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😱 At the end of the summer, Sweden announced a €3.1b carbon dioxide removal (hashtag#CDR) subsidy. You may have been still in vacation mode and missed it, like I did. But to put that into perspective: per capita, this is the equivalent of the U.S. providing €100b so definitely noteworthy. So time to dig into it!
🏭 The subsidy will be valid from 2026 until 2046 and is aimed at entities that can deliver negative carbon dioxide emissions via BECCS targeting biogenic CO2 from renewable sources.
🎯 The first auction targets 600Kt, with storage set to begin in 2026, with a set target of achieving 2Mt of CO2 negative emissions annually by 2030. The overall goal for the period is to reach 30Mt of CO2 stored.
✅ Using a reverse auction process (cheapest offer gets it), companies must demonstrate their ability to separate, transport, and geologically store biogenic carbon dioxide from renewable sources.
🔗 Investment and operating costs throughout the BECCS value chain are eligible for support.
⏲️ The support is over a period of 15 years, beginning once the CO2 is permanently stored.
💰 Current budgeting indicates state support per tonne of approximately $143 aligning with medium-term estimates for BECCS costs.
📅 The submission deadline for the first reverse auction will be on November 21, 2024
BUT WILL IT WORK?
🤔 In a recent paper published in Environmental Sciences Europe (link in comments) the authors highlight some of the dilemmas of reverse auction for BECCS including the ‘winner’s curse’ which is the risk of bidding for a contract that turns out to be too costly to implement.
💵 Robert Höglund also highlighted that the estimated costs of $48–135/tCO2 plus the potentially high storage costs outside Norway will likely put the total cost per tonne well over $200 – higher than the current budget of state support per tonne. Meaning that Swedish suppliers would need other sources of income to cover the target volumes sought (link in comments).
🏛️ So how will this interplay with corporate action and the voluntary carbon market. Is the government aiming to purchase these tonnes outright? Or is it planning to leave the actual purchase to a company, thereby allowing double claiming just like its neighbour Denmark is?
📈 Overall, this is a huge step towards making Sweden the global hub for BECCS. It has a rich history of sustainable biomass use and infinite potential to deliver megatonnes of CDR through BECCS. I really hope this subsidy is what it takes to get the industry off the ground.
👏 Special shout out to those pushing the needle on BECCS in Sweden, first and foremost KLIMPO and Karolina Unger, and then of course Stockholm Exergi, a prime example of how the future of BECCS in Sweden can look like.
❓ What do you think? Is this a smart policy move? What did I miss?
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