This marks the next step in the Norwegian Government's full-scale carbon capture and storage ("CCS") demonstration project. With this backdrop, this newsletter will briefly present the Norwegian full-scale CCS demonstration project, as well as the barriers for CCS today.
Today's barriers for CCS
Both the UN climate panel and the International Energy Agency consider CO2 capture and storage to be necessary to reduce global climate gas emissions in line with the targets in the Paris agreement at the lowest possible costs. As such, CCS is potentially an important measure in the efforts to mitigate the climate challenge.
Currently, the technical barriers for CCS are relatively low, and several projects have been realised on a global scale. However, the commercial barriers are significant. Investors are understandably discouraged by the combination of high investment and operation costs, low income potential and technical risks which CCS projects boast today. Financing costs for CCS projects also tend to be significant, caused by challenges in assessing the project risk inter alia due to an untested regulatory framework. In this context, a Norwegian Government backed full-scale demonstration project could contribute with valuable learnings, although a higher price for CO2 emissions is the most important driver for CCS to become commercially viable.
The Norwegian full-scale CCS project
The Norwegian Government has appraised a full-scale CCS demonstration project since 2015. The stated ambition is to realise a cost-efficient solution for full-scale CO2 handling in Norway, provided that this contributes to technology development on a global scale.
The demonstration project is based on CO2 being captured from emission sources in Eastern Norway. After capture, the CO2 will be transported by ship around the southern coastline to an onshore facility in Western Norway, not far from Bergen. From this onshore facility the CO2 will be shipped via pipeline to a subsea storage location near the Troll field, outside the west coast of Norway.
The three elements in a CCS project, namely capture of the CO2, transportation of the CO2 to the injection site and injection and storage of the CO2, require very different knowledge and technical capabilities. In the Norwegian full-scale demonstration project, this is dealt with through appointing different industry players to handle the various phases. As such, concept studies for the capture part and the transport part have been concluded, whereas the concept study for the storage part is currently undertaken by Equinor, Total and Shell. This is expected to be finalised in autumn 2018.
The application deadline for the storage permit licensing round is 7 September 2018. License award, which is scheduled for Q4 2018, is conditional upon the licensees demonstrating the financial strength, technical and geological competence and reliability that is required to operate and control the storage site. In the coming months, it will be interesting to see the level of interest the application round will attract.