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🗞️ Last week, Denmark was all over carbon dioxide removal (#CDR) news with their announcement to award $166m to three #BioCCS companies to remove 1.1Mt of CO2.
🤓 I spent the last few days reviewing the actual contracts, researching the underlying funding mechanism, and talking to insiders in Denmark to make sense of it. Here are the key things you need to know:
💰 The fund foresees 2.6 billion DKK (over $370 million) for CCS based CDR (DACCS/BECCS/BioCCS). This means that only 45% of the funds were awarded - the rest likely next year. The government received less qualified offers than expected, largely due to limited storage capacity in the period in question (2026-2032).
🤝 Negotiations are currently underway for another fund of 19.5 billion DKK (over $2.8b) that could encompass both CCS and other CDR technologies from a more diverse portfolio, particularly biochar carbon removal (#BCR), which is a priority technology for Denmark. Reminder: DK has a 2Mt/year BCR target for 2030!
⚠️ Unlike what had been reported last week, last week’s deal was not public procurement but a subsidy. Here some details from the contract:
🔄 The agreement explicitly permits companies to sell these credits on the Voluntary Carbon Market (#VCM). However, they have to be counted towards Denmark’s nationally determined contribution (#NDC). Counting them towards another NDC, on the other hand, would lead to termination of contract.
🛡️ This stance of allowing selling credits on the VCM while ensuring all CDR is counted towards a national NDCs aligns with last year’s deal between Ørsted and Microsoft (also in Denmark) and with the vision the European Commission has recently laid out for all credits certified under the Carbon Removal Certification Framework (#CRCF).
👏 Personally, I am a big fan of this approach. There are so many misunderstandings when it comes to double claiming, but ultimately it maximises climate finance and impact.
💚 Overall, Denmark is really leading the way. Considering its size and GDP, these investments into CDR are huge. I am particularly excited about the negotiations currently under-way for the much larger, more tech-neutral $2.8b fund which could be a game-changer for BCR in particular.
❓ What do you think? How do you see these developments and their impact?
BioCirc Carbon Capture Scotland Bioman ApS CDR.fyi Carbon Herald Robert Höglund Anna von der Schulenburg, PhD Gregor Vulturius Manolis Karampinis Simon Bager, PhD Morten Heick Tank Chen Margriet Kuijper Marcel Huber European Biochar Industry Consortium (EBI) Hansjörg Lerchenmüller Benjamin Schulz
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