New year, new tricks – more focus in Norway on CCS and Green Growth in 2017
10 Jan 2017
Building of a full-scale demonstration facility for Carbon Capture and storage (CCS) is expected to move forward in Norway during 2017. The Norwegian Government has allocated about 360 million NOK (40 million EURO) for the concept study of a CCS facility, which should lead into a investment decision in 2019. CCS is one of the Government’s prioritized areas for enhanced climate action, which is expected to help in reaching the climate goals set for Norway. However, the aim is also to increase knowledge of this process across the world and support the national green growth strategy in general.
FUNDING OF FULL-SCALE CCS DEMONSTRATION FACILITY IN NORWAY
The benefit of the project
In order for a full-scale project to gain socio-economic returns it has to contribute to the reduction of barriers and costs for CCS development. In parallel with the feasibility studies the Ministry of Petroleum and Energy has carried out a concept of evaluation, which seeks to answer whether full-scale CCS is socio-economically profitable or not. The following aspects form the basis for evaluating the benefits from a CCS project:
- Achieve knowledge that can be transferred across countries and sectors.
- Provide storage solutions with sufficient capacity for economies of scale.
- Demonstrate that CCS is a safe and effective climate measure.
- Contribute to improvements of the market situation for CCS.
The conclusion from the feasibility study was that all these aspects would contribute to reducing barriers and costs for future CCs projects and that it would be particularly valid for alternatives which establish and qualify storage sites and other infrastructure with capacity to store excess amounts of CO2.
Cooperation between state and the Industry
The findings of the feasibility study stressed the importance of cooperation between the state and industry in realisation of CCS capture facilities. This was needed for development of CCS value chains, establishment of a business model for capture, transport and storage, update cost estimates and further development of technology. From the state’s side it is important that they could share their cost and risk in the development phase with the industry players that participate in the project.
Next phase – The concept phase
The next phase will be used to optimise concepts, clarify technical requirements and develop a technical and commercial basis for an investment decision. This work is essential in providing a sufficient basis for an investment decision for both the State and the industry players, which is planned for the spring of 2019. The industry actors will have to make their own investment decisions, therefore they should get time to carry out concepts, models and procedures. A full-scale CCS project could then be realised in 2022.
In order to ensure that the CCS is a safe and effective climate measure, the authorities will enter contracts for the financing of concept studies with up to three capture projects. This should ensure the validity of the received results, lower risk of lack of CO2 for the chain, and reduce CO2 cost per unit with increasing CO2 volumes in the chain. Projects which fulfill the set criteria in the coming announcement can apply for the funding.
The development of a storage site will be based on an on-shore facility. An on-shore facility will be well suited to provide economies of scale in the sense that it has capacity to receive volumes from other CO2 capture projects.
Building up a demonstration facility for a new technology, such as for CCS, is not possible without incentives. The Government will therefore establish framework conditions and incentives for building of this demonstration facility in Norway in cooperation with the industry players agreeing. This will ensure that the facility will be built in the first place, but will also be operate a cost effective CCS chain.
NORWEGIAN GREEN GROWTH STRATEGY
Building of a full scale CCS demonstration facility is only one feature of the Norwegian Government’s aspirations to support green growth. An expert committee on green competitiveness put forward a report for the Norwegian Prime Minister and Minister of Climate and Environment, which forms an important starting point for drafting of a Norwegian green growth strategy.
In the years ahead, both the Norwegian and international economy must shift towards a low-carbon society. The Norwegian Government ambition is to create new, profitable jobs in businesses that assist Norway and other countries in this green restructuring.
In the report, the committee proposes a national strategy for how to reduce greenhouse gas emission, while Norway at the same time maintains value creation and high rates of employment. The committee has as a premise that Norway should reduce its greenhouse gas emissions by at least 40% by 2030 and become a low-carbon society by 2050. Restructuring towards a low-emission society requires a broad commitment and the ability to seize new opportunities – and a green growth strategy gives a lot of opportunities.
To succeed in meeting these goals the Norwegian businesses must contribute to these aims as well, which was clearly demonstrated in the report already. Large parts of the business sector were involved in the process and the Minister praised the committee for having interacted so well with these players. In line with the mandate the committee received from the government, it has requested opinions and input from key industries, enterprises, organisations and academia from various parts of the country. Eleven sectors have submitted their own roadmaps towards green competitiveness – also the renewable energy sector.
The committee report and the numerous roadmaps give us analysis and proposals that will contribute to the work of government on the white paper regarding long-term perspectives on the Norwegian economy and the white paper on industry. They also contribute to the following-up of cooperation with the EU on climate targets for 2030.
Renewable Energy Funding
One interesting result of the committees work on a green growth strategy is that it could result in a increased funding of renewable energy. One of the suggestions of the report was to initiate a long-term investment funding in the form of a venture capital fund, which would invite private capital to invest together with public funding on renewable energy projects.