Consultation response to the Act on Pipeline Transport of CO2

Green Transition Denmark would like to thank you for the opportunity to comment on the bill.

We generally believe that it is far too early to start planning a national infrastructure for piped transport of CO2 in Denmark and to tie up financial and administrative resources in transporting large quantities of CO2 through pipes across the country. Green Transition Denmark has a number of reasons for recommending that the bill not be accepted.

It is stated in the comments to the bill that there is already a developed CCS market in Denmark, but it is far too premature to conclude this. There are a number of demonstration and pilot projects, business initiatives, but there is no real market or integrated value chain for CO2 capture, transport and storage. It may take many years before this has a realistic chance of becoming a reality.

It is claimed that the bill does not have direct climate or environmental consequences, but the installation of a large infrastructure with piping of CO2 will have a negative climate effect during construction, it will seize significant natural areas, and a negative effect on climate and environment during construction. There is an additional energy and material consumption associated with the installation of a new CO2 infrastructure, which should be taken into account in the assessment. Or as Rambøll has concluded in a memo for the Danish Energy Agency: The plan for the tender with geological storage of greenhouse gas emissions will "in itself involve energy consumption and CO2 emissions. Materials, construction work, transport and pumps in operation and later decommissioning of the facilities will directly and indirectly lead to the release of greenhouse gas emissions.”

It is also to be expected that the bill may place greater demands on the administration's time and resources. This is also recognized in the comments to the bill, where it is stated that the Ministry of Climate, Energy and Supply's costs will be increased by the proposed regulatory framework for Danish CO2 infrastructure. Carrying out accompanying supervision of the expanded CO2 infrastructure will also lead to increased costs, as the supervisory competence is proposed to be assigned to the Danish Energy Agency. These extra legal costs should ideally be paid by the operators and consortia that want to establish a CO2 infrastructure, so that they have to cover the full costs of the establishment, and therefore get extra incentives to make cost-effective solutions. But there is an additional risk in this process: that the authorities' limited administrative resources will be used to a greater extent to process new projects about CO2 infrastructure, where the administrative resources could be used much more effectively to ensure faster case processing for the construction of solar installations, wind turbines, industrial heat pumps and a necessary expansion of Denmark's dilapidated electricity grid. It is far more important to accelerate the transition to a renewable energy system and to electrify as much of society as possible so that the electrons can be transported faster than to use the limited resources to promote a future molecular transport that may not be cost-effective or profitable at all market conditions, let alone helpful in relation to reaching Denmark's climate goals.

In the bill, it is proposed that expropriations can be made to promote the laying of pipelines over land, and this can also seize significant administrative and financial resources that could be better used for other and more climate-efficient purposes. It must e.g. it is expected that there may also be local protests against more CO2 infrastructure, transport and storage, as has already been seen in Havnsø municipality, where local citizens feel insecure that there may be leakage from underground CO2 storages.

We note that the bill guarantees that EIA studies will be carried out in relation to establishment of pipelines, and that is good. But stricter safety measures should also be ensured during operation and when transporting CO2 by pipe over land. Piping in urban areas should be avoided as far as possible. There have been a few cases of leaks from CO2 pipelines abroad, and in high concentrations CO2 is dangerous for citizens and the environment in the local area, and it can lead to extra emissions of CO2 into the atmosphere. Therefore, it is important that the necessary resources are also set aside to supervise operators of the pipelines, and that the operators are given the duty to immediately warn local citizens and authorities in the event of leaks on pipelines.

In the bill § 29, subsection 1, 1st point it is proposed that, in decisions pursuant to § 28, representatives in the Energy Complaints Board, appointed on the recommendation of the Danish Industry and the Council of Agriculture, be replaced by 1 member with special expertise in the establishment and operation of gas-transporting pipelines and 1 member with special expertise in the environment.

Green Transition Denmark agrees that it is a good idea. It is important that the correct expertise is taken into consideration when handling appeals against decisions regarding pipeline installations for the transport of CO2.

General comments on the bill:

Green Transition Denmark is generally skeptical of the idea of ​​already opening up the establishment of a national infrastructure for CO2 transport via pipes. This can lead to a carbon lock-in, which i.a. can make it extra attractive for cogeneration plants, waste incineration plants, cement factories and other industrial companies to invest in CO2 capture plants, even where there are more climate-efficient green technologies that could have a much greater climate effect and contribute to a faster reduction of air pollution.

