High hopes for CCS in Denmark, but countdown to 2030 has begun

Denmark targets 70% greenhouse gas (GHG) emissions reductions by 2030, compared with 1990 levels, and carbon capture and storage (CCS) is expected to play a key role in order to reach this target.

According to the country’s energy ministry, the country is on track to achieve 55.5% of CO2 reductions by 2025 and 68% by 2030 – a shortfall of around 1.5 million tonnes from the 70% target.

With 2030 now only a few years away, Denmark is stepping up efforts to roll out projects at scale in order to tackle emissions from hard-to-abate sectors such as cement production.

In October, two Danish CCS projects were selected to receive grants from the EU Innovation Fund under the European Commission’s latest call for proposals.

This includes the ACCSION project which aims to capture 1.5 million tonnes per annum (mtpa) of CO2 from the Aalborg Portland cement plant from 2029. The project, which will receive a grant of €220 million, is being developed by Air Liquide and Cementir Holding Group, through its subsidiary Aalborg Portland. The captured CO2 would be transported via new pipeline infrastructure to onshore CO2 storage facilities, according to plans. 

The second project selected for funding is the INEOS-led Greensand project where the plan is to store 8 mtpa of CO2 from industrial emitters in Northwest Europe under the seabed in the Danish part of the North Sea, from 2030. The storage capacity will be 400,000 tonnes/year in the initial phase. The project’s pilot phase was completed in September this year.

The project is however still pending final investment decision (FID) and regulatory approvals.

“When we eventually can reach final investment decision depends among other things on the approvals from the Danish authorities. But the fact that DNV – a world class independent verifier – has stated that Greensand is ready as a safe storage site is of course a very positive thing and gives us great comfort,” Mads Gade, Head of INEOS Energy Denmark, told Gas Outlook. “We are at the same time quite far on the more commercial side when it comes to establishing the entire CCS value chain. So, the ambition is still to take Greensand into operation as the first storage site within the EU in end 2025/start 2026.”

It has since been announced that the Greensand CCS project has been earmarked for funding under the EU Innovation Fund although the exact amount is not known.

CCS in Denmark has plenty of political support. To this end, the Danish Energy Agency published the final tendering materials for the DKK 28.7 billion (US$4.2 billion) CCS Fund in October this year. Under the tendering procedure, market players will bid for a fixed volume of CO2 per year and a price per tonne of the CO2 they will capture and store.

The deadline for applying for participation in the tender is 25th March, 2025.

Onshore and offshore storage – will it be enough?

Developing sufficient storage sites, whether onshore or offshore, is a prerequisite for meeting Denmark’s CCS goal of 3.2 mtpa by 2030.

In June this year, the Danish Energy Agency said a number of companies have been granted a license to explore whether carbon can be stored onshore in the Danish subsoil at three different locations. Wintershall Dea and INEOS, together with Nordsøfonden, were granted a license to explore at Gassum in Jutland, the so-called Greenstore license; CarbonCuts together with Nordsøfonden were granted a license to explore at Rødby on the island of Lolland; and Equinor and Ørsted together with Nordsøfonden were granted a license to explore at Havnsø on the island of Zealand. Three licenses for offshore storage in the North Sea were also granted in February 2023, to TotalEnergies and a consortium consisting of INEOS and Wintershall respectively. Additionally, in September this year, the agency opened a licensing round for exploration and utilisation of CO2 storage in the Thorning area in Jutland.

Gade notes that the Danish National Geological Surveys assess a very large potential for storage in the Danish subsoil – a potential that equals 400-700 years of Danish emissions.

“The establishing of Danish storage sites whether it is offshore, onshore or nearshore could thus potentially play a vital role when it comes to the fulfilment of the climate targets of the European Union,” he said.

“Now we need to do our own surveys to be able to demonstrate the potential for safe storage. But subject to the outcome of these studies and the authority approval process it is the ambition to bring the Greenstore license into operation before 2030.”

Commercially viable

Tobias Johan Sørensen, senior analyst at the Danish think tank CONCITO, told Gas Outlook there is investor appetite for CCS in Denmark but notes that 2030 is approaching fast.  

“We see that the technologies are available on the market and that actors are willing to invest in CCS and expect to get their payment back if they win the tender. But it is not like they get paid by the state up front. They only get paid if they win the tender and capture and store the CO2,” he says.

“Market actors are willing to do this without very high returns, which we take as a sign of a commercially viable technology. That said, 2030 is not far away and there are some risks, for example if storage sites will be ready in time.”

Sørensen says it may be possible to make a deal with a storage provider within the timeframe of the Danish CCS tender.

“But the question is; what is the price and when can it be ready? Is the price low enough to be competitive and deliver the necessary reductions? That is a key uncertainty.”

He adds: “I think it is definitely possible to meet the goal of around 3 mtpa of CCS by 2030, but I think it comes with a high level of uncertainty. Denmark should definitely have a plan to meet the 2030 climate target even if some CCS is delivered a few years later.”

Sørensen noted that Industrial emitters like cement producers that develop CCS can sell back surplus EU carbon allowances to the market, or at least they don’t have to buy new ones if their emissions are captured and stored. “That is a competitive advantage for example vis-a-vis biomass combined heat and power producers,” he added.

Other noteworthy CCS projects in Denmark include Ørsted’s CO2 capture and storage project, ‘Ørsted Kalundborg CO2 Hub’, which will aim to capture 430,000 tonnes of biogenic CO2 annually from two of Ørsted’s biomass-fired CHP plants from 2026. The CO2 will be shipped to Norway and permanently stored under the North Sea seabed as part of the Northern Lights project developed by Equinor, Shell and TotalEnergies. 

Criticism

In Denmark, as in the rest of the world, there are mixed views about the role CCS can play on the path to net zero, particularly outside the industrial sector. 

Daniel Hauberg, an advisor at the Danish Society for Nature Conservation, told Gas Outlook: “Our view is that CCS is a necessary technology to get rid of some emissions that we don’t have a better answer to right now. On the other hand we are massively opposed to CCS when we have other options. Take waste-to-energy as an example. We need to reduce our generation of waste instead of creating an incentive for imports.”

Meanwhile, the think-tank Green Transition Denmark noted in a recent report that CCS is still an unproven technology and that the climate benefits of Co2 capture at biomass plants — known as Biomass Energy Carbon Capture and Storage — were in particular uncertain.

Even for industry, CCS is an expensive and very energy intensive technology that in a a worst case scenario can delay the phase out of fossil fuels, the report said. The large amounts of state funding to CO2 capture and storage could alternatively be used to invest in green energy solutions, which would secure a faster phase out of fossil fuels.