Press conference on Carbon capture and storage

Minister of Petroleum and Energy Tina Bru:

Introduction

It is 100 years this year since the Kvalsund longship was found at Kvalsund in Herøy municipality in Møre og Romsdal. The Kvalsund longship dates back to around the year 690.

Today, we are launching a brand new longship. The Government is now presenting a white paper in which we recommend initiating a Norwegian carbon capture and storage project. A project we have decided to call ‘Longship’.

The Viking longship was state-of-the-art ship technology in its day and the result of innovation and hard work. Our longship is also the result of new technology and cooperation between industry and the public authorities.

It is the biggest ever climate project in Norwegian industry.

Industry and enterprises across Norway, which create jobs and welfare, also emit CO₂ that contributes to climate change. Many people have therefore been concerned with working out how CO₂ can be captured and stored.

The work on carbon capture and storage has been a priority in the climate policies of numerous governments. This Government has worked on realising the ambition of carbon capture, transport and storage in Norway since 2013.

This has involved a lot of hard work. A huge number of hours have been devoted to developing technology, and quality assuring and assessing the costs. Both industry and the authorities have made targeted efforts to this end over many years. It has been important for us to build the project brick by brick and establish a good basis for decisions.

We are now presenting a comprehensive, thoroughly prepared and quality assured decision-making basis to the Storting. We have considered two different enterprises in connection with carbon capture. The Government proposes that the Longship project is initially implemented with Norcem, which produces cement in Brevik, as the first carbon capture project.

The success of Longship is contingent on others using the technology. Carbon capture and storage in Norway will only succeed if other countries and industries follow suit.

A key point is that others must also invest. We are therefore making it a condition that the second enterprise, Fortum Oslo Varme, secures sufficient own funding and EU funding or funding from other sources, before it gets the go-ahead for carbon capture. If it succeeds in doing so, the Government will also grant funding to this project.

Northern Lights, which is a collaboration between Equinor, Shell and Total, has been granted funding to build a carbon transport and storage solution.

I know that the Government has the broad support of the Storting in establishing carbon capture and storage, which is very important. Longship is a major project for Norway, and we hope that it will be an important project in helping to cut global greenhouse gas emissions and secure industrial jobs in the future.

It will be funded over a number of years, initially as investment support, followed by operational support. It is important that it is endorsed by the broadest majority of the Storting, and I look forward to working together with the Storting on the project.

About the project

Longship comprises three parts that together make up the state-funded project: carbon capture, transport and storage.

Norcem will capture carbon from its cement factory in Brevik.

Cement production represents around seven per cent of global CO2 Two thirds of these emissions result from the process of turning limestone into cement. Carbon capture and storage is currently the only method we have to reduce these emissions.

Around 400,000 tonnes of CO2 will be captured each year from flue gas emitted from Norcem. The captured carbon will be converted into liquid form and placed in temporary storage at Grenland port.

It will then be transported from Brevik by ship to a new reception terminal in Øygarden municipality in Vestland From here, the carbon is pumped through a pipeline and injected into a geological formation in the North Sea around 2,600 metres beneath the sea floor for permanent storage.

The transport and storage part of the project has been given the name Northern Lights.

Fortum Oslo Varme

The success of Longship is contingent on more carbon capture and storage projects being initiated in Europe, and more actors contributing to funding the projects.

The Government will also pave the way for Fortum Oslo Varme to become part of Longship.

Emissions from waste management make up around five per cent of global greenhouse gas emissions.

Fortum Oslo Varme will capture CO2 from its waste incineration facility in Oslo. Around 400,000 tonnes of CO2 will be captured each year and transported to Oslo port and on by ship to Northern Lights.

The Government is prepared to provide NOK 3 billion to Fortum Oslo Varme, NOK 2 billion of which will be earmarked for investments and NOK 1 billion for operation. However, the condition to secure other funding must first be met.

Capacity utilisation

Our goal is for Longship to be relevant to others and that we achieve the desired effect through the technology being spread and used by other projects.

Longship will facilitate this through the development of a flexible transport and storage solution with considerable carbon storage capacity.