The previous international experiences with CO2 capture do not give reason to believe that the large scale-up will take place in the next 10 years, which could make it economically attractive or climate-wise meaningful to capture CO2 at point sources and then transport the CO2 over long distances and store it underground.

There are many different technological forms of CO2 capture under development around the world, but CO2 capture in biomass plants, waste incineration plants, cement plants and the energy-intensive industry is still very immature and has been difficult to scale up in a cost-effective way. The international CCS experience has so far been rather disappointing in relation to CO2 capture in industry and at power plants.

We are aware that the International Energy Agency and other players such as The Global CCS Institute is still in favor of CO2 capture, but we note at the same time that the head of the IEA, Fatih Birol, has started to tone down the expectations for how much CCS will come in the coming years. At the launch of the World Energy Outlook in October, he thus said that "CCS has been the story of a great disappointment."

Green Transition Denmark recommends that the state postpones the planned tenders for CO2 capture, transport and storage in 2024 and 2025. It is our assessment that it would be much better to take a break to think. See also our detailed note on the same subject.

The state runs a great risk for taxpayers' money if large public funds are tied up in developing an integrated value chain with state-supported CO2 capture facilities, pipeline transport and storage. And at the same time, you run the risk of tying up considerable administrative resources in realizing this project, which could have been used on other green technologies with a far greater and faster climate effect.

We note that the present bill on pipeline transport of CO2 does not provide direct access to state aid for the pipeline, as it is envisaged that this will be left to the operators, who themselves must obtain financing for the construction of the infrastructure. If a CO2 infrastructure is created, the full bill should be covered by the polluters, so that they have incentives to also reduce their pollution or to consider cost-effective alternatives to create CO2 capture, transport and storage. Any form of government support for CO2 capture, transport and storage should be avoided. It would be far better to introduce a higher CO2 tax that could give market players stronger incentives to promote effective and cost-conscious climate solutions.

The current bill should be seen in the context of the broad political settlement that was concluded on 20 September 2023, where the parties to the agreement agreed to hold two tender rounds in 2024 and 2025 for CO2 capture, transport and storage. These tenders can lead to the state anyway ending up giving direct or indirect support to consortia who want the state to cover some of the risk/bill by establishing pipelines to transport CO2. This should be avoided.

If private companies or consortia want to establish pipelines between CO2 capture facilities and e.g. CCUS plant, the Green Transition Denmark believes that it is important that the state does not provide money for this, either directly or indirectly. The total costs for construction, operation, maintenance and extra safety measures should be borne solely by the market and users. It should not be the state, because it should, in accordance with the Climate Act, choose the most cost-effective measures to ensure a reduction of Denmark's emission of greenhouse gases by 70 per cent. towards 2030. CO2 capture, transport and storage is one of the most expensive measures that can be chosen, and it is not cost-effective compared to the other green technological solutions available.

Furthermore, it can be stated that there is still some uncertainty as to whether CO2 capture at point sources will be effective. It is far from certain that you will be able to catch 3,2 million. tonnes in 2030, which a wide circle of the parties in the Danish Parliament have set as a target. There are real technical challenges that should not be ignored. The Danish Energy Agency calculates in their technology catalog that the capture efficiency is between 85-99 per cent. (on large biomass plants) or 90-99 per cent. at other facilities. In reality, international experience so far shows that the effectiveness is much lower. Only under completely optimal conditions and for very short periods can CO2 capture systems at point sources manage to remove between 75-90 per cent. of the CO2. But their downtime is far higher than what the Danish Energy Agency expects in their technology catalogue, and the real efficiency in capture plants around the world is in reality between 20-80 per cent. per year. You have to factor in operational disruptions and significant downtime when the capture plant is out of operation. Let us assume that in the course of a few years it succeeds in eliminating some of the childhood diseases, but this will hardly bring the average efficiency above 65-75 per cent.

In theory, transporting CO2 via pipes is cheaper than transporting it with trucks and ships, but the pipeline can only rest on its own if there is a larger scale in the overall CO2 capture in Denmark. And it's still a big if. No one yet knows whether Ørsted's state-supported capture facilities at the plants in Avedøre and Asnæs can capture the promised amount of CO2, no one knows whether Aalborg Portland's pilot project can ever be scaled up, and even if there are district heating plants and waste incinerators that hope to one day be able to capture CO2 for end of the chimney, it is highly uncertain whether there will be a market economic basis for betting on it in the long term. If the scaling does not take place, there is a risk that a great deal of time, energy and financial resources will be wasted on building a new CO2 infrastructure that will not be profitable under market conditions, and a lot of time and money will also be wasted in management along the way and case processing, which could be much better used to promote faster case processing and installation of renewable energy projects, heat pumps and energy-efficient technologies.

