrogen from natural gas would cost about €2 per kg. With current gas and energy prices, the situation is drastically different and means the cost of hydrogen has become much higher, irrespective of the production method. Uncertainty relating to future gas prices and the desire to phase-out the use of fossil fuel-based energy are factors forming the basis of the EU’s focus on green hydrogen.

Head of the IEA surprised by this focus

The head of the IEA, for his part, was somewhat surprised by this focus, because he believed that the market was not mature enough to warrant such a large focus, and was surprised that the EU would devote so many resources to something that would mostly benefit other nations (such as China). In this context, he refers to other examples of the same thing happening for Europe. 

Carbon Dioxide Removal (CDR); From distraction to prerequisite for achieving climate goals 

Those who have been following the international debate over CCS in the last few years will probably have noticed the clear-cut fronts between the different camps for CCS, CCU and CDR.

From being expensive and dangerous, to being warmly welcomed

As usual, the viewpoint of the individual, including their basic assumptions, is crucial for the conclusions they arrive at. Over the years, industrial CDR (such as Bio CCS and DACCS) has been warned against as a costly or dangerous ‘distraction’, to becoming increasingly welcomed and is now frequently mentioned as a requirement for achieving climate goals. This is similar to the change in opinion over time around CCS. Before 2020, while the EU’s climate goal was an 80-95% reduction in greenhouse gasses by 2050 compared to 1990, there were many industrial organisations that strongly believed that CCS would not be needed before 2050. But since an ever increasing share of the global economy is now subject to a goal of net-zero emissions (now: 80%), the public discourse has changed dramatically in a short space of time – on CCS, CCU and CDR. That said, it cannot be guaranteed that any industrial CDR will be fit for purpose. The laws of physics, limited natural resources and the need to be profitable will continue to limit what can be realistically achieved. 

The strategy under development could include a goal of 5Mt CO₂ stored each year through industrial CDR

One important development worthy of mention is the EU strategy currently in preparation which could include a goal of 5Mt CO₂ stored each year through industrial CDR. During COP26 in November, the USA announced an initiative to remove 1 Gt CO₂ from the atmosphere (CDR) at a cost of less than $100/tonne by 2050. And in November the Swedish Energy Agency delivered its recommendation to the Swedish government of a support system to remove up to 2 million tonnes of CO₂ per year fro the atmosphere through Bio CCS by 2030.
In November, the IEA released its updated assessment on the status of DACCS and also recently published an article with recommendations as to how member nations could realise the potential BECCS represents. In their ‘Net Zero 2050’ scenario, the IEA says of DACCS that close to 90 Mt CO₂ per year will need to be extracted by 2030. According to the IEA, one of the steps that public authorities can take to promote a market for CDR is to buy CO₂ reductions directly from businesses offering it.

The Environmental Analysis is prepared by Gassnova’s analysis team.

Solar cell and wind turbine prices bucked a long-standing trend by rising in 2021. This is according to an analysis by Wood MacKenzie published in February.

Record commodity and transport costs

The principal reasons behind the price rise are record commodity and transport costs, supply chain issues and logistical bottlenecks. Despite this, China added a further 134 GW of renewable energy capacity in 2021, and their total capacity increased to 1,070 GW – amounting to 1/3 of total global renewable energy capacity. According to Wood MacKenzie, Chinese manufacturers now make up 70% of the global market for solar cells and 50% for wind turbines. China is even more dominant in lithium-ion battery production.

Strong domestic market

Chinese-manufactured solar cells and wind turbines also have far and away the lowest prices on the international market. Wood MacKenzie believes that China’s energy policy and economic growth going forward will create a formidable domestic renewables market, drive costs down even further and enshrine China’s continued dominant position as a global supplier of these technologies. They also point out that China is far from a global leader in other climate-related technology areas such as CCS and low-carbon hydrogen, and that these will be important areas of competition for technology suppliers in the coming years. Looking further into the future, operators outside of China may win competitive advantages around the production of next-generation fuels.

Radical and far-reaching changes

The Russian invasion of Ukraine and the response of the international community has rapidly weakened international cooperation and trade in energy resources and other vital raw materials. The crisis has the potential to create radical and far-reaching changes in many parts of society. The longer and deeper the crisis gets, the greater the ripple effects will be for the economy and supply chains in Europe and beyond.

