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BECCS notches a big win

The Danish Energy Agency has announced a significant contract to turn the biomass plants from Danish power company Ørsted into carbon-negative solutions. The 430,000 tonnes per year of carbon captured will be super-expensive, and the system will be paid for via a unique combination of subsidies from both the Danish government and Microsoft. But thanks to unique circumstances available in Denmark, the project likely pencils out fairly well.

Here are the basics: Ørsted has already undertaken a project to convert existing coal capacity to biomass, with an expectation to be coal-free next year. The current carbon capture agreement focuses on two facilities: a wood chip-fired Asnæs Power Station, and the straw-fired Avedøre Power Station. The Avedøre plant has a capacity of 585 MW, and an impressive efficiency of 49%, so we can assume it puts out about 0.6 kg CO2 per kWh produced. If we assume the plant has a capacity factor of 50% (a rough estimate), the plant emits about 1.5 MT of CO2 per year. The capture agreement covers about 10% of these emissions. According to the press release, the Asnæs Power Station converts about 200,000 tonnes of wood chips per year, which at a rate of 1.8 tonnes CO2/tonne wood would lead to 360,000 tonnes CO2 emissions per year. The Asnæs project would capture almost 80% from this source.

The cost of the project is significant for a point source capture project, though small compared with direct air capture. The project uses amine capture plants from Aker, who has published that the capex for their systems range from $30-45/tonne, with opex another $15-55/tonne. That's a pretty big range, so I will assume the combined costs for an operation of this size are about $60/tonne.

To this we must add the cost of transport. The project will build a shipping terminal at the Asnæs Power, and will truck CO2 from Avedøre until a pipeline can be built. From Asnæs, the pipeline will load CO2 onto ships owned by Northern Lights for storage underneath the North Sea off the cost of Norway The estimated cost of such shipment and storage is $35-$65/tonne, and will likely be on the high end of this range given the small initial volumes The total cost of the effort will thus be over $120/tonne, likely still higher when the cost of pipelines are considered. This is more than the cost of carbon credits in Europe today, and very likely more than their price tomorrow as well.

As a demonstration project, however, this is not bad. The government of Denmark is subsidizing the project for 20 years, with the hopes of building a large shipping terminal for CO2, channeling much of Europe's emissions to Iceland in this way. Some of the subsidy pays back as a long term investment in jobs. Microsoft has stepped in with purchase promises for 250 kT of CO2 per year for the first 11 years, amounting to about 60% of the project's nameplate production (though likely more at the outset). It is not clear what price Microsoft is paying for participation, but they have been willing to shoulder large costs for carbon credits in other projects.

Why was the subsidy of Ørsted successful when a similar project from Drax in the UK failed? Obviously a lot of this is speculation, but Ørsted has a number of advantages that Drax does not:

  • The straw that fuels Avedøre is locally sourced, such that the effort can reasonably secure the support of the agricultural community. For Drax, all of the wood chips would have come from overseas.

  • The long term opportunity to build a CO2 shipment terminal provides a payback to the Danish people from handling the rest of continental Europe's emissions. This additional revenue stream is obviously not available in the UK.

  • Microsoft's willingness to off-take a large fraction of the CO2 provides not just cost savings, but political cover.

The hope of the industry is that the next round of BECCS plants will be cheaper still. Obviously Aker and Northern Lights will be able to make their respective technologies cheaper with scale, perhaps bringing costs down to $70-80/tonne over time. This is still quite a lot of money, and more expensive than similar CO2 storage projects in the US (which benefit from cheaper transport costs). But Europe appears willing to pay, so this project offers a first peek at what may be Europe's CO2 capture future.

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