Commission approved the €1.1 billion Danish scheme to support carbon capture and storage initiatives

On January 12, 2022, the Commission approved the €1.1 billion Danish scheme to support the roll-out of carbon capture and storage (“CCS”) technologies to reduce CO₂ emissions and boost decarbonisation of industrial processes.

CCS consists of a set of technologies that make it possible to capture the carbon dioxide (CO₂) emitted from industrial plants, including process-inherent emissions, or to capture it directly from ambient air, to transport it to a storage site and inject it in suitable underground geological formations for the purpose of permanent storage.

The aid will be awarded through a competitive tendering procedure (to be concluded in 2023) open to companies active in any industrial 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.

The Commission found that the Danish scheme is in line with the conditions set out in Article 107(3)(c) and in the 2022 Guidelines on State aid for climate, environmental protection and energy, which allow Member States to support measures reducing greenhouse gas emissions. In particular, the Commission found that the scheme is necessary and appropriate to cut CO₂ emissions, has incentive effects towards future investment in CCS, and bears limited negative effects on competition.

The Commission decision on the Danish scheme is the last of a series of state aid decisions in Europe to promote CCS technologies. Previous measures consisted both of specific support to carbon capture projects (e.g., Commission’s decisions in cases SA.53525 and SA.61295 for the Netherlands, as well as EFTA Surveillance Authority’s decision in case 093/20/COL approving the €2.1 billion aid to Norwegian full-scale carbon capture and storage) and support to industrial facilities linked with decarbonisation countermeasures such as CCS (e.g., Commission’s decisions SA.102385 for Slovakia and SA.103821 for Czech Republic).