Tailored state aid agreements are necessary

State aid for industry partners

Since CCS was not commercially viable when the Longship project began, it was necessary to provide state aid to industry partners.
The high proportion of state aid has made it necessary for the state to follow up on the projects.

Cost sharing required up to a maximum level

Since the Longship projects are the first of their kind, the level of uncertainty in each project is higher than you would normally encounter in large industrial projects. Industry partners therefore required cost sharing up to an agreed maximum level (related to both investment and operations).

Entering dialogue with potential customers

Northern Lights has identified a business case for carbon transport and storage: The state aid agreement provides Northern Lights with incentives to enter into dialogue with potential customers across all of Northern Europe. Northern Lights’ potential future profits will be based on the tariff paid by potential new customers.

Elements of regulations that have been challenging

Elements of regulations have been challenging for industry partners. For example, there are no incentives for carbon capture and storage from biogenic sources and the liability for damages related to any CO₂ leakages in the chain is not always logically allocated. This is set through the state aid agreements.

Must comply with the Norwegian Public Procurement Act

The extensive proportion of state aid means that industry partners must comply with comprehensive procurement procedures from the Public Procurement Act. For some industry partners, this created a need to acquire new competencies.

This article was written based on the report «Regulatory lessons learned from Longship», which is based on the experiences gained from the Longship project.