The plan is for Northern Lights to be developed in two phases. The first phase is part of the Longship project and has an estimated capacity of 1.5 million tonnes of CO2 per year, over an operational period of 25 years. A potential second phase has been planned, with an estimated capacity of 5 million tonnes of CO2 per year.

The emissions that are captured and stored at Norcem will make up less than ten per cent of this figure.

The project will thus have considerable residual capacity for subsequent projects after including the emissions from Fortum Oslo Varme.

We want other projects that are not directly funded by the Norwegian state to utilise this capacity.

We have developed a business model, together with the companies, that gives Northern Lights excellent incentives for selling available capacity. This is a good basis for project growth, and the work is already starting to pay off.

Northern Lights is in contact with many industrial companies across Europe that have emissions they want help to manage. They consider the current realistic potential to be 48 million tonnes of CO2 per year from these companies, which corresponds to the annual emissions from 12.5 million cars.

Costs

Longship represents a major boost for Norway. The project has considerable upsides, but also entails major costs and a high risk for Norway as a whole.

In total, the project is estimated to cost NOK 25.1 billion.

Negotiations have been held with all the companies on the sharing of costs and risk between the state and industry. Industry is prepared to cover much of the costs, which is great. The state will, however, have to cover most of the costs involved in this project.

The state’s total share of the costs in connection with the implementation of Longship will be NOK 16.8 billion. This includes ten years of operation.

Conclusion

I would like to thank everyone who has contributed to the development of the Longship project to date.

Norcem, Fortum Oslo Varme, Equinor, Shell and Total have, along with Gassnova and other state actors, invested considerable efforts over the course of many years. Without the trust the companies have shown in the state and the excellent collaboration we have enjoyed during the development of the project, I would not be able to stand here today with such good news.

Permanent carbon storage from Norwegian carbon capture projects is scheduled to start in 2024. We have also taken steps to enable Northern Lights to store CO2 from other customers and actors.

Northern Lights is already in contact with relevant customers in Europe, and new projects are being planned and developed in the Netherlands, Belgium, the UK, Sweden and Denmark.

Just this Friday, I had a very positive conversation with my Swedish colleague, Anders Ygemann, who confirmed that Sweden is considering storing CO2 emissions from Swedish industry in Norway, and that the Swedish authorities now want to invest in developing a similar project in Sweden.

More paying customers and the spreading of carbon capture and storage technology in Europe are important to the success of Longship.

And on that note, I hand you over to the Minister of Climate and Environment.

Minister of Climate and Environment Sveinung Rotevatn:

The Government is presenting an important white paper today that heralds great opportunities for significant emission cuts and economic development.

According to the UN Intergovernmental Panel on Climate Change and influential expert communities, carbon capture and storage is a prerequisite for reducing global greenhouse gas emissions in line with the Paris Agreement climate targets.

This forms the background for the Government’s work on carbon capture and storage.

Climate change results in irrevocable losses and damage. It constitutes a huge threat to the world’s ability to provide clean water, enough food and safe housing.

Norway has set itself high climate targets. We were recently one of the first countries in the world to step up our climate targets for 2030 under the Paris Agreement.

The Government is now making active efforts to encourage the EU to also step up its target for 2030, by reducing greenhouse gas emissions by 55 per cent. Indeed, the Commission proposed last week that the EU should step up its climate target to 55 per cent. We will follow developments in the EU closely. However, if we are to have any chance of reaching our climate target, we have to develop carbon capture and storage technology more quickly.

Longship is an example of how emissions can be cut, without halting development. Profitable companies that succeed in developing new climate technology are key to cutting emissions and creating jobs.

This project will reduce emissions in Norway. If both the Norcem and Fortum Oslo Varme projects are realised, a total of 800,000 tonnes of CO2 will be captured and stored every year. For the sake of comparison, the emissions from domestic flights in Norway, before the coronavirus pandemic, constituted around 1.3 million tonnes per year.

However a good climate policy should not only reduce emissions in Norway, it should also contribute to developing technology in the rest of the world.

Longship will contribute to developing carbon capture and storage as an effective climate measure. It will demonstrate that carbon capture and storage is safe and feasible, and it will facilitate learning and cost reductions for others and subsequent projects, also internationally.

