In December 2021, the Danish government entered into a political agreement with a broad political majority of the Norwegian Parliament on a comprehensive CCS strategy – capture, transport, and storage of CO2 – that promotes new infrastructure and ensures regulation of CCS on market-based terms. The agreement must ensure that the first capture facilities can be ready in 2025 and thus contribute to reducing the Danish emission of CO2.
By Steen Neuch Vedels, CEO at Vestforbrænding
The technology has been used for many years
CCS stands for Carbon Capture and Storage and is described in Danish as the capture and storage of CO2. CCS is a well-known technology used in other countries for many years, but it has most often been used to increase oil extraction. Instead, the technology must now be used in Denmark to deposit the CO2 where it came from – deep underground.
The work is underway
A number of conditions must be in place before CO2 capture and storage can start in Denmark. In the Climate Agreement of 2020, it was decided that CCS must be an essential piece in achieving Denmark’s climate policy goals. The Danish Energy Agency has since worked to make CCS possible in Denmark.
With the political agreement on a CCS strategy, the Danish Energy Agency can accelerate further and is currently working on the following, among other things:
- Build the framework for the rules that make it possible to grant permits for geological storage of CO2 in the Danish underground.
- Amend the legislation and regulations so that the framework for constructing and operating capture plants for municipal utility companies – for example, waste-to-energy plants – becomes clear.
- Investigate environmental and natural impacts for the areas where underground geological storage may become relevant. Therefore, the Danish Energy Agency has initially initiated a strategic environmental assessment (SME) of the plan for tendering for storage in the western part of the North Sea.
Economics in the political agreement
The political agreement on CCS from December 2021 allocated 16 billion DKK for CO2 in 2024-2048, where the funds were to be offered in two phases. After two initial rounds of market dialogue, the Energy Agency published the material for the first tender round in early 2022, where Vestforbrænding applied for prequalification.
With this tender, the Danish Energy Agency wanted to enter into a contract with one operator, where the subsidy totaled an estimated 8 billion DKK is given for capturing and storing CO2 from flue gas from combustion.
The operator must ensure CO2 reductions corresponding to at least 0.4 million tons/year – collected and permanently stored from and including the year 2026. The operator can deliver the reductions with one point source, a combination of point sources, or a portfolio of several point sources. The contract is expected to have a duration of approx. 21 years of operation. The grant is paid per ton of CO2 documented, collected, and stored permanently.
Result of prequalification round
At the beginning of August 2022, the Danish Energy Agency announced which applicants had been pre-qualified to bid for the CCUS pool, which aims to establish large-scale CO2 capture in Denmark from 2025 and realize CO₂ reductions of 0.4 million tons annually from 2026.
The Danish Energy Agency received four complete applications, three of which were approved to submit bids and participate in the upcoming tender negotiations. It has been a requirement in the prequalification round that the potential grant recipients had sufficient financial and technical capacity to deliver the expected reductions in an environmentally and safety-responsible manner.
The pre-qualified bidders were:
- Western Combustion
- Ørsted Bioenergy & Thermal Power A/S
- Aalborg Portland
Vestforbrænding has thus been selected to participate in the tender to allocate subsidies from the state CCSU pool of 8.168 billion DKK. The Danish Energy Agency will carry out the tender in 2022, and the winner of the tender is expected to be announced in early 2023.
Vestforbrænding proud to be prequalified
Just a few days after Vestforbrænding had been selected to participate in the large national tender for CO2 capture, an LOI (Letter Of Intent) was signed with the gas distributor Evida (owned by the Danish state) and Gas Storage Denmark (GSD). The three players will create an integrated solution for CO2 capture, where the captured CO2 will be stored in GSD’s warehouse in Stenlille in Zealand, Denmark. The parties can thus secure the entire value chain in one integrated solution – from capture to transport and storage.