 

EU action plan

The IEA quickly released a 10-point plan for how the EU can reduce its dependence on Russian gas by up to 1/3 this year, while also reducing carbon emissions. The EU recently published its plan to wean itself off Russian fossil fuels well before 2030, while also protecting itself from high energy prices this year. The plan states that in the short-term the EU will increase its gas purchases from other suppliers and in the longer term, increase the introduction of renewable energy while phasing out fossil fuel-based energy.

 

High energy prices

All in all, it is reasonable to expect that energy prices in Europe will remain much higher for the foreseeable future than before the pandemic. Inflation in the EU, already high before the Ukraine crisis, has risen further and is expected to remain high going forward. As for CCS, higher energy prices will make it more expensive and less competitive compared to other climate initiatives.

 

Increased interest in CCS?

The desire to phase out fossil fuel-based energy more quickly in the EU may also have a direct impact on interest in CCS, especially for carbon capture from natural gas or coal. Furthermore, the coming energy shortage will mean that all energy use (including for CCS) will face stronger competition with other energy use across society. However, the adoption of CCS up to 2030 will also largely be decided by the balance the EU makes between climate issues with other needs and how much funding is available for this purpose.

Equinor’s annual ‘Energy Perspectives’ from last year offers relevant analysis and its ‘Rivalry’ scenario is a fitting comparison to the current situation. The scenario points out that energy policy is much more focused on energy independence than the economy and environment. The analyses also show that this scenario leads to greater social inequalities, lower energy efficiency, less technology development as well as higher taxes on natural resources compared to their other scenarios.

Funds of up to DKK 16 billion

A total of up to DKK 16 billion is planned to be made available with an ambition of capturing and storing 0.4 million tonnes of CO₂ from 2025, and 0.9 million tonnes from 2030. This agreement also opens the door for CO₂ to be used for synthetic fuel production. The first announcement of funds is expected to take place this year.

Heavy industry and Combined Heat and Power Plants that burn waste are pointed to as relevant potential applicants.

Facts

• A timetable for the capture, transport and storage of carbon is the second part of the overall strategy for carbon capture and storage. The first part came in June.
• The Danish Climate Agreement for Energy and Industry 2020 allows for the establishment of a pool of funds of up to DKK 16 billion in two funding waves for the development of carbon capture, transport, storage.
• In the short-term, funds are available to CO₂ emitters interested in carbon storage and transport etc., and who take responsibility for documenting their CO₂ reductions.
• The Agreement paves the way for the implementation of CO₂ reductions of 0.4 tonnes per year from 2025.
• It is supplemented by a range of long-term initiatives, which will lead to a market-based rollout of CCS in Denmark, by introducing taxes and expenditure on emissions purchases, for example.
• The agreement is also focussed on strengthening global CCS through EU regulation and promoting Denmark as a European carbon storage hub.
• In June, the Danish government and a large number of others agreed to the plan and timetable for introducing carbon storage. This is the first step in Denmark’s overall CCS strategy. DKK 210 million was set aside for GEUS to survey potential carbon storage sites.
• The timetable for carbon capture, transport and storage is a supplement to the green sub-agreement of the Finance Act 2022 agreed on by the Danish Social Liberal Party, the Socialist People’s Party, the Red-Green Alliance, The Alternative and the Christian Democrats, with DKK 2.5 billion set aside for a carbon capture funding pool. It is expected to lead to CO₂ reductions of 0.5 tonnes per year from 2025.

In a report published in December, the U.S. Government Accountability Office (GAO) provided information on investigations into DoE funding allocations and follow-up of nine large CCS demonstration projects.

$1.1 billion in support

In total, the DoE awarded $1.1 billion in support over the period 2009-17. Of the projects supported, six were linked to power generation ($684 million) and three to industrial processes ($438 million). Of the power generation projects, only one was successfully completed (Petra Nova), but even this was closed down in 2020 after only three years in operation.

Of the industry projects, two were completed (Air Products, Texas and Archer Daniels, Illinois). The GAO has two recommendations:

• that the DoE improve its project selection and negotiation processes and
• that they be more consistent in their follow-up of projects with regards to their scope, timelines and budgets.

The recommendations were particularly aimed at flaws in the DoE’s selection of coal-fired energy projects that they believe were rushed and not completed according to proper regulations. This also covered the assessment of market related conditions to do with the prospects of coal vs. natural gas. According to the GAO, this led to substantial extra costs for taxpayers.

Edit this text area as you want, make headings and paragraphs…