Denmark sets aside $4.2 billion as part of its third fund for carbon capture and storage

The Danish Energy Agency has launched the tendering procedure for its third fund for carbon capture and storage (CCS) projects, with DKK 28.7 billion ($4.2 billion) available for interested parties to help Denmark in its path to climate neutrality.

The CCS Fund will cover the costs of capture, transportation and geological storage of fossil, biogenic or atmospheric CO2 over a 15-year contract period, with the subsidies including a requirement for the commissioning of capture facilities by December 1, 2029, and full capture and storage from 2030.

Overall, it is estimated that the fund will reduce Denmark’s annual carbon emissions by 2.3 million tonnes from 2030, which corresponds to around 5% of the country’s total current emissions over a year.

According to the Danish Energy Agency, the fund has been designed to ensure maximum competition for funding to achieve the highest possible carbon reductions at the lowest possible cost, with the subsidy to be paid per tonne of CO2 stored.

The tendering procedure will be carried out by negotiation, in which market players bid a fixed amount of CO2 per year and a price per tonne they will capture and store. The deadline to apply to be pre-qualified to participate in the tendering procedure is March 25, 2025, at 13:00.

Funding can be awarded to multiple tenderers and the Danish Energy Agency plans to hold a follow-up information meeting about the tendering materials on November 21, 2024.

“With CCS technology, we can store CO₂ underground instead of releasing it into the atmosphere, where CO₂ contributes to the greenhouse effect and thus to global warming. Now the Danish Energy Agency’s tendering procedure will ensure that we get the highest CO₂ reductions from the funds allocated by politicians,” said Peter Christian Baggesgaard Hansen, Deputy Director General at the Danish Energy Agency.

The most important terms of the tendering materials were announced in June, in connection with a market consultation. The Danish Energy Agency also held two market dialogues about the fund, most recently from June to August, taking into consideration the input from stakeholders and potential tenderers.

Implementation of the new CCS fund requires state-aid approval from the European Commission.

The first fund, the CCUS pool worth approximately DKK 8 billion, was secured by Ørsted, which will capture and store 430,000 tonnes of CO2 annually from 2026 and for the following 20 years. First storage of CO2 is expected next year.

The NECCS pool was completed this May, when three companies were contracted to capture and store 160,350 tonnes of biogenic CO2 annually from 2026 to 2032.

According to the agency’s latest point source analysis, the full capture potential of all Danish point sources amounts to 6.9-13.7 million tonnes CO2 in 2030. 

Denmark has granted six licenses for exploration for CO2 storage and has political agreements with several countries for cross-border transportation of CO2 for geological storage under the seabed.

To remind, the Danish Energy Agency granted the first-ever permit for a CO2 storage project in Denmark at the end of 2022 to INEOS E&P and Wintershall Dea for the Greensand Pilot Injection Project. In February, the partners received the first full-scale CO2 storage permit for the Danish North Sea.

On March 8, INEOS and Wintershall Dea marked a major milestone and a world first with the first-ever injection of CO2 in the North Sea as part of Project Greensand.