| dc.description.abstract | This thesis sets out to shed light on aspects surrounding Carbon Capture & Storage (CCS). It is written in collaboration with Sval Energi AS, taking into account the Trudvang project. The goal is to investigate the potential committed volumes of Carbon Dioxide (CO2), emission allowance prices and Initial Rate of Return for the CCS value chain. Additionally, the different rules, regulations and proposals are evaluated and their likely effect on the Trudvang project is considered.
The CCS industry is becoming increasingly important as countries and companies seek to reduce their CO2 emissions and explore new opportunities for low-carbon growth. However, with CCS being at an early stage of commercialization, CO2 storage projects such as Trudvang face significant risks. These risks are from amongst others, immature regulations, allowance price fluctuations, and developing infrastructure.
The main method of investigation is reading literature and reviewing current EU proposals. Furthermore, CO2 emission, capture, and storage data are gathered to create an overview. CO2 price estimations and the value chain’s profitability are investigated. Because of the political polarization inherent in the climate debate and European Union Emissions Trading System (EU ETS) rules, the authors will utilize multiple sources to ensure some consensus regarding the literature used.
Key findings:
• Planned capture capacity surpasses planned storage capacity, providing potential financial advantages for storage operators.
• Central Europe is the most suitable source of captured CO2 for the Trudvang project.
• Transport and infrastructure are key aspects in the value chain, cooperation with the EU’s projects of common interest would mitigate some financial risk in infrastructure.
• The allowance price is difficult to predict due to rapid regulatory evolvements.
• It is indicated that the CCS value chain Sval takes part in with the Trudvang project is financially feasible. With a possible real IRR above 7.53%.
• The EU ETS framework is evolving and show signs of positive development for CCS.
• Introducing payment for emission removals in the EU ETS opens profitable opportunities for Sval to store CO2 from various sources.
• Estimates suggest that carbon contract for difference with a lower floor of €145 will substantially decrease financial risk in relation to the Trudvang project.
• Storage sites will likely gain value based on the EU's recent proposals for regulations, especially the Net Zero Industry Act, reducing perceived risks by increasing the asset value and subsequently strengthening real options such as selling the project. | |