A Norwegian project aimed at storing millions of tonnes of carbon emissions underneath the North Sea received a shot in the arm on Thursday (5 September), when some of Europe’s biggest industrial players signed up to preliminary agreements.
During a high-level conference on carbon-capture-storage (CCS) technology, co-hosted by the Norwegian government and the European Commission, seven companies including metal producer ArcelorMittal and Heidelberg Cement gave their backing to the Northern Lights project.
The brain-child of state-owned Norwegian fossil fuel giant Equinor (formerly Statoil) and partners Shell and Total, Northern Lights aims to be “the world’s first cross-border CO2 storage” project, according to Equinor executive Eldar Saetre.
With the ink still fresh on the memorandum of understanding, the CCS project team hopes that it will convince governments to invest in the plan and allow it to scale up to commercial size.
Scalability has proved an insurmountable obstacle to other CCS ventures so far and other streams of funding from donors like the EU have proved difficult to either secure or utilise fully.
The Norwegian government, for its part, acknowledged the significance of the industry’s commitment. Oil and Energy Minister Kjell-Boerge Freiberg told reporters that “it’s the right step in that direction”.
During the conference, Freiberg said that CCS would be essential for the labour market in the years to come and “necessary to keep jobs in a low emissions society”. However, he added that it will face financial, legal and social challenges.
CCS is by no means cheap. Estimates in 2016 showed that at least €1 billion will be needed to just set up the full-scale chain. If all goes to plan, it could be up and running by 2024.
Abatement costs currently hover around the €100 per tonne mark, while the EU’s emissions trading system has managed to push the carbon price up to around €25. That gap is proving to be difficult to overcome.
Northern Lights plans for the capture of carbon emissions at source, from industrial installations like steelworks and cement factories, their transportation by ship to offshore sites and their storage under the sea bed.
In preparation for the storage part of the project, Equinor has been scouting sites that could be up to the task. Executive Stephan Bull quipped that his team have “had fingers crossed we don’t actually find oil and gas” during that exploration process.
Norway is not alone in looking to turn the North Sea into a carbon storage hub. Port of Rotterdam CEO Allard Castelein explained how the Netherlands’ own Porthos project is not looking at Equinor as a competitor.
“We’re not looking to conquer the world like we used to in the dark ages. There’s so much carbon to capture and enough to go round,” he told the conference. Equinor is hoping to capture five million tonnes of emissions, while the Rotterdam project could top 10 million.
Porthos is largely a similar affair as Northern Lights, in that it will capture emissions from the vast array of industrial sites clustered around Europe’s largest port and then store them in old gas fields.
However, the Dutch project differs in that it will use a pipeline to transport the emissions. It will also redistribute some of the emissions to the surrounding glasshouses, which should boost plant growth.
It could also beat Northern Lights to the title of first cross-border CCS project, as Castelein revealed that the plan is to link the system to Belgium and perhaps even Germany.
The EU has firmly acknowledged recently that CCS will be needed in order for the bloc to reach its climate targets, particularly a still-to-be-agreed carbon neutrality goal for 2050.
Climate Commissioner Miguel Arias Cañete told the Oslo conference that CCS is “a realistic solution” for industries like steel and cement, reiterating that the EU executive is committed to financing innovative technology.
That pledge comes to fruition in the next decade when the EU’s Innovation Fund – a war chest with an estimated bounty of €10 billion, depending on the price of carbon – will kick in.
Commission official Christian Holzleitner explained that one of the aims of the fund is “to make you invest now. Not in ten years.” As well as financing the technology itself, the funding can be used to cover operating costs for up to a decade.
Holzleitner added that the Commission had “learned lessons” from its previous fund, NER300, which failed to award money to any of its prospective candidates. EU auditors concluded last year that it had largely failed its objectives.
But NER300 looked almost exclusively at the abatement costs of applying projects, whereas the Innovation Fund will analyse five criteria that cover a broader range of factors. The call for applicants will launch next year.
The European Investment Bank (EIB) is also getting in on the act. Vice-President Andrew McDowell said the lending house has identified CCS as a priority and it will form “a big part of our business”.
McDowell warned that the path ahead will not be easy, as projects will still have to contend with the issue of long-term liability and considerations like insurance against emission leakage. He added it is a difficult risk to quantify and manage at the moment, given the fledgeling nature of the industry.
The EIB is currently updating its energy lending policy and a draft version of the proposal suggests scrapping all funding for fossil fuel projects. The draft also suggests that poorer EU countries should be granted higher levels of funding.
Shareholders meet next week to discuss the draft, with a decision expected in October. But climate experts are concerned that member states will look to water down the ‘no fossil fuels’ policy and install loopholes.