Photo: Used for illustrative purposes only. Source: Magseis Fairfield

Danish govt to hold co-ownership in future CO2 storage licenses under new political deal

The Danish government has signed a new political agreement with eight parties which implies that it will have a 20% co-ownership in future carbon storage licenses in the North Sea.

Danish parties Venstre, Socialistisk Folkeparti, Radikale Venstre, Enhedslisten, Det Konservative Folkeparti, Dansk Folkeparti, Liberal Alliance and Alternativet agreed that the government must have a co-ownership of the CO2 storage permits via the North Sea Fund. 

The parties also agreed that CO2 storage must be taxed in accordance with the general tax rules. 

According to the Danish government, with the co-ownership, Denmark removes part of the risk from the private companies, which should help start a new business sector. 

At the same time, the government gets a share of the profits if carbon storage becomes a good business. 

After the first tender for storage permits in the North Sea in 2023, the signatories will meet again to evaluate the government’s participation in the next tender.

“For decades, Denmark has benefited from extracting oil and gas from the North Sea, but now we have agreed on the framework for how we can benefit in the long run from pumping CO2 into the same subsoil. The oil adventure can turn into a climate adventure,” Danish Minister of Climate Dan Jørgensen said.

“CO2 needs to be captured and stored to keep the temperature rise down, and we expect demand for CO2 storage throughout Northern Europe. This agreement can both strengthen a new green industry and in the long run Denmark’s economy.” 

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Following the Danish Climate Agreement for Industry and Energy from 22 June 2020, a broad majority of the parliamentary parties have decided that capture and storage of CO2 must be possible in Denmark and this is seen as an important part of fulfilling climate policy goals. 

Denmark’s government approved funding totaling about $41 million for two CCS projects at the end of last year, which will use the existing oil and gas infrastructure in the North Sea, with a goal of supporting the country’s wider CO2 emission reduction targets for 2030 and beyond.

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