The European Commission has approved a €1.1 billion Danish programme to assist them in reducing carbon emissions
The European Commission has approved a € 1.1 billion Danish scheme to support the roll-out of Carbon Capture and Storage (CCS) technologies to reduce Carbon Dioxide (CO2) emissions that are released in the atmosphere and achieve deeper decarbonization of industrial processes.
The measure contributes to the achievement of Denmark’s climate targets and the European Union’s (E.U.’s) strategic objectives under the European Green Deal.
The European Commission assessed the scheme under E.U. State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the E.U., which enables Member States to support the development of certain economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy (CEEAG).
The scheme notified by Denmark will support CCS as a viable and effective tool to mitigate climate change. This is expected to increase investor confidence in the CCS-technology, reduce costs for future application of CCS technologies and thereby facilitate the development of a commercial CCS market in Denmark.
Speaking on the occasion, the Executive Vice-President of the European Commission for a Europe fit for the Digital Age (Competition) – Margrethe Vestager said, “This €1.1 billion scheme will enable Denmark to capture and store a significant amount of CO2, preventing its release into the atmosphere. It will help Denmark achieve its ambitious target of climate neutrality by 2050 at the latest, in line with the European Green Deal objectives, while ensuring that competition distortions are kept to the minimum.”
Under the scheme, the aid will be awarded through a competitive tendering procedure which will be concluded in 2023. The tender will be open to companies active in any industrial sectors, including the waste and energy sectors. Under a 20-year contract, the beneficiary will capture and store an annual minimum of 0.4 million tonnes of CO2 as from 2026. The maximum amount of aid will be equal to € 54.9 million per year (DKK 408.4 million), adjusted to inflation. The scheme will help reduce its greenhouse gas emissions by 70% by 2030 compared to the 1990 level.
The scheme has an incentive effect as potential beneficiaries would not carry out the investments and engage in a CCS project without the public support. The scheme has a limited impact on competition and trade within the E.U. In particular, the aid is proportionate and any negative effect on competition and trade in the E.U. will be limited in view of the design of the bidding process, which will ensure that the aid amount is kept to the minimum. The scheme will be subject to an ex-post evaluation, which will verify among other things the effectiveness of the competitive bidding process.
