With the Danish Climate Agreement for Energy and Industry of 22 June 2020, a majority of the Danish Parliament decided that carbon capture and storage is to be an important element in achieving Denmark’s climate policy objectives. The decision prompted the setting up of technologically neutral and market-based funds (the CCUS funds) of DKK 16 billion, which are scheduled for deployment between 2024-2048. The Danish Energy Agency (DEA) is responsible for the deployment of the CCUS funds. The funds are intended to ensure the capture, transport and storage of 0.4 million tonnes of CO2 per year from 2025 and an additional 0.5 million tonnes of CO2 per year from 2030.
The DEA wishes to inform the market of the DEA’s preliminary overall assumptions and considerations regarding the deployment of the CCUS funds (see section II.2.4), and about a market dialogue and preliminary timeline (see section VI.3)).
The deployment of the funds will take place in two phases: phase 1, which is the subject-matter of this Prior Information Notice, and phase 2, which will be implemented in future. For the purpose of the phase 1 deployment of the CCUS funds, the DEA intends to conclude one or more agreements to support the political objective of CO2 reductions of 0.4 million tonnes per year from 2025.
Information about the CCUS funds can be found in the Danish Climate Agreement for Energy and Industry of 22 June 2020 (
https://fm.dk/media/18085/klimaaftale-for-energi-og-industri-mv-2020.pdf), Agreement of 30 June 2021 (
https://kefm.dk/Media/637606718216961589/Principaftale%20om%20CO2-lagring.pdf) and Agreement of 14 December 2021
(
https://kefm.dk/Media/637750877973046181/Aftaletekst_final.pdf).
The phase 1 deployment of the funds will be implemented by allocating funds with focus on the carbon capture facility/facilities. The carbon reductions must count as reductions in the Danish national climate accounts.
The funds shall cover the costs of capture, transport, and permanent storage of CO2. Bidders are therefore assumed to be responsible for the whole value chain.
The DEA expects that the first phase of the deployment of the CCUS funds will take place through a negotiated bidding process with one or more negotiation rounds. The DEA further expects that the bidding process, including the bidding material, will be conducted in English. The DEA is considering whether the deployment of funds in the first bidding process will be split into one or more agreements.
It is expected that bidders will be required to deploy carbon capture and storage into operations no later than 2025.
The DEA is furthermore working under the assumption that funds are granted per ton captured, transported, and stored carbon. The DEA is considering the criteria for the bidding process, including matters such as price per ton CO2 captured and stored, delivery schedule, project maturity, and total amount of CO2 delivered and stored.
It is noted that the DEA will notify the CCUS funds to the European Commission as an aid scheme in accordance with the procedure prescribed by Article 108 of the Treaty on the Functioning of the European Union and that the deployment of the funds is dependent on the Commission’s prior approval.
The market dialogue and the bidding process will be conducted subject to the necessary legislative changes.
Regarding section II.3) it is noted that the date is based on the DEA’s current expectations and that the date might be subject to change. Reference is also made to the preliminary timeline in section VI.3).
In relation to section II.1.6), it should be noted that the DEA has not yet decided whether the deployment of this phase of the CCUS funds is to include one or more agreements.