6. In the wake of Longship – CCS going forward
Longship can already prove positive effects on the development of CCS in Europe. The existence of a CO2 transport and storage service provider like Northern Lights has removed an important barrier to CCS. Stronger climate policies and a higher ETS price has also contributed to an increased focus on CCS in key European industries and by other stakeholders.
Northern Lights has decided to conduct a study regarding expanding its capacity (phase 2) from 1.5 million tonnes of CO2 per year to 5–7 million tonnes due to the strong demand experienced for CO2 transport and storage services across Northern Europe. Phase 2 of Northern Lights is not governed by the state aid agreements but has the status of a Project of Common Interest54 for Europe, and is described by the European Commission as “a commercial CO2 cross-border transport connection project between several European capture initiatives (United Kingdom, Ireland, Belgium, the Netherlands, France, Sweden) and the transport of the captured CO2 by ship to a storage site on the Norwegian continental shelf”. Northern Lights has received CEF support for the FEED study of phase 2. Four of the potential customers of Northern Lights have received support from the Innovation Fund. There are other CO2 transport and storage projects under development in Europe, but Northern Lights is a few years ahead of these other projects.
A prerequisite for Northern Lights closing agreements with customers abroad is bilateral agreements between the Norwegian Government and the government of the country of the emission sources. The Norwegian authorities have started informal consultations with a number of European countries. Memorandums of understanding on CCS collaboration have been signed with Belgium and the Netherlands.
HeidelbergCement has 10 CCS projects in the pipeline with a capture project at Slite, a factory on Gotland in Sweden, being one of the most mature. HeidelbergCement has said that they have built on and benefited from the experiences from Heidelberg Materials and the Longship project while developing their CO2 capture project on Gotland.
Interest in CCS in the waste to energy sector in Europe is also increasing.
A major driver for the increased focus on CCS in key European industries is the higher ETS price. The ETS price has risen to about 80 euros per tonne (June 2022) from about 20 euros per tonne when the investment decisions for Longship were made in 2020. The ETS price peaked at 97 euros before the invasion of Ukraine in February 2022. Stronger European climate policies are behind the rise in the ETS price. The large fluctuation in the EU ETS price over the last few months shows, however, the political risk related to the future price development of CO2 emissions in the EU.
There has also been a development in the legal framework since Longship was approved and processes are ongoing. Revision of the ETS Directive, including a proposal of including all forms of transport of CO2 for permanent storage in the ETS, is ongoing. At COP26 in Glasgow there was a change in the UN reporting regime making it possible to report CCS of sustainable biogenic CO2 in line with CCS of CO2 from fossil sources both to the EU and to the UN. The Norwegian Government has been working to clarify how the EU legislation, which has never been applied to a CCS project like Longship before, should be interpreted and this work will continue. More countries are ratifying the 2009 amendment to the London Protocol14. Norway is in the process of opening up more storage areas and will gain further experience with the Storage Regulation21. A change in regulations is proposed and processes are ongoing.