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Building from successful CO2 capture: Lessons from Norway

The carbon capture industry has seen a number of failed investments, but there are a handful of success stories that offer useful lessons for the future. A recent white paper from the Institute for Energy Economics and Financial Analysis (IEEFA) provides a nice repository summarizing the largest CO2 capture investments to date. The white paper focuses attention on the failures of carbon capture to achieve its promise, and comes to the conclusion that future investments are likely to follow this pattern. I don't think this approach is a fair read based on the history of technology - generally, organizations learn from their failures, especially when money is on the line. All technologies become cheaper over time as we learn, and we should expect the same here.

I believe it is worth reviewing this paper over several blog posts, focusing not just on the past (as the IEEFA does), but on what might might expect in the near future based on the industry's ability to improve upon those experiences. The first in this series focused on capturing carbon from the natural gas industry, and in particular the experience of Norway.

One of the most successful carbon capture projects to date is the Sleipner CO2 Storage Project, which was commissioned in 1996 and is located in the Central North Sea between the UK and Norway. This project was the world’s first commercial carbon capture project with a dedicated geological structure for CO2 sequestration, and it has been among the world’s most successful carbon capture projects, with no evidence of CO2 leakage from its geological formation. The experience from Sleipner was effective in designing and implementing different regulatory frameworks for carbon storage around the world, and was used as a guide for the EU Directive on geological storage of carbon dioxide.

Another notable carbon capture project is the Snøhvit project, which is a liquefied natural gas (LNG) development in the Barents Sea off northern Norway, commissioned in 2007. The extracted gas contains 5-8% CO2 by volume, which is solidified into dry ice and pumped back to the Snøhvit field offshore through a separate pipeline to be injected in the geological reservoir 2600 metres beneath the seabed. The company says that a shale cap which lies above the sandstone will seal the reservoir and ensure that the CO2 stays underground without leaking to the surface. However, it was discovered in early 2010 that there was less storage capacity than expected at the Snøhvit injection site.

Economics, in the form of stringent emission regulations, was the key driver behind these Norwegian CCS projects. Norway was one of the first countries in the world to impose a CO2 tax, legislated in the Act on Tax on CO2 Emissions in Petroleum Activities on the Continental Shelf. This requires companies to pay a CO2 tax on the combustion of gas, oil, and diesel in petroleum activities in the designated offshore area, as well as on CO2 or natural gas emissions. The government in its new climate plan for 2021–2030 has announced that the total CO2 price of emissions will increase in line with the increase in the tax on non-ETS (Emissions Trading System) emissions subject to an emissions tax, so the total CO2 price in 2030 will be about NOK 2000/tonne measured in fixed 2020 NOK—almost three times the current price.

In conclusion, while many carbon capture investments have failed to live up to their initial expectations, the Sleipner and Snøhvit projects show that success is possible if incentives are aligned.

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