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EU ETS price approaching viable commercial level for CCS projects: Equinor


Government support still vital for projects

EU ETS breached Eur100/mt earlier in Feb

Equinor awaiting UK funding decision for FID

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  • James Burgess
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EU Emissions Trading System prices at Eur100/mt are now approaching a level that would make carbon capture and storage projects commercially viable, Equinor Senior Vice President for Low Carbon Solutions Grete Tveit said on the sidelines of the International Energy Week conference in London Feb. 28.

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The EU ETS price needs to go a little higher to make CCS commercially competitive, but "we are not far off," Tveit told S&P Global Commodity Insights.

Prices breached the Eur100/mt mark for the first time ever on Feb. 21 and have hovered close to that level since, Platts assessments show. Platts is a part of S&P Global Commodity Insights.

Equinor has taken a final investment decision in its Northern Lights CCS project in Norway -- the only project in the company's portfolio that has reached FID -- and is awaiting details of the UK government's funding support and business models for CO2 and hydrogen before taking FIDs in projects there.

"We had a lot of help from the Norwegian government" for Northern Lights, Tveit said, adding that industrial emitters had also received subsidies to get the value chain going.

Equinor is developing low-carbon hydrogen production projects in northeast England, connecting to the Endurance carbon store in the southern North Sea.

'Keen to move fast now'

Tveit said the company was ready to go with an FID, once the UK business models were finalized.

"The industries are quite keen to move fast now," and governments needed to move policy and incentives forward as soon as possible, Tveit said.

"Pushing forward policies and business models is really important," she added.

Tveit pointed to strong policy support for low-carbon projects in Germany and Belgium, as well as across the Atlantic in the US, that was spurring project development elsewhere.

"Competition is picking up, which is fantastic, because the urgency is there," she said, calling for a need for collaboration between governments and companies to create a complete value chain.

"We can't take that investment decision" without knowing the market for CO2 capture and storage will be there, Tveit added.

Dutch support for project developers

The Netherlands, another North Sea country looking to develop CCS projects, has rolled out substantial state support for project developers.

The 2021 Dutch SDE++ subsidy application for renewable energy and CO2 reduction technologies, which aims to cover the difference between the cost of the technology and the market price for CO2, awarded subsidies of around Eur75/mt for CCS projects, avoiding 4.74 million mt CO2/year across 11 projects.

The fund with a total budget of Eur5 billion also provided for subsequent allocation rounds of up to Eur300/mt, which included CCS projects along with other technology projects such as geothermal, biomass and fermentation.

A budget of Eur13 billion has been made available for the 2022 SDE++ round, which closed Oct. 6.