Shell and Exxon on the hunt for Billions in Green Subsidy
Summary - Four multinationals including Shell and Exxon aim to store CO₂ in an empty gas field off the Dutch coast and will apply for a subsidy at the end of this month. According to estimates, this subsidy could amount to around € 1.5 billion, which would cause other subsidies on ‘truly green projects’ to diminish.
This article originates from the Financieel Dagblad and added upon. For the original, click here.
Storing CO₂
Four multinationals, including Exxon and Shell, will apply for a subsidy to store CO₂ in a gas field under the North Sea. This grant is controversial as it is a huge amount for something that has never been done on this scale. There are less than 25 active large carbon capture and storage projects worldwide. The so-called Porthos project in the North Sea should therefore be a milestone in Europe.
The goal of this project is to reduce the amount of carbon emissions in the Rotterdam harbor. CO₂ is captured from flue gas that is released when fossil fuels are burned. This is transported via pipelines to, in this case, an empty gas field. In Rotterdam, another carbon capture and storage project called ‘Road’ has already been worked on for years. Despite € 150 million in subsidy, of which about 10% was paid, Road was never realized.
Shell, ExxonMobil, Air Liquide and Air Products are now making a second attempt with Porthos. To this end, they will claim subsidies from the Dutch energy facilities (SDE). Until now, this money has mainly gone to the construction of solar meadows and wind turbines. From the 24th of November onwards, companies can also apply for a subsidy for the capture and storage of CO₂, or CCS (carbon capture and storage).
EU money
The grant application is still awaiting the final signatures, say spokespersons for both Shell and ExxonMobil. It is evident that the application will be made however. Last month it was announced that the European Commission wants to provide a subsidy of € 102 million. According to the Financieel Dagblad, if the companies apply for a subsidy, there is a good chance that they will also receive the money.
The idea is to prevent CO₂ from entering the air by storing it in an empty gas field. Last summer, Minister Eric Wiebes of Dutch Economic Affairs and Climate Policy wrote that since 2008 the government has paid out approximately € 4.5 billion in SDE subsidies. With those billions, about 42 megatonnes of CO₂ emissions have been saved.
If all goes well, Porthos should save about 37 megatonnes of CO₂ emissions in fifteen years. With a subsidy of an estimated € 1.5 billion. "CCS is cheaper than almost all other measures," said a Shell spokesperson.
'Technical and social experiment'
“It is a technical experiment, and therefore also a social experiment. You have to question whether it will work out,” says Ebel Kemeling of consultancy MJ Hudson Spring about Porthos. "So this could become a political target."
He wonders whether CO₂ capture is 'the new biomass'. Energy companies received billions in subsidies to burn wood pellets in coal-fired power stations. Gradually, resistance to these practices increased. Opponents pointed out that trees were cut down in North America to disappear in Dutch coal-fired power stations, making the whole practice of ‘co-firing’ wood pallets in coal power plants seem silly to some. Last summer, it became political.
The Dutch government coalition decided to stop providing new subsidies for the combustion of woody biomass in power stations. Kemeling: 'We will yet again pass on billions of euros to these large companies.'
CO₂ capture will soon be largely financed by households, through the ‘Sustainable Energy Addition’ (ODE). Every household in the Netherlands pays a premium (called ‘opslag’ in Dutch) to finance sustainable projects. Wind and solar projects are also financed with this storage, which causes friction. Porthos is unexplored territory, solar and wind are known projects with known benefits. Furthermore, money that is directed towards CO₂ capture does not go to wind and solar projects.
'Storage not a sustainable energy supply'
Alex Kaat, head of public affairs at the Holland Solar trade association, fears that subsidies will soon be partly depleted at the cost of solar parks. "This is the boogeyman for many solar park developers," he says when asked about CCS. The production of green electricity and the capture of CO₂ are different techniques, says Kaat. The Sustainable Energy Storage fund is intended for the generation of green energy. CO₂ capture does not provide energy, but simply captures emissions. His conclusion: “It is unfair competition. Or in any case, the comparison between the generation of energy and the capture of CO₂ is made arbitrary.”
Despite the upheaval, it seems certain that CCS will come. The capture and storage of CO₂ is an objective in the Climate Agreement. What’s more: the Netherlands will not achieve its climate objectives without CO₂ capture. For Chairman Olof van der Gaag of the Dutch Sustainable Energy Association, “CO₂ capture was not our preference, but it is an acceptable compromise. Ultimately, I would rather have CO₂ underground than in the air.”
Kemeling is in favor of CO₂ capture, but not with SDE as financing. The subsidy assumes that we know and can weigh up what CCS costs. “It has never been proven. Not on this scale, not in gas fields,” he says. "It's blowing against the wind."
References & Further Reading
Insights - Carbon Capture and Storage