Europaudvalget 2022-23 (2. samling)
EUU Alm.del Bilag 688
Offentligt
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Danish response to the European
Commission’s
call for evidence for an
industrial carbon management strategy
–
carbon capture, utilisation and
storage deployment
Denmark welcomes the opportunity to comment on the European
Commission’s
Public Consultation on industrial carbon management
–
carbon capture, utilisation
and storage deployment (CCUS).
Along with a deep, rapid, and sustained effort to reduce greenhouse gas emissions,
a substantial amount of removals of CO
2
from the atmosphere will be needed, as the
EU approaches
climate neutrality. It is important that the EU’s climate efforts
are
designed to incentivize this in the most cost-effective way.
Denmark sees carbon capture and storage (CCS) as a central tool in achieving CO
2
reductions in the hard to abate sectors, as well as achieving negative emissions.
Denmark also considers carbon capture and utilisation (CCU) as an essential
technology to produce enough green fuels and chemicals for the transition of hard to
abate sectors such as aviation, shipping and industry.
Denmark applauds the initiative on a communication on an EU strategy for the
creation of a single market for CO
2
transport, utilisation and storage services by 2030.
This paper highlights some of the most urgent thematic areas, which we believe
should be addressed in an upcoming strategy.
1. Scope of the initiative and definitions
The call for evidence uses different terms for the initiative. However, it is our
understanding that the strategy will focus on technological carbon capture, transport,
utilisation and geological storage with a focus on capture in the hard-to-abate
sectors.
Given the importance that biogenic carbon capture and storage (BECCS), direct air
capture carbon capture and storage (DACCS), pyrogenic carbon capture and storage
(PyCCS) and biogenic CO₂ for climate-neutral fuels and plastics can play in efforts
to reach net zero by 2050 at the latest, Denmark emphasizes the need to include
these sources of CO
2
in any analysis leading to a strategy.
To the extent that the communication will address wider issues of carbon
management, it may be useful to clearly define the understanding of the technical
terms used in the resulting communication e.g. what is
included in the term “CCU”
2. Focus on establishing full value chains
The CCUS value chains will consist of different operators from capture, transport,
utilisation and storage. This calls for an analysis, which recognizes
interdependencies between the different parts of the chain and considers how to best
address regulatory and economic barriers for a European single market for CCUS.
Date
30 August 2023
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Key elements of such an analysis could include:
•
Possible means to encourage investments in the different parts of the value
chain.
•
Cost assessments of different value chains in terms of resulting negative
emissions.
•
Liabilities in the different parts of the value chain.
•
The financial potential of voluntary carbon credits in a mature CCS market.
•
Needs for financial support to full value chain projects in existing EU funding
schemes.
•
Identification of required framework developing a common European market for
CO
2
.
More generally, Denmark finds it important that the need for a full CCUS value chain
approach is recognised across the current and future EU regulatory framework.
Current ETS prices are not sufficient to drive the not-yet established CCS value
chain. This means that first movers in any part of the value chain will need to take
disproportionate risks. However, rising carbon prices including ETS, lower
technology costs and the development of a mature CCS market, are likely to lead to
a balance between ETS cost savings and the costs of CCS-gained CO
2
reductions.
At least for emitters whose emissions are all part of the ETS system.
However, first movers in any part of the value chains could be reluctant to implement
their part for the chain unless other parts are in place.
The analysis and communication could therefore consider possible models on how
best to encourage private investments in all parts of the CCUS value chain.
3. Cross-border infrastructure
Denmark has a huge geological storage potential, extending beyond our own needs.
Given this, Denmark has the potential and the political ambition to become a hub for
storage of CO
2
from European emitters beyond our national borders.
Several storage projects are under development in the North Sea Area, including on
Danish territory. Current estimates of known projects at different stages of
development, suggest a future potential annual injection capacity of up to more than
50Mt CO
2
by 2032 in Denmark. The success of these projects depends on a variety
of factors such as the geology, development of transport infrastructure and the
economic feasibility for the different parts of the value chain.
A prerequisite for making use of Denmark’s geological storage
potential and
fulfillment of national ambitions to serve as a hub for storage of European CO
2
is to
enable an efficient cross-border transport infrastructure, which could also help
ensuring sufficient amount of carbon for green fuels and plastics.
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With a view to enable cost efficient and relevant cross border infrastructure the
Commission may want to consider in its work inclusion of e.g.:
•
•
•
•
Analyzing barriers for the development of a common European market for
transport of CO
2
for both utilisation and storage
,
Creating a geographical overview of needs for cross border infrastructure.
Assessing investment needs and costs of a trans-European CO
2
transport
infrastructure by 2030 and by 2050.
Exploring other thematic areas related to enabling relevant cross border
infrastructure.
4. BECCS and DACCS integration in the ETS
The EU climate regulation does not currently provide market-based economic
incentives for technological carbon removal.
In Denmark’s view, the appropriate response
to this challenge is to strengthen and
extend carbon pricing to technological carbon removal in order to make it the primary
instrument for ensuring compliance with and
delivery of the EU’s climate target.
To reach the EU’s objective of climate neutrality,
a substantial amount of CO
2
removal from the atmosphere is needed to counterbalance residual emissions.
However, there are currently no economic incentives in the EU’s climate regulation
for scaling up and delivering negative emissions through technological solutions.
The Commission should prioritize the development of methodologies for BECCS and
DACCS in the certification framework for carbon removals. Moreover, the
Commission should assess a range of policy options for further incentivizing the
development and deployment of technological carbon removal technologies, while at
the same time retaining high ambitions for conventional emission reductions.
This could include integrating negative emissions technologies in the ETS
–
for
example by allocating revenue to installations that generate negative emissions
certified through robust and transparent carbon accounting. This should include a
carbon management framework to ensure that the creation of new allowances is
based on physical carbon removal, to prevent an increase of net emission.
5. UNFCCC
While formats for reporting of negative emissions (BECCS) in national
communication to the UNFCCC are currently being developed for sectors with fossil
and process emission, there is not yet a UN format for reporting of negative
emissions from BioCCS and DACCS.
The analysis and strategy could act as a lever for the EU to ensure that the necessary
methodological guidance and reporting formats for any technological carbon capture
and storage resulting in negative emissions are developed under the UNFCCC.
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