Tender for Contract on subsidy for carbon capture, transport and storage

Description

With the Danish Climate Agreement for Energy and Industry of 22 June 2020, a majority of the Danish Parliament decided that carbon capture and storage is to be an important element in achieving Denmark’s climate policy objectives. This prompted the setting up of technologically neutral and market-based funds (CCUS funds) of DKK 16 billion scheduled for deployment between 2024-2048. The funds are deployed in two phases. This tender concerns the first phase. The DEA considers the deployment of funds for the first phase and conclusion of the contract to be a subsidy scheme encompassed by the European Commission’s Guidelines on State aid for climate, environmental protection and energy 2022. The designation of the contract as a services contract in section II.1.3) etc. does not change this. The competitive bidding process for the first phase was conducted as a negotiated procedure in accordance with the rules and principles of section II of the Danish Public Procurement Act. Lot 1: The DEA wished to enter into one Contract pursuant to which the recipient of the subsidies (“the Operator”) shall ensure and be responsible for capture, transportation and permanent storage of CO2 (“the Contract”). The funds are intended to provide subsidy for carbon capture and storage on flue gasses emitted by incineration. The funds are not intended to provide subsidy for carbon capture and storage on biogenic sources emitted without incineration. See https://kefm.dk/Media/637750803075155837/Faktaark_Tilskudspuljer%20til%20fangst%20og%20lagring%20af%20CO%E2%82%82_V02.pdf. The funds are not intended to provide subsidy for carbon emissions that originate from flaring related to oil and gas production in the Danish North Sea. As described in the tender documents the Operator shall ensure that the CO2 reductions equate to a minimum quantity of 0.4 MT captured and permanently stored CO2 per year starting with year 2026. The Operator may also capture and permanently store CO2 from start of operation until 31 December 2025, and/or capture and permanently store additional quantities of CO2 from 1 January 2026. The Operator may deliver the reductions with one point source, a combination of point sources or a portfolio of several point sources. The subsidy will be paid per ton CO2 captured and permanently stored. If the Operator achieves a larger quantity of reductions than the guaranteed quantity in any given year, the Operator may receive subsidy for such larger quantity if and to the extent that there are available funds within the limit of the yearly maximum allocated subsidy. In addition to the CO2 reductions, the Operator shall deliver various documentation and reporting and make available various information/knowledge, data, etc. to the DEA and to third parties. The Contract is expected to have a duration of approx. 20-21 years of operation (in addition to the prior pre-construction and construction phases), unless terminated earlier in accordance with the terms set out in the Contract. The Contract has been subject to a prior publication of call for competition in the Official Journal of the European Union, see Contract Notice no. 2022/S 111-312435, published 10 June 2022, as amended by notice 2022/S 128-365765 and 2023/S 023-064608. As part of the procedure (a negotiated procedure) the DEA made - prior to and in connection with the negotiations in the negotiation phase of the tender procedure - changes and clarifications to the tender documents. The changes and clarifications are described in the voluntary ex ante transparency notices no. 2023/S 043-127149, published 1 March 2023, and 2023/S 096-300720, published 19 May 2023, and the revised tender documents are also made publicly available on the website stated in section I.1). The DEA chose to publish the voluntary ex ante transparency notices in connection with the negotiations and the decision to award the Contract, see further in section VI.3) of this contract award notice. The DEA has notified the funds to the European Commission as an aid scheme in accordance with the procedure prescribed by Article 108 of the Treaty on the Functioning of the European Union and has received the European Commission’s prior approval. Section II.1.7) and V.2.4): This is the maximum available subsidy for the entire duration of the Contract (subject to indexation). The subsidy is including VAT.