Ørsted Awarded $1 Billion Deal to Capture and Store Over 8 Million Tonnes of Carbon
Denmark-based energy provider Ørsted announced that it has been awarded a 20-year contract for its “Kalundborg Hub” carbon capture and storage (CCS) project by the Danish Energy Agency (DEA), with planned capacity to remove and store over 400,000 tonnes of CO2 per year.
The Ørsted Kalundborg Hub project will see the company establish carbon capture at two of its Danish power stations, including the wood chip-fired Asnæs Power Station in Kalundborg on western Zealand and at the Avedøre Power Station’s straw-fired boiler in the Greater Copenhagen area. The two combined heat and power (CHP) plants are linked to the grid, the district heating system, and have their own harbours, enabling them to act as hubs for the handling and shipping of carbon and green fuels. They will not only serve as hubs for the capture and shipping of its own carbon but they will also for shipping carbon produced by other players.
Ørsted said that it expects the plants to begin capturing and storing biogenic carbon emitted from the plants in 2025, and to capture and store approximately 430,000 tonnes of CO2 every year from the beginning of 2026.
The deal marks the first tender of Denmark’s CCUS subsidy scheme, which forms part of the Danish Climate Agreement on energy and industry, launched in 2020 and aimed at achieving a 70% emissions reduction by 2030. The scheme allocates 16 billion DKK (USD$2.3 billion) to carbon capture and storage initiatives. According to the DEA, the tender with Ørsted covers approximately half of the amount allocated.
Mogens Hagelskær, Deputy Director of the Danish Energy Agency, said:
“I am very pleased that we are ready to sign a contract with Ørsted. Now, they can start to establish capture, transport, and storage of CO2 on a full scale. The decision is a giant step forward for the CCS industry in Denmark, as it is the first time in history a contract for full scale CCS has been awarded.”
Carbon captured at the plants will be shipped to the Northern Lights storage reservoir in the Norwegian part of the North Sea. The Northern Lights project, a joint venture between Equinor, Shell and TotalEnergies, was launched in late 2020, as the transport and storage component of Longship, the Norwegian Government’s full-scale carbon capture and storage project. Longship was unveiled in September 2020, with the government describing carbon capture and storage as a prerequisite for reducing global greenhouse gas emissions in line with the Paris Agreement climate targets.
Ole Thomsen, Senior Vice President and Head of Ørsted’s Bioenergy business, said:
“According to the UN’s Intergovernmental Panel on Climate Change (IPCC), capture and storage of biogenic CO2 is one of the tools we must use to fight climate change, and our CCS project will contribute significantly to realising the politically decided Danish climate targets for 2025 and 2030.”
Alongside the announcement, the company also unveiled a 2.76 million tonne carbon removal agreement with tech giant Microsoft, one of the largest of its type by volume to be announced to date.
For Microsoft, the new agreement marks the latest in a series of recent carbon removal deals, forming part of the company’s initiative to become carbon negative by 2030, and to remove all of its historical emissions by 2050. Microsoft recently announced Direct Air Capture (DAC)-based agreements with climate tech company CarbonCapture and with startup Climeworks, and in March the company entered its first agreement for ocean-based carbon dioxide removal, with ocean health company Running Tide.
Melanie Nakagawa, Chief Sustainability Officer at Microsoft, said:
“Our landmark long-term agreement with Ørsted for high-quality carbon removal supports Microsoft’s commitment to become carbon-negative by 2030, sends a strong demand signal to scale the market, and showcases the power of partnership and the technological innovation needed to help the world make the clean energy transition.”
Ørsted formed a collaboration in 2021 with Microsoft and carbon capture tech provider Aker Carbon Capture to explore the technological, regulatory, and commercial possibilities of developing carbon capture at biomass-fired heat and power plants. Aker will serve as the carbon capture provider for the new project, providing five of its “Just Catch” units to the CHP plants.
Valborg Lundegaard, CEO at Aker Carbon Capture, said:
“We’re proud of our partnership with Ørsted and see this project as a milestone for our standardised Just Catch offering to the mid-scale emitter market. We look forward to working with Ørsted and to contributing to their decarbonisation journey and to Denmark’s CCUS ambitions.”