First published on https://illuminem.com/energyvoices/1e5e9828-a0c2-4215-8f7f-86e68b1d1488 Sep 28 2021.
New Swedish government support for BECCS can have a large effect on carbon markets for permanent storage.
Earlier this month the Swedish government announced an annual 400 million SEK (46m USD) state procurement scheme for bioenergy carbon capture and storage (BECCS). This will be done by using reverse auctions where the company with the lowest price per ton removed wins the bid. The sum would be enough to remove 200 000 to 400 000 tons of CO2 per year, paid for by the Swedish state.
Update: After this article was published the opposition parties in Sweden won approval for their budget proposal in parliament. That included an increase in CDR procurement to 36,3 billion SEK for 2026–2046 = 1815 million SEK (192 million USD) per year. Contracts will be entered in 2022 for delivery from 2026.
Even if the support has been criticized for being too small it will likely help get the first BECCS plants in Sweden off the ground. The new projects will likely put hundreds of thousands of tons of CO2 removal on the carbon marketplace after 2026, since the government will only be partly funding the removal facilities.
There are also plans for BECCS in many other places such as California and not the least Drax plans in the UK for a mega facility that could capture up to 8 million tons of CO2 by 2030. However, Drax has drawn criticism for its large imports of biomass, and its BECCS plant would be a high stake mega-project. Today there is only one large-scale BECCS plant operational in the world, Decatur, Illinois since 2017, and it is not selling removal credits to the market, nor claiming it delivers negative emissions.
The second half of this decade is likely to see both large-scale BECCS and DACCS plants coming online. Carbon engineering and its partner 1pointfive is well underway with a one million tons per year DACCS project in Texas and have plans for a similar one in Europe.
This will be big news for a removal market that today only consists of a few ten-thousand tons of permanent storage, and the question is how it will be affected. Will demand for relatively expensive permanent removals scale to millions of tonnes with the increasing supply, or will the projects have to rely on government funding and regulation to force companies to procure removals?
My guess is that the voluntary market for permanent removals will swallow most, or all of the increasing supply. Today the market is severely supply-constrained and demand is growing very fast. But since BECCS is currently cheaper, it could make it harder for DACCS to find buyers.
BECCS in Sweden
Sweden is arguably one of the places in the world best suited for deploying BECCS, with the documented highest potential in Europe. 50 million tonnes of CO2 from biogenic point sources are already released each year, mainly in paper mills and biomass heat and power plants. Since these are plants already in operation, removing the CO2 from their exhaust gases would not require sourcing of new biomass.
Most of the facilities are located on the Swedish coastline, making it easy to transport the captured CO2 to the final storage location, likely to be located outside the coast of Norway. Here large storage locations are being developed where CO2 will be stored in underground formations such as old oil and gas fields.
The size of the government’s procurement is likely too small for the largest and most efficient facilities to fully utilize the bid. It is with the larger facilities (over half a million tons per year) that the price can come down to around 110–150 USD per ton. The cost of removal from smaller facilities will likely be double that.
Stockholm Exergi, a Swedish energy company, has built Sweden’s first BECCs pilot facility at their biomass-fired combined heat and power plant in Stockholm. Converting the whole plant to BECCS could capture 800 000 tons of CO2 per year. The company has been shortlisted for the EU’s Innovation Fund, which could cover up to 60 percent of costs. Igelstaverket in Södertälje south of Stockholm has plans to capture the 650 000 tons CO2 they emit from biogenic sources each year, and facilities in Växsjö and Gothenburg have similar plans.
The financing of BECCs in Sweden will likely depend on government procurement and EU funding in its first years. Other options include mandating certain sectors to purchase BECCS to cover parts of their emissions, and further down the line including it in the EU ETS for hard to abate emissions. But it is likely that most actors are also counting on income from the voluntary carbon removal market.
Can BECCS be sustainable?
BECCS has been widely criticized by environmental groups in the past since they see a risk that a large deployment can lead to unsustainable plantations for bioenergy crops, taking farmland out of circulation, risking leakage, and rising food prices.
The opposition to BECCS is often focused on the effects of extremely large scale deployments with several billions of tons removed. This is largely an effect of climate models using BECCS as a stand-in term for negative emission technologies. Few serious actors believe that only one carbon removal technology is going to be enough, a portfolio is needed.
All else equal, capturing existing biogenic CO2 emissions will contribute to negative emissions without any large direct negative effects. However, there is a long-standing debate if these biogenic emissions are sustainable in the first place.
Researchers are split into two camps where one points to it being better for the climate in the short term if the biomass remains in the forest since it takes decades for a new tree to capture the CO2 that the harvested trees release. This can for example be done by letting trees stand longer before harvesting. The other side points to the great possibilities for biomass to replace fossil fuels and emission-intensive materials, something they argue requires increasing, not decreasing harvests. They also point to few trees being cut down with the sole purpose to burn them, but all forestry creates huge amounts of waste biomass that can and should be utilized. The emissions and uptake from forestry is also part of the national reporting and climate targets, and Sweden and other countries have forest reference levels to adhere to, ensuring that the current carbon sink is maintained. The most important factor is to make sure that the biomass for BECCS plants is sustainably sourced and does not contribute to deforestation.
As long as biogenic emissions are counted as zero-emissions BECCS will be classified as a negative emissions technology. If it can be assumed that the biomass heat and power, as well as paper production will continue, then it will be a very positive development to capture and store this CO2. Large-scale developments of BECCS, with purposely grown biomass, however, require a different calculation around sustainability.
BECCS is here to stay, keep your eyes on Sweden for the first projects to enter the voluntary market.