Denmark's CCS Strategy: Deliver or Pay

In just a few years, Denmark has started a significant rollout of Carbon Capture and Storage technology. Denmark is the first country in the European Union to deploy CCS on a meaningful scale.

Plans for CCS in Denmark date back to the early 2000s, when multiple energy companies explored the option of capturing emissions from their coal power plants. In 2008, those plans became more specific, with announcements from Vattenfall to equip its coal-fired power plant Nordjyllandsværket with CCS technology.

But those plans were met with protests and did not last long. In 2009, Vattenfall stopped the CCS project. For many years, CCS played no major role in Denmark's climate discussion.

That, however, changed in the 2020s. This time, there was wide political agreement about the need to deploy the technology. Agreements and roadmaps were supported by parties across the political spectrum. Particularly, the fact that the eco-left party Red-Green Alliance (Enhedslisten) supported these plans was seen as a sign that CCS has received acceptance from many who were previously critical.

That does not mean that there are no critics of the CCS rollout in Denmark. Some environmental NGOs like Noah, the Danish section of Friends of the Earth, are still opposed to the technology. A local environmental group opposes plans for a CO₂ storage site near the town of Kalundborg. But it does not look like those protests will be as impactful as those in 2008.

Denmark's first CO₂ storage site, Greensand, is located in the North Sea in the Nini West oil field, reusing infrastructure from previous oil drilling operations. It is the world's first CO₂ storage site in an oil field that is no longer used for oil extraction. Denmark is also exploring onshore storage sites, which is expected to be cheaper, but potentially more controversial.

Since 2023, Denmark has run three tenders offering generous subsidies to companies that want to capture and store CO₂ emissions from their facilities. Unlike in 2008, coal power plants are no longer part of the discussion, which helped to gain acceptance. Denmark has drastically reduced its coal use and plans a full phase-out by 2028.

Being a small country without a lot of heavy industry and an electricity system dominated by renewables, Denmark has not many large emission sources left. The largest industrial emitter is Aalborg Portland, the only cement plant in the country. The production of cement clinker is often described as the hardest of the hard-to-abate sectors, as the bulk of emissions from cement plants are caused by carbon trapped in limestone rock. The calcination, the conversion of calcium carbonate to calcium oxide, inevitably releases CO₂. While ideas for experimental technologies exist that seek to use alternative calcium sources, those are nowhere near commercial deployment.

Denmark has two oil refineries. However, Denmark plans to phase out its own oil and gas production. Whether these refineries have any long-term future appears, therefore, questionable. Both refineries have made public statements with vague plans for CCS, but they played no major role in the CCS tenders.

The remaining major CO₂ sources are bioenergy power plants and waste-to-energy plants. Emissions from the combustion of biomass are often seen as climate-neutral, though the reality is usually more nuanced.

Furthermore, Denmark has a sizeable Biomethane industry. Biomethane is made through anaerobic digestion, which converts wet biogenic waste into Biogas, a mixture of Methane and CO₂. When upgrading Biogas to Biomethane, those two gases need to be separated.

This Biomethane upgrading process creates highly concentrated CO₂, which is a major advantage for carbon capture technology. Separating CO₂ from the flue gas of a power plant or many industrial emission sources requires a costly and energy-intensive gas separation step, usually using amine scrubbing technology. Biomethane plants do not need this extra step. The CO₂ separation from Methane, which often also uses amine scrubbing, needs to happen anyway.

It is apparent that a large share of CO₂ captured by future Danish CCS projects will be of biogenic origin. Capturing and storing biogenic CO₂ is often described as a carbon removal or "negative emission" technology, as the biogenic carbon is largely the result of plants using atmospheric CO2 for photosynthesis.

There is a significant market for voluntary carbon removal certificates. Carbon removal certificates are often seen as a more trustworthy alternative to traditional carbon credits based on compensation through emission reduction.

According to the web page CDR.fyi, carbon removal certificates for BECCS (Bio Energy with Carbon Capture and Storage) are traded for around 220 US$. Many of the participants in the Danish CCS tenders have announced partnerships with offtakers of carbon removal certificates.

When looking at the subsidies handed out in the tenders, it is important to keep in mind that many of these projects rely on additional income through the voluntary carbon removal market. This additional income significantly impacts the economics of these projects.

While that can help early BECCS projects, carbon removal credits are an unpredictable funding source. The voluntary carbon removal market is dominated by a few IT companies. A larger rollout of BECCS technology probably cannot rely on voluntary payments from IT corporations.

Cement plant drops out of first Tender

In 2022, the Danish energy agency (Energistyrelsen) started the first tender for CCS projects. While the Danish government was willing to offer generous subsidies to companies seeking to implement CCS, this offer came with a catch: companies would have to deliver on their promises — or face substantial penalties.

In a sector where lofty promises are often contrasted with the reality that CCS projects often don't deliver the promised emission savings, it seems reasonable that the Danish government did not want to hand out subsidies too easily.

Three participants pre-qualified for the first tender: a waste-to-energy plant in Copenhagen (Vestforbrænding), the energy company Ørsted with two of its bioenergy plants, and the cement producer Aalborg Portland. It was also reported that one of the oil refineries had applied for the tender, but it did not make it through the pre-selection.

Shortly before the final deadline, Aalborg Portland decided to drop its application. According to an article on the news site Klimamonitor in 2023, apart from the risks caused by the penalties, the size of the tender has also played a role for Aalborg Portland's decision.

The first tender was handing out subsidies for around 400,000 tons of CO2. "Our potential and level of ambition is greater, and therefore we would rather build a plant that can catch up to 1 million tonnes of CO₂ by 2030 rather than 400,000 tonnes in 2026," Aalborg Portland's CEO Søren Holm Christensen said to