Funding for Longship and Northern Lights approved

Yesterday, the Storting (Norwegian Parliament) adopted the budget for the Ministry of Petroleum and Energy for 2021, in line with what was proposed from the Government.

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Olje- og energiminister Tina Bru Equinors konsernsjef Anders Opedal i selskapets kontorer på Fornebu 15. desember 2020. Credit: Ella Ege Bye/OED

This includes funding for Longship, and the Ministry is given power of attorney to enter into agreements with Northern Lights, as proposed. The Storting also provided a few amendments, emphasising the need for cost control, risk management, and benefit realisation.

The Government has laid out its plans for Longship in a white paper, which will be debated by the Storting early in 2021. The formal approval of the plan for development/installation and operation (PDO/PIO) will take place as soon as the Storting has adopted the white paper.

Today, Minister of Petroleum and Energy Tina Bru held a press conference on the Northern Lights project with CEOs of Equinor, Shell and Total.

Equinor's press release: Go-ahead for the Northern Lights project.

— Carbon capture and storage (CCS) is important to achieve the goals of the Paris Agreement. Longship is the largest climate project in the Norwegian industry and will contribute substantially to the development of CCS as an efficient mitigation measure. Working together with the industry, the step-by-step approach has confirmed that the project is feasible. I want to thank the Northern Lights partners Equinor, Shell and Total and I am looking forward to our continued cooperation, says Minister of Petroleum and Energy, Mrs. Tina Bru.

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Olje- og energiminister Tina Bru med konsernsjefene Anders Opedal (Equinor), Ben van Beurden (Shell) og Patrick Pouyanné i Total. Credit: Ella Ege Bye/OED

Longship is a major step in the Norwegian commitment to our common ambitions to combat climate change. It is also an important achievement for Norwegian industry.

A large number of CCS projects are necessary to reach our climate targets at the lowest possible cost. We have a solid foundation in Norway for contributing to further development of CCS technology and solutions. Our long experience with safe storage of CO2 at the Snøhvit and Sleipner fields are prominent examples. They are good illustrations of utilising technology from the petroleum industry to fight climate change.

The comprehensive decision basis we have presented to the Storting is a result of close collaboration with the industry. Gassnova has also been an important contributor. The industry will own and operate the projects. The state will provide sufficient support to get the job done.

— Together with the industry partners we have negotiated support agreements that provide the right mechanisms for a successful project. The agreements stimulate cost discipline, efficient utilisation, and further development of the infrastructure. I am encouraged by the fact that Northern Lights experiences huge interest in storing CO2, Minister Bru says.


Background
The national budget for 2021 was adopted 14 December 2020. The Storting approved to allocate funding for 2021 to the implementation of Longship and to award state aid in accordance with the negotiated agreements concerning the carbon capture projects of Norcem and subsequently Fortum Oslo Varme (FOV), on the condition that FOV obtains sufficient own funding and funding from the EU or other sources. State aid awarded to FOV is limited to a maximum of NOK 2 billion in investments and NOK 1 billion in operating expenses. FOV must clarify whether it wishes to implement the project on these conditions within three months of the funding decision from the second round of calls issued by the EU’s Innovation Fund, but no later than 31 December 2024.

The overall investments for the project are estimated to be NOK 17.1 billion. The pertaining operating costs for ten years of operation are estimated to be NOK 8 billion. The total cost estimate is thereby NOK 25.1 billion. Longship receives state aid in accordance with negotiated agreements. The state’s share of the costs is estimated to be NOK 16.8 billion. This means that the state covers around two thirds of the costs of the project.

Longship paves the way for clean hydrogen
Longship facilitates the production of blue hydrogen from natural gas with carbon capture and storage. This results in hydrogen with very low emissions and a major potential for value creation in Norway and for greenhouse gas emission cuts in Europe. Hydrogen also plays a key role in the EU’s Green Deal.

The national budget includes a brief description of the Longship project. The complete basis for the state's decision to invest in Longship is presented in the white paper on Longship: Meld. St. 33 (2019–2020) Langskip – fangst og lagring av CO2. An English translation of the white paper is now available here: link.

The white paper on Longship was originally scheduled to be heard by the Storting on December 10. Due to canges in the Storting's program it will now take place in early 2021.

The formal approval of the plan for development/installation and operation (PDO/PIO) will take place as soon as the Storting has adopted the white paper on Longship.

White paper: Longship - Carbon capture and storage.