The plans to establish an integrated value chain for CO2 capture, transport and storage rest on the notion that it will be one among several important climate solutions. But there is reason to stop and take a more thorough pause for thought before committing significant financial and administrative resources to developing this carbon value chain. It can also be deeply problematic in relation to the climate to scale up too much and too quickly with CCS and the associated infrastructure.

It is particularly problematic if a future pipeline makes it cheaper for wood-fired CHP plants and district heating plants to invest in CO2 capture. This is absolutely not recommended, as it takes up to 30 years before CO2 capture on a combined heat and power plant with Danish wood can become net positive. See RGO's note on this for the specific calculation.

CO2 capture plants have a very large energy consumption, and in energy systems like the Danish one (where fossil fuels still make up 53 per cent of the gross energy consumption) the extra energy consumption will lead to increased CO2 emissions. The international climate panel, IPCC, estimates based on the research literature that CO2 capture plants cost 13-44 per cent. extra on the energy bill of the plants that install it. However, CO2 capture at biomass power plants consumes even more energy because it requires 25-55 per cent. extra energy than if the power plant did not capture CO2.

If this extra energy consumption is covered by fossil fuels or extra biomass combustion, more CO2 and methane gas are emitted in connection with the extraction, transport and use of these fuels. When you factor in these extra emissions, and add the energy costs associated with transporting, disposing and storing the captured CO2, the real efficiency of CO2 capture in some cases drops to between 0 and 25 percent. The extra bill can add up to several hundred kroner per tonnes of CO2. It is an energy bill that will ultimately end up with the citizens, and since the bill for electricity and heating relatively takes up the most in the household for the lowest incomes, it can also have a social impact.

Green Transition Denmark will not deny that CO2 capture may play a role in climate policy during the 2030-40s, but the state must not promote such a technology that has little prospects for solving climate problems in the short term and medium term.

At the same time, we call for a more thorough calculation of the broader climate and environmental costs associated with establishing an overall CO2 value chain from CO2 capture at industrial point sources, transport via pipes to CO2 storage on land and to of the sea These calculations should include financial opportunity costs in the form of alternative investment opportunities in competing climate solutions, such as additional installation of solar cell systems, wind turbines, heat pumps, electrification of heat supply, industry and transport, as well as energy-saving technologies that can provide a much greater, faster and safer climate effect per krone invested.

Green Transition Denmark believes that it is important to avoid an excessively large carbon lock-in for expensive infrastructure, which will trigger extra large climate bills. The large investment in the CO2 capture facilities and a rapid establishment of a new CO2 infrastructure can, in the worst case, lead to the preservation of fossil-based production and infrastructure and/or lead to the construction of new infrastructure to dispose of the captured CO2, which must be transported by trucks , ships and pipes to be stored underground or to be used in various CCUS subsidiary industries. The long pipelines and the permanent need for transport during disposal will impose additional costs on society, it will seize additional natural areas, and in the construction phase it may increase Denmark's energy and resource consumption instead of reducing it.

If the politicians still choose – despite all the objections mentioned above – to focus on the capture, transport and storage of CO2 on a larger scale, it is better if it happens locally in coastal areas, where the CO2 can be transported by ship and the captured CO2 can possibly be form part of a circuit where it is used for production at new Power-to-X factories, where e.g. e-kerosene for aviation. If appropriate, one must think business-politically about the development of special CO2 clusters, which, for example, trying in Fredericia. But a larger fixed CO2 infrastructure with pipelines throughout the country can end up being counterproductive, leading to extra CO2 emissions in the construction phase and leading to excessive investments in CO2 capture facilities in industry, power plants and incineration plants that should otherwise be invested in a green and energy-efficient conversion of all processes.

Therefore, the Green Transition Denmark recommends that the current bill be put on hold until 2030, so that there is time to make a thorough evaluation of the experiences from Ørsted's CCS plant and to assess whether the international experiences with CCS and the establishment of a larger infrastructure is an economically sustainable and cost-effective path compared to investing in and scaling up other green technologies.