As such, we hope that the project can and will help to establish an infrastructure that other projects in Europe will benefit from. We hope it encourages the EU to dare to invest more in this technology.

Longship will help ensure that Norway, Europe and the world come closer to reaching their climate targets. Some industries have no other means of significantly reducing greenhouse gas emissions than through carbon capture and storage. One example is the cement industry, which represents around seven per cent of global CO2

Renewable energy has the potential to replace fossil energy in many industrial processes, but this is not an option for some sources of emissions. If we do not succeed in developing carbon capture and storage and start using it globally, much of the emissions will continue and we will have no feasible options or possibility of eliminating them.

I believe that Norway is in a good position to succeed with the green shift, to develop the climate solutions of the future and create new green jobs. We are now building the world’s biggest floating offshore wind park, we are leading the way when it comes to electrifying our vehicle fleet and we are creating the world’s most environmentally-friendly ships.

Eighty zero or low-emission ferries are under construction, and a third of Norway’s car ferries will be powered by electricity by 2022.

Longship demonstrates that the climate solutions of the future also in this area can be created here in Norway, and that we lead the field in climate policy.

Minister of Children and Families Kjell Ingolf Ropstad:

Long history

As noted by the Minister of Oil and Energy, there has been broad political support for carbon capture and storage for a long time. Several governments have contributed to the work in this connection over the course of many years.

The Government has long endeavoured to support and contribute to carbon capture and storage projects, in e.g. the Netherlands and in the UK, but none of these projects have yet been realised.

The fact that Longship is now set to become a reality is the result of a staged and thorough approach. It has taken time, but it has been absolutely necessary, and it has been worth it.

I therefore conclude that today is a red-letter day for the work on carbon capture and storage.

Jobs

Not enough of our trade and industry policy has led to cuts in greenhouse gas emissions, and not enough of our climate policy has led to economic development. We want to change that.

With the knowledge at our disposal today, it will be very difficult to achieve the climate targets and maintain the current level of industry in the long term without utilising carbon capture and storage.

Although Longship is first and foremost a climate project whose goal is to reduce CO2 emissions, the development and operation of carbon capture and storage facilities will pave the way for jobs and economic development in Norway.

Longship is expected to employ around 1,500–3,000 full-time equivalents in the construction phase, and around 170 jobs during the operational phase.

However, the jobs during the construction phase of the project are not the most important aspect here, but rather the opportunities the project provides for future zero-emission industrial development in Norway.

Being able to demonstrate carbon capture technology is by all means important, but the fact that we can now provide carbon transport and storage for research, new industry and new projects can also create new profitable industries in the future.

Carbon capture and storage can become an important instrument for transitioning Norwegian industry and Norwegian jobs to a low-emission society. The Government is keen to contribute to this transition, which we have demonstrated through our support for the technology development at Hydro Karmøy and the offshore wind project Hywind Tampen.

Norway has developed a knowledge community and a supplier industry with a high level of expertise in carbon capture, transport and storage over the course of more than 25 years.

These jobs are distributed across the country, because the processing industry and other industry that generates CO2 emissions are dotted all over Norway.

Carbon capture and storage is essential to achieve the global targets set out in the Paris Agreement. The Norwegian supplier industry will thus be in a strong position to win contracts and take market shares globally.

This effect will be enhanced by the fact that we have a head start.

Solidarity

For me, this project is about international solidarity. There is much talk of how the transition to a low-emission society must be fair. This means that we must succeed in the necessary transition to a low-emission society without leaving important groups in society behind.

Norway is well equipped to handle the transition to a low-emission society and we have good welfare schemes in place that cover everyone. This is not the case for every country.

It is therefore important to show that we can do both: We can reduce greenhouse gas emissions and, at the same, time, ensure that jobs remain safe. This is particularly important for industries that do not currently have realistic alternatives to carbon capture and storage if they are to survive in a low-emission society.

I am therefore pleased that this project not only enables us to do our bit to reduce global emissions, but that it also provides a helping hand to those who fear their jobs are threatened by the much-needed climate measures.

Prime Minister Erna Solberg:

European cooperation

The realisation of this project marks Norway’s major contribution to international efforts to develop carbon capture and storage as a climate solution and make it available to the international community. This can hardly be said to be the case today.

