State aid for BECCS
Sweden has a good starting point for implementing BECCS thanks to its large point source pollution of biogenic carbon dioxide and several industries are already investing in the development of this technology. However, as BECCS is not economically feasible at present, state aid is needed to continue development.
The Swedish Energy Agency is proposing a support system for BECCS in the shape of reversed auctioning. Reversed auctioning means that, for example, a pulp and paper industry or a combined heat and power plant can submit a bid on how much carbon dioxide they can capture and store, and at what cost. Winning bid will be the best solution at the lowest cost. According to the agency’s investigative report, the costs are estimated at SEK 1,100–2,000 per tonne of carbon dioxide. The state aid will cover costs for capture, transport and storage during a binding period of 15 years.
According to the proposal of the Swedish Energy Agency, the first auction will be announced at the end of 2022 and the allocations will take place in 2023. Storage of carbon dioxide is expected to begin no earlier than 2025, as it will take time for the actors to carry out construction of the carbon capture facilities.
Reversed auctioning is cost effective
In the report, the Swedish Energy Agency has deemed reversed auctioning as the most cost-effective support system. It is also considered to be compatible with EU state aid rules. In addition, Sweden can benefit from the collected experience of other countries concerning the reversed auctioning process.
Level of ambition for the support system
The level of ambition for the support system is based on the targets stipulated in the Swedish Government Official Report 2020:4 – The road to a carbon neutral future. The goal, according to the governmental report, is to capture and store two million tonnes of biogenic carbon dioxide per year by 2030. However, the feasible potential for BECCS in Sweden amounts to at least 10 million tonnes of biogenic carbon dioxide per year in a 2045 perspective. In addition, the technical potential is considered twice as great.
The Green Industry Leap
At the Swedish Energy Agency, CCS projects can also receive support through the Green Industry Leap. The Green Industry Leap is an initiative to support the industrial sector on its path to reduce process-related greenhouse gas emissions, which is in line with the Swedish climate targets of net zero emissions by 2045. Support can be given to research, feasibility studies, pilot and demonstration projects, as well as general investments.