In connection with the signing of the LOI, the CEO of Vestforbrænding, Steen Neuchs Vedel, stated:
– It is a great achievement, where we clearly demonstrate that we are able to work together swiftly for an important cause. We now stand shoulder-to-shoulder in finding a solution to handle the entire value chain. When we have dived deeper into consolidating our project, well we present it to the public. Vestforbrænding aims to transport the captured CO2 via pipes to Stenlille in Zealand, where GSD has a large underground storage facility.
– It is an enormously exciting project, that we are pleased to be a part of. This supports our ambition to show how Denmark can utilize its underground to store vast amounts of CO2 in a safe and economic way, said Adam Elbæk, CEO of Gas Storage Denmark, on the same occasion Evida has a lot of experience with large construction projects and is looking forward to collaborating on a pipeline from Vestforbrænding in Glostrup to Stenlille.
– Piped infrastructure for transporting the green gases of the future can become an essential part of the overall solution for CO2 capture and storage. We are therefore very much looking forward to contributing our knowledge and experience in the work that is to come, which can significantly impact the green transformation of the energy system, stated Evidas CEO Ole Kalør in connection with the signing of the LOI.
With the pre-qualification, Vestforbrænding – Denmark’s largest waste-to-energy company – is the only municipally owned waste company participating in the further process. Climate, environment, and the green transition are part of Vestforbrænding’s DNA. The company works to recycle as much waste as possible and ensure a climate-neutral energy utilization of the residual waste.
Therefore, CO2 capture and reduction are firmly anchored in Vestforbrænding’s strategy and are an important milestone for the company.
– We must take social responsibility, and CO2 reductions are a decisive goal for municipal and national climate objectives. I believe that Vestforbrænding has a unique position for selling surplus heat from CO2 capture to benefit our owner municipalities’ current and future district heating customers, says CEO Steen Neuchs Vedel. He points out that Vestforbrænding is rolling out a large-scale district heating project for 6 .1 billion DKK, which will convert 30,000 households from using expensive natural gas to green district heating.
-In the past, there have been obstacles for municipally-owned companies to bid on large tasks of building a CO2 capture facility. With this obstacle out of the way, we can intensify our work with CO2 capture and thereby contribute to effective CO2 capture at our plant, and in particular, actively support both our 19 owner municipalities and the national climate effort, says Vestforbrænding’s CEO, Steen Neuchs Vedel.
Facts about the CCUS pool:
- The CCUS pool aims to establish CO2 capture in Denmark from 2025 and realize CO2 reductions of 0.4 million tonnes annually from 2026.
- In the first phase of the CCUS pool, the funds are disbursed to contribute to establishing an integrated value chain for capturing, transporting, and storing CO2.
- The support is given per reduced tonnes of CO2 and will be adjusted for the development in CO2 taxes – including any negative taxes for negative emissions.
- Correspondingly, the development in the CO2 quota price will be included in determining the amount of support.
Facts about CCS:
- Capture and storage of CO2 or Carbon Capture and Storage (CCS) works by capturing CO2 and depositing it underground.
- CCS can capture CO2 from large point sources, such as facilities with fossil emissions (such as waste-to-energy plants) or CO2 emissions from burning biomass, large CO2-emitting industries, and CO2 from biogas plants.
- In December 2021, the Danish parliament entered into a political agreement on CCS.
Facts about Vestforbrænding:
- Owned by 19 municipalities in Zealand, Denmark
- Denmark’s largest waste company and Northern Europe’s largest producer of waste-based district heating
- Founded in 1970
- Offers solutions within the collection and treatment of waste, the production of district heating and electricity, and the delivery of district heating.
- Handles waste for 900,000 citizens.
- In 2021, almost 500,000 tonnes of waste were converted into heat (1.26 million MWh) and electricity (199,000 MWh).
For further information please contact: Steen Neuch Vedels, snev@vestfor.dk
“The waste-to-energy plant Vestforbrænding is in the final sprint for subsidies of €1.1 billion for CCS” was published in Hot Cool, edition no. 6/2022
