Increased funding from the EU and national governments have boosted the prospects for carbon capture technologies in Europe. Three projects in the Netherlands, Norway and UK could be operational by 2024.
Carbon Capture projects have seen a number of setbacks in the past on the back of high start-up costs and unproven technologies. But it now seems increasingly likely that the technology will play a key role in achieving Europe’s CO2 reduction targets which are being scaled up.
The push for more ambitious CO2 targets is increasingly being followed up by grants from the EU and national governments. On 2 October, the European Commission announced that it will grant €102 million ($118.5m) to the Porthos Carbon Capture Utilisation and Storage (CCUS) project in the Port of Rotterdam, which is a joint venture of state-owned EBN, Gasunie and the Port of Rotterdam Authority. The commission had previously granted €6.5m for the project’s study phase. The grants are allocated through the EU’s Connecting Europe Facility (CEF) fund.
The Porthos project will use depleted gas fields in the North Sea to store CO2 which will be transported by pipelines from the port area. The CO2 will be captured by four companies at their refineries in the Rotterdam port area; ExxonMobil, Shell, Air Liquide and Air Products.
A total of six CCS projects received grants from the latest CEF round. However, Porthos is the only project that received a grant for the construction phase – the other projects received smaller grants to carry out further studies.
“The EC grant shows Europe believes CCS will be an important contributor to reach the CO2 reductions targets and that it is a viable technology,” Sjaak Poppe, a spokesman for the Port of Rotterdam told the Energy Voice.
The EU’s 2030 target for GHG emissions reductions is expected to be revised upwards to around 55% compared with 1990 levels. The current target is 40%, however a recent vote in the European Parliament called for as much as a 60% reduction in CO2 emissions. The UK has already set a target of 57%.
“The revised 55% EU target for CO2 emissions reduction makes CCS even more necessary. It is getting harder and harder, if not impossible, not to use CCS to reach the EU’s climate goals,” said Poppe.
Poppe said a FID is expected in December next year after the permitting process and the Environmental Impact Assessment have been carried out. That means the Porthos project could be up and running by 2024. The total investment is expected to be around €450-500m, which includes the cost of laying onshore and offshore pipelines.
Government subsidies
Once the CO2 has been captured, the companies will pay a fixed tariff for transport and storage. Broadly speaking, the tariff is around twice as much as today’s prices for EU carbon allowances under the EU’s Emissions Trading System (ETS), or around €60/tonne. To this end, the Dutch government has put together a scheme to subsidize the difference between the ETS price and the costs of CO2 capture plus the Porthos tariff.
“The goal is to store 2-2.5m tonnes of CO2 each year. The Dutch Climate Agreement aims for 7.2m tonnes by 2030, so there is ample space for more CCS-projects,” said Poppe.
“I don’t think this will be the last CCS project in Rotterdam,” he said. “The Dutch ministry of economic affairs and climate has asked EBN to carry out a study to look which other depleted gas fields are most suited for CCS.”
The Norwegian government recently also announced substantial funding for CCS. The “moon landing” CCS project at the Mongstad refinery was never a success and was ultimately abandoned in 2013. However, the technology has matured since then, and Norway is hopeful that CCS will help meet its climate goals.
In September, Norway announced a 16.6bn NOK ($1.8bn) support package for the “Longship” project which involves capturing CO2 at Norcem’s cement factory in the Oslo area. The CO2 will be transported by ship to the Norwegian west coast where it will be pumped through pipelines to a reservoir under the seabed. The transport and storage leg of the project is known as “Northern Lights,” a joint development between Equinor, Shell and Total. The total cost of the project is estimated at NOK 25bn. As with Pathos, it targets start-up in 2024.
“Longship is a relatively costly project for carbon abatement. I also think the cost estimate and timeline is on the optimistic side. But the technology has matured since the Mongstad project,” said Audun Martinsen, Partner and Head of Oilfield Service Research at Oslo-based research firm Rystad Energy.
The project would see 400,000 tonnes of CO2 per year captured at the Norcem cement factory. It could also capture an additional 400,000 tonnes at the Fortum Oslo Varme waste to energy plant, if additional funding is granted, for example from the EU.
IOCs eye opportunities
For oil and gas companies, CCS presents a big opportunity to substantially reduce their carbon footprint and keep investors onboard.
“Shell and Equinor want to halve CO2 emissions by 2030 and be carbon neutral by 2050. CCS is an important tool to achieve this goal. The oil and gas companies have to take action as investors are pulling out of polluting companies,” said Martinsen.
In the UK, the EU-backed Acorn Hydrogen and CCS project in Aberdeenshire could capture 340,000 tonnes/year of CO2 from the St. Fergus gas terminal by 2024. The CO2 would be transported to an offshore storage site by utilising existing gas pipelines. There are also plans to reform North Sea natural gas into blue hydrogen by capturing the CO2 and storing it.
The Acorn project will receive funding from a £62m ($79.7m) north-east Energy Transition Fund, which was announced by the Scottish government in June. It may also receive a cash injection from the UK government’s £800m CCS pledge announced in the 2020 budget and from COVID-19 recovery funds. The project has already received around £7.5m in government funding. It also received €2.8m by the EC to carry studies in 2019 (and €374,000 in 2018) and a further €7.9m in October’s CEF round. The project is backed by Chrysaor, Shell and Total.
The CCS projects that received EU funding to carry our further studies in the latest CEF round were the Antwerp connection with Porthos (€5.8m), the Antwerp link with the Northern Lights project (€3.2m), The Amsterdam-IJmuiden CO2 transport and offshore storage project (€15.4m) and the Ervia Cork CCUS project in Ireland (€1m).
It now seems like CCS is finally gaining momentum in Europe.
“The train is leaving the station. The money is on the table. Costs are coming down as the industry has drawn lessons from pilot projects in the past,” said Martinsen.
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