Carbon capture, utilization, and storage (CCUS) technology is gaining momentum as the world races to meet its climate goals. In Northern Europe, various countries are setting ambitious targets to develop CCUS projects, while others are laying the groundwork to catch up. This blog explores the state of CCUS in Northern Europe, focusing on the regulatory landscape, key projects, and the challenges that lie ahead.

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Will CCUS projects kick off in Northern Europe?

Northern Europe is emerging as a hub for CCUS projects, with countries like Denmark, the Netherlands, Norway, and the UK taking the lead. These frontrunners have made significant progress, leveraging geological advantages such as depleted offshore gas fields for CO₂ storage and strong political commitment.

Denmark’s Project Greensand and Bifrost projects, for example, are set to demonstrate the viability of large-scale CO₂ storage offshore. The Netherlands' Porthos project is also advancing rapidly, with construction slated for completion by 2026. In Norway, the Northern Lights project continues to expand, positioning the country as a pioneer in offshore CO₂ storage.

Despite these promising developments, the challenge remains in scaling these projects quickly enough to meet climate targets. While these initiatives represent progress, much more investment and development are needed across the region.

CCS project portfolio: Growing rapidly, but not fast enough

Global CCS capacity is increasing, but experts agree it needs to grow even faster. As of mid-2024, global CO₂ capture capacity reached 50.5 Mtpa (million tonnes per annum), with an additional 6.6 Mtpa under construction. The number of projects in advanced development stages saw a 55% increase from 2022 to 2024, and early-stage projects jumped by 64%.

However, achieving climate goals requires a monumental increase in storage capacity. Estimates from the IEA and IPCC suggest that global CO₂ storage must reach 1 Gtpa (gigatonne per annum) by 2030, and 6 Gtpa by 2050. The current pace of growth, while promising, may not be sufficient to meet these targets, especially given the long lead time for CCUS projects—typically 6 to 10 years from inception to operation.

The regulatory framework: A positive shift for CO₂ management

The international regulatory framework for CCUS has evolved favorably in recent years. Significant milestones, such as the inclusion of CCUS in hard-to-abate sectors during the first global stocktake of the Paris Agreement at COP28, underscore its growing importance.

Additionally, the London Protocol has made strides in addressing cross-border CO₂ transport challenges, though full ratification is still pending. While only 11 of the 53 Parties have ratified amendments allowing cross-border CO₂ storage, interim solutions are being put in place to enable early adopters to proceed.
In Europe, the EU CCS Directive remains the cornerstone of regulatory support, laying out stringent requirements for CO₂ storage and transport. The Net Zero Industry Act (NZIA), adopted in 2023, could further accelerate CCUS deployment by mandating a minimum annual injection capacity of 50 Mt of CO₂ by 2030. This legislation, along with the EU’s Innovation Fund, which financially supports large-scale CCUS projects, is a key driver of the technology’s advancement in the region.

Challenges in the CCS value chain

Despite the significant progress being made, several challenges continue to affect the viability and scalability of CCUS projects, particularly in the full value chain. Managing these risks is crucial for ensuring a sustainable future for carbon capture.

One of the primary hurdles is the transportation of CO₂ across borders, where regulatory obstacles such as the London Protocol still need a permanent solution. While interim agreements have been made, a long-term resolution is essential to enable large-scale CO₂ transport between countries.

Additionally, the issue of long-term storage liability remains a significant concern for operators. Under current EU regulations, liability can extend for decades, increasing the financial risks associated with storage sites.

Another challenge is the cost gap between CO₂ capture, transport, and storage, and the price of CO₂ emissions quotas. For many projects, the cost of capturing CO₂ exceeds the current price of carbon allowances, creating financial strain and inhibiting investment. This issue underscores the need for stronger incentives and policies to bridge this gap.

Technical and commercial interface risks along the value chain also need to be addressed. Various Joint Industry Projects and research initiatives are currently targeting these knowledge gaps, focusing on improving integration and de-risking the entire process—from capture to storage.

One of the lesser-known but critical obstacles involves CO₂ properties. The purity of captured CO₂ varies depending on its source, and impurities can compromise the safety and integrity of transport and storage infrastructure. Negotiations over CO₂ purity standards can be a sticking point in project development, adding complexity and costs to the commercial agreements that underpin CCUS networks.

Overcoming these challenges requires coordinated efforts between governments, industry stakeholders, and regulatory bodies. Addressing these risks will be key to scaling up the CCS value chain in Northern Europe and beyond.

CCS frontrunners: Denmark, the Netherlands, Norway, and the UK

Denmark, the Netherlands, Norway, and the UK are well ahead in the CCUS race, having developed advanced projects and regulatory frameworks to support CO₂ capture and storage.

• Denmark's Project Greensand and Bifrost are moving rapidly towards operational phases, leveraging depleted offshore oil and gas fields to store CO₂ from both domestic and imported sources.
• The Netherlands is utilizing its vast offshore gas fields, with the Porthos and Aramis projects poised to store millions of tonnes of CO₂ annually. Despite early setbacks, the country is now on track to play a significant role in Europe’s CCUS landscape.
• Norway continues to lead, with its Longship Project and the Northern Lights transport and storage facility already in operation. Norway’s offshore storage capabilities offer a scalable solution for the region, with future expansions targeting 5 to 7 Mtpa of CO₂ storage.

These countries are setting a strong example for the rest of Europe, showcasing how dedicated policy support and collaboration between public and private sectors can drive meaningful progress in carbon capture.

Catching up: Poland, Czechia, Sweden, and Germany

While some countries are making headway, others are still laying the groundwork. Poland, Czechia, Sweden, and Germany are expected to export their captured CO₂ volumes rather than store them domestically, mainly due to regulatory and geological constraints.

Germany, in particular, has displayed a historically skeptical attitude towards CCS. However, the tide is slowly turning, with recent regulatory and policy shifts signaling a more favorable environment for future CCUS projects. For example, Germany’s involvement in cross-border CO₂ transport agreements and participation in EU funding programs like the Innovation Fund could facilitate its eventual participation in large-scale CCS.

Poland and Czechia, with their heavy reliance on coal and other carbon-intensive industries, are also recognizing the need for CCUS, though their efforts remain in the early stages. Sweden, while advanced in renewable energy, is exploring CCUS options to offset emissions from its steel and industrial sectors.

In conclusion

The development of CCUS in Northern Europe offers a glimpse into the future of decarbonization. While frontrunner nations like Denmark, Norway, the Netherlands, and the UK are rapidly advancing, others like Poland, Czechia, Sweden, and Germany are poised to follow, potentially becoming major exporters of captured CO₂.

The regulatory landscape is moving in a positive direction, and while the pipeline of projects is growing, the global scale-up of CCUS still needs to accelerate to meet climate goals. The challenge now lies in translating ambition into action, managing key risks across the CCS value chain, and ensuring that these projects move from development to full-scale operation before it’s too late.

To learn more about the pioneers within CCUS, sign up for our upcoming event in the financing the energy transition series > How Danish pioneers put CCUS into practice.

9/16/2024 7:00:00 AM