Our decision to implement this project can be seen as a consequence of the Government’s ambitious targets for greenhouse gas emission cuts.

As Sveinung said, we were, in February, one of the first countries in the world to step up our climate targets under the Paris Agreement. We are also encouraging the EU, together with Norway, to commit to a 55 per cent reduction by 2030. Indeed, the EU Commission proposed last Wednesday that the EU commit to a more ambitious climate target under the Paris Agreement.

More ambitious climate targets also increase the need for carbon capture and storage, and we need solutions more quickly than we had initially envisaged. However, the fact that we have a head start also increases the level of risk in the project.

Norway is now taking the lead by demonstrating a whole value chain and investing in carbon storage infrastructure that can be used by industrial companies in Norway and other countries in Europe. This can provide a foundation for more carbon capture facilities later on.

A head start is not an advantage however, unless we bring others on board. It is therefore vital that projects and the authorities in other countries take advantage of the opportunities Longship presents, and that as many as possible learn from us.

Longship underlines the need for and value of international cooperation on developing technology and reducing emissions.

If both Norcem and Fortum Oslo Varme are realised, they will each capture around 400,000 tonnes of CO2 per year. Northern Lights considers it likely that the storage facility we are now building will have the capacity to store up to 100 million tonnes of CO2. Longship will thus only fill around 40 per cent of the storage capacity we have identified to date over a period of 25 years.

The Norwegian Petroleum Directorate’s CO2 Storage Atlas assumes that the Norwegian continental shelf has the capacity to effectively and safely store 1.25 billion tonnes of CO2. Its theoretical storage capacity is in the region of 80 billion tonnes of CO2. That is equivalent to 1,500 years of Norwegian emissions.

This goes some way in explaining why we are making it a condition that others contribute by making significant funding available to Fortum Oslo Varme.

This project is a major boost for Norway in a period where there is less and less leeway in our budgets. The costs involved are great and the state is taking a bigger risk than usual.

However, this project is a priority, despite the considerable risk, because we believe it is the right investment in a climate solution for the future.

The International Energy Agency has calculated that it will cost twice as much to achieve the climate targets if we do not utilise carbon capture and storage.

Now, we expect and hope that others in Europe will follow suit, and that the storage facility’s capacity will be utilised by others that are willing to put money on the table.

The longship we are launching today will help to bind Europe together, and make it possible for the continent to achieve its climate targets, while also safeguarding value creation and jobs.

Industrial opportunities ahead

Longship is also an important industrial project for Norway.

The project builds on the expertise and industry developed by the oil and gas sector over the course of more than 50 years and more than 25 years of carbon capture and storage.

The project facilitates the further development and transition of Norwegian industry and the supplier industry.

Norway is taking the lead with Longship by demonstrating a whole value chain. This project will also improve the possibilities for developing whole value chains for hydrogen in Norway.

Hydrogen represents exciting possibilities for Norway, as both an energy nation and technology nation. Longship will increase the likelihood of hydrogen also becoming an important industry in our country.

Hydrogen must be produced with no or very low emissions if it is to become a zero or low emission source of energy. This can be achieved by means of clean power or from natural gas with carbon capture and storage.

Hydrogen also plays a key role in the EU’s Green Deal. This means the EU will invest heavily in hydrogen when it sets out to create new jobs and growth after the pandemic. This also represents opportunities for Norway.

Conclusion/Global action for the climate, which also gives us a competitive edge

The climate and environment issues faced by Norway and the international community pose major challenges. We must implement multiple measures to mitigate these problems.

Carbon capture and storage is one of the areas where Norway is well qualified to contribute. I am therefore delighted that Norway’s investment in carbon capture and storage has such broad political support.

Norwegian trade and industry is also well equipped to grasp the opportunities that arise from the project. The factors that will determine whether or not the project succeeds are that:

We show that capture and storage work in the whole value chain

Other countries and companies start utilising the technology, and more carbon capture facilities are built, so that the technology matures and is utilised

We create jobs and develop technology that boosts Norwegian value creation

We are about to embark on a long journey. This is a project that entails considerable risk. The launch of Longship will enable us to help reduce emissions, without halting development.