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Denmark’s Embrace of Carbon Capture and Storage

Johan Weihe, partner at Bech-Bruun, analyses the current state and future development of carbon capture and storage (CCS) in Denmark.

Published on 13 November 2023

In 2018, the Intergovernmental Panel on Climate Change (IPCC) concluded that CCS plays an important role in achieving global climate goals. Since then, the Danish government has adopted a renewed focus on CCS, and there is now political consensus that CCS is a crucial tool to achieve CO₂ reductions, especially in hard-to-abate sectors. CCS is also seen as a tool to achieve negative emissions by capturing biogenic emissions.

Aiming to be a global frontrunner in CCS, Denmark has recently implemented various strategies and regulations promoting CCS, allocating significant funds for its deployment. This development is driven by Denmark’s ambitious climate targets. According to the legally binding targets of the 2020 Danish Climate Act, by 2030 CO₂ emissions are to be reduced by 70% (from 1990 levels) and net zero reached by 2050. Last year, the Danish government went further, proposing to reach net zero by 2045 and to reduce CO₂ emissions by 110% come 2050.

The CCS industry is growing in Denmark, and in a few years, we expect to see full-scale CCS value chains in operation. In this article, we will give an overview of the current state and future development of CCS in Denmark.

Cross-Border Transportation of CO₂ for Storage in Denmark

Some countries have greater capabilities for CO₂ storage than others. According to the Geological Survey of Denmark and Greenland (GEUS), Denmark’s subsoil has the potential to store up to 22 gigatonnes of CO₂, equating to 500-1000 years of total Danish emissions at current levels.

Denmark has ambitions to become a European hub for CO₂ storage, with its subsoil able to accommodate CO₂ captured both domestically and abroad. In 2022, Denmark, Belgium and Flanders signed an agreement on cross-border transportation of CO₂ with the purpose of permanent geological storage. In October 2023, Denmark and the Netherlands signed a similar agreement.

By the end of 2024, the Danish government is expected to present a proposal regarding the framework for cross-border infrastructure and the interconnection of regional transport networks for the transportation of CO₂. According to the government, the proposal will be based on the European Commission’s proposal for an Industrial Carbon Management Strategy, which is expected in early 2024.

The government has further announced that a new bill on the transportation of CO₂ will be presented in 2024. This legislation aims to establish a clear and uniform framework for pipeline transportation of CO₂, including third-party access to CO₂ pipelines.

CO₂ Storage Sites

Both offshore and onshore storage of CO₂ is viable, given the consistent composition of Denmark’s underground reservoirs.

At present, full-scale CO₂ storage is confined to a designated area of the Danish North Sea, previously earmarked for oil and gas exploration. Licenses for full-scale CO₂ exploration and storage in the Danish North Sea are awarded based on annual tenders, with the first tender held in 2022.

Licensing Regime for CO₂ Storage

The licensing regime for CO₂ storage typically mirrors the approach used for oil and gas licenses. An exploration license is generally granted for a period of six years with the option of extension. If the work programme is completed satisfactorily, the licence holder holds a preferential right to be granted a licence for conducting storage activities for up to 30 years.

In the first tender round for full-scale CO₂ storage licences, three licenses were granted. Two of the licenses were granted to TotalEnergies and one license was granted to a consortium consisting of INEOS and Wintershall Dea.

The Danish state has an ownership share of 20% in all Danish CO₂ storage licenses. The state participation is exercised by the governmental entity Nordsøfonden.

The second tender round, scheduled for 15 August 2023, was deferred pending a political decision on the state’s ownership share in future storage licenses. According to a political agreement reached in September 2023, the state ownership share in future storage licenses shall also be 20%. Further, in future licensing rounds, licensees will be required to make a payment to the state for an issued storage license. This payment is to cover the state’s costs associated with the qualification of the specific storage site.

"Substantial funds are allocated for CCS development in Denmark".

There is a separate license scheme for CO₂ storage of less than 100 kt for the purpose of research, development or testing of new products and processes. In December 2022, INEOS and Wintershall Dea were granted permission to inject and store up to 15,000 tonnes of CO₂ in the former Nini West oil field over a four-month period in connection with the Greensand Pilot Injection Project.

Public Funding

Substantial funds are allocated to support the development of CCS in Denmark.

In May 2023, Ørsted won the first tender for a subsidy to establish the first full-scale CCS project in Denmark. Ørsted was awarded a contract for a subsidy of approximately DKK8 billion. The project will capture and store 430,000 tonnes of CO₂ annually from 2026.

In August 2023, a tender procedure for negative emissions opened (the NECCS tender). In the NECSS tender, one or more contracts for subsidies can be awarded to operators engaged in the capture, transportation and permanent geological storage of biogenic or atmospheric CO₂. The bidding window closes on 1 December 2023.

Future CCS funding opportunities are on the horizon, with tenders scheduled for June 2024 and June 2025. These tenders, valued at DKK10.5 billion and DKK16.3 billion respectively, extend over a 15-year period. The subsidy contracts are open to a diverse range of participants, from individual stakeholders to consortia or third-party entities overseeing the entire value chain. CCS-related technologies can apply for support under the Energy Technology Development and Demonstration Programme (EUDP).

CO₂ Storage Projects Under Development

Two offshore CO₂ storage projects are under development in depleted oil and gas fields in the Danish North Sea: Project Greensand (INEOS consortium) and Project Bifrost (TotalEnergies consortium).

Gas Storage Denmark (GSD), a publicly owned company, is carrying out a pilot project for onshore CO₂ storage at its underground facilities in Stenlille. According to GSD’s projections, this facility is designed to accommodate at least 10 million tonnes of CO₂, and is expected to be in commercial operation by the end of 2025.

Ørsted’s CCS project, which won the first CCS subsidy tender in Denmark, will not involve CO₂ storage in Danish territory as the captured CO₂ will be transported to Norway for permanent storage.


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