Government announces NOK 80m additional funding for 2018 to cover studies of CO2 transport, storage and up to two capture facilities
The global carbon capture and storage (CCS) sector has secured a vote of confidence from the Norwegian government, which today announced £7.35m of new backing for demonstration studies on how to capture, transport and store carbon dioxide from a cement factory in Brevik.
Publishing its much anticipated assessment of plans for a full-scale CCS demonstration project that would eventually see CO2 captured at industrial sites in Norway and then transported for storage under the North Sea, the government today agreed to commit an additional 80m krone (NOK) towards engineering and design studies in 2018.
It means the total 2018 government funding for the CCS project in 2018 amounts to 280 million NOK, including funds transferred from 2017, the Ministry of Petroleum and Energy explained. The funding will cover studies of CO2 transport, storage, and up to two capture facilities.
However, having weighed the costs of investing in CCS against other climate measures, the Ministry warned that climate mitigation measures would have to be met within a tighter scope in budgets in the years to come.
Norway and its state-owned CCS company Gassnova have over the past two years been assessing three potential industrial sites from which to further develop technology with the aim of bringing Europe's first full CCS value chain - covering capture, transport and storage - into operation by 2022.
Of the three potential sites, the government has agreed to fund further studies at cement maker Norcem's factory in Brevik, but decided against continued studies of carbon capture at Yara's ammonia plant in Porsgrunn.
For the Fortum Oslo Varme waste-to-energy facility, meanwhile, the government said it would undertake further assessments before deciding on whether to offer continued support and take it forward to the next stage.
Once the FEED - front end engineering and design - studies announced today have been completed, the government and companies involved will then make a final decision by 2021 on whether to invest in fully developing the CCS pipeline project.
Minister of petroleum and energy, Terje Søviknes, described today's announcement as a "milestone" for Norway's CCS aspirations. "I am very pleased to announce our continued commitment to CCS, although many issues remain to be resolved through FEED to bring forward reasonable cost estimates and contribute to global knowledge dissemination and technology development," he said.
Noting that the global cement industry is a major contributor to global greenhouse gas emissions, the government concluded in its assessment that Norcem had "demonstrated project execution abilities and relatively low cost per tonne CO2 captured compared to the other two capture projects".
But it said Yara's ammonia facility had "smaller learning potential compared to the two others, and some uncertainties concerning the plant", adding that it "does not make sense industrially to continue the planning of their plant".
It also raised concerns over Fortum Oslo Varme's bid - citing higher potentially higher costs and the waste plant's proximity to Oslo - although it is now assessing updated information recently provided by the company before it makes final a decision.
While Norcem and potentially Forum Oslo Varme are developing the CO2 capture end of the project, oil giants Statoil, Total, and Shell are cooperating on developing the transport and storage end of the CO2 pipeline.
The Norwegian government warned today that bringing the full CSS project into operation would be a costly exercise without support from the companies involved and cooperation with the EU. "Without considerable support from other sources it will be challenging to finance a demonstration project for CO2 capture and storage in Norway," it said. "It is a prerequisite that the companies involved take a share of the costs and risks in the project. Further, it will be necessary to establish a cooperation to support the project, for example with the EU."
Trude Sundset, CEO of Gassnova, welcomed the government's decision to take the CSS pipeline project to the next stage, pointing to the importance of the technology for Norway and the rest of the world meeting the goals of the Paris Agreement.
"We have now reached a level where demonstration of capture and storage of CO2 on an industrial scale is a natural next step," said Sundset. "If we realize the Norwegian full-scale project, this can also help reduce economic, technical and regulatory barriers to subsequent projects around the world."
Clearly concerns pervade within the Norwegian government over the potential high costs of investing in developing CCS. However, before making its final investmnet decision in 2020-21, Norway will have to weigh up whether the climate costs of not developing carbon capture technology could in fact be much higher.
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