Orsted Wins 20-Year CCS Contract Supporting Subsea Carbon Storage

Asnaes power plant
The Asnaes woodchip-fired powerplant (Orsted)

Published May 17, 2023 11:24 PM by The Maritime Executive

Danish energy company Orsted has secured a massive state subsidy contract for a carbon capture and storage plan. The scheme will take carbon dioxide from two biomass-fired powerplants in Denmark, liquefy the CO2 and ship it to Norway, where it will be injected into a subsea reservoir for permanent storage. 

The subsidy contract offers roughly half of a $2.3 billion funding pool in return for carbon removal of 430,000 tonnes per year, starting in 2026 and running for at least 20 years. Orsted's bid for the tender won out over two competing offers. 

Beginning in 2025, the Asnaes and Avedore combined heat and power plants will begin to capture and store biogenic carbon - that is, biologically-derived CO2 from biomass like straw and woodchips, the fuel sources for the two plants. The biogenic source is an important distinction for climate mitigation: by burning plant matter and capturing the carbon, the project effectively withdraws CO2 from the atmosphere, creating negative emissions. 

Starting in 2026, the two units will capture and store about 430,000 tonnes of biogenic CO2 every year. Orsted hopes that the project will also provide the infrastructure for shipping out CO2 captured by other emitters as well. 

"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,” said Deputy Director of the Danish Energy Agency, Mogens Hagelskær.

The subsidy from the Danish state will help the project get up and running to launch a value chain for capture, transport and storage of CO2. 

The project also draws together several commercial threads from the growing CCS sector to get to implementation and monetization. Orsted has hired Aker to deliver off-the-shelf carbon capture units with existing technology, and it will buy storage space for the carbon in the Equinor/Total/Shell offshore CO2 storage project, Northern Lights (itself subsidized by the Norwegian state).

These partnerships will save Orsted the difficulty of developing its own capture system and subsea storage reservoir. On the revenue side of the deal, Microsoft has agreed to purchase 2.76 million tonnes of carbon removal credits from Orsted over the span of 11 years, monetizing the negative emissions.  

"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,” said Melanie Nakagawa, Chief Sustainability Officer at Microsoft.