OSLO (Reuters) - Norway will finance two-thirds of a large-scale project to capture and store carbon dioxide - its second attempt to cut greenhouse gas emissions in a plan that was previously touted as the oil-producing country’s moon landing.
Dubbed Longship after the vessels used by Vikings, the project would help the world to reach the goals of the Paris climate agreement, Norway’s Prime Minister Erna Solberg said.
Solberg told Reuters achieving the Paris climate targets would be more costly without carbon capture and storage.
“When we are now developing a storage facility ... it will be an important step because there will be a possibility for safe storage for a lot of other countries who would also like to capture their CO2.”
Carbon capture has long been highlighted as a way to reduce CO2 emissions but there are few commercial projects in existence.
Norway tried a decade ago to create a carbon capture project at a gas power plant.
State oil company Equinor EQNR.OL, then called Statoil, failed to complete the plan - touted at the time as Norway's moon landing - because of cost issues.
Under the latest proposals, Norway would fund a carbon capture project at a cement factory in southern Norway operated by Germany's HeidelbergCement HEIG.DE.
The government would also finance a facility to capture emissions at a waste incineration plant in Oslo operated by Fortum FORTUM.HE - if the Finnish company can find external investment.
Oslo will also finance Northern Lights, a joint venture between Equinor EQNR.OL, Shell RDSa.L and Total TOTF.PA that would transport and bury the captured emissions, up to 1.5 million tonnes per year initially, in a geological formation in the North Sea.
Norway would finance 16.8 billion crowns ($1.83 billion) of the estimated total cost of 25.1 billion crowns for all the projects.
“We will create a whole new value chain that is needed to deliver on the Paris Agreement,” Sverre Overa Johannesen, Equinor’s leader for Northern Lights, told Reuters.
The plans could also be important for decarbonising the industrial use of gas, including the production of emissions-free hydrogen, effectively extending the gas industry’s lifetime as well as offering a new revenue stream for Norway, Europe’s second largest gas supplier after Russia.
“I believe that this time Norway will succeed,” said Camilla Svendsen Skriung, who advises the green think tank Zero Foundation on CCS, pointing to the close cooperation among industrial partners.
Equinor last year signed memoranda of understanding with seven companies, including Sweden's largest refiner Preem[CORRLR.UL] and the world's largest steel producer ArcelorMittal MT.LU to store CO2 at Northern Lights.
Preem, which operates two refineries on Sweden’s west coast, said it was planning to capture and store up to 500,000 tonnes of CO2 per year from 2025 at the site.
HeidelbergCement told Reuters Norway’s backing for building a carbon capture facility at its cement plant, with an estimated cost of 3.3 billion crowns, was key, especially as European carbon prices are not high enough to attract the investment.
The price of emitting carbon under Europe’s emission trading scheme last stood at around 27 euros per tonne. HeidelbergCement declined to say what capturing one tonne of CO2 at the Norwegian plant would cost. Some studies estimate cement carbon capture costs at around 100 euros per tonne.
Fortum said it was pleased about Norway’s pledge to fund carbon capture at its waste plant if the company can get extra funding, even though this could delay the project.
Norway, part of the European single market but not of the European Union, wants Brussels to help fund the Fortum plant.
Jannicke Gerner Bjerkaas, director of CCS at Fortum’s Oslo subsidiary, told Reuters that having to apply to the EU for money could mean the plant would come into operation in 2026 rather than 2024.
Oslo said it would fund 2 billion crowns, out of the total 4.3 billion estimated total capital cost, if Fortum can secure the remainder.
Solberg said she was confident the proposals would pass parliament as there was broad political consensus to back carbon capture.
Editing by Gwladys Fouche and David Evans. Editing by Jane Merriman
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