ESA approves carbon capture and storage project at Kaarstoe

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The EFTA Surveillance Authority (ESA) has decided to authorise state funding to Gassnova SF in order to cover the costs of establishing a carbon capture and storage facility (a “CCS”) at Kaarstoe, Norway.

The CCS will capture and store CO2 emitted by the power plant, Naturkraft, which is jointly owned by StatoilHydro ASA and Statkraft SF. The CCS is to be owned and managed by the 100% state owned company, Gassnova SF, which will also be the direct recipient of the state funding.

The aim of the Kaarstoe project is to test full-scale carbon capture using current technology (i.e. amine based post-combustion solution) and thereby contribute to bringing the CCS amine based technology further with the aim of reducing energy costs so as to contribute to the global deployment of such technologies at affordable prices. The state funding will cover 100% of the investment cost and operating costs of the CCS during a period of 10 years.

The Authority (ESA) has taken the view that the subscription of funds to Gassnova for the Kaarstoe project involves state aid. In line with the State aid Guidelines on aid for the protection of the environment the Authority has taken a favourable attitude towards state aid to the Kaarstoe project.

The project is aimed at the protection of the environment by means of capturing and storing carbon, which is a well-defined objective of common interest. The Kaarstoe project is also well designed to achieve this common interest objective. It is generally acknowledged that cost reductions are necessary in order to enable CO2 capture and storage to move forward and contribute to combating climate change.

An essential step on the way for cutting operating costs of CCS is to test the technology and learn from the experience gained. The investment undertaken by the Norwegian state and the lessons to be learned from the Kaarstoe project will contribute to showing how and to which extent the CCS technology can be made less costly for investors. The state investment can thereby pave the way for making CCS accessible at reasonable costs and thus for more private sector investment in CCS.

ESA says the aid is limited to 10 years thereby allowing time and opportunities to achieve benefits of the aid while limiting the possibility that state funding will affect private market investor initatives in the long term. Finally, distortion of competition and effect on trade would be limited amongst others by the fact that Gassnova will share general know-how acquired via the Kårstø project at conferences and workshops as well as within the framework of early CCS movers established by the European Commission.

(NRK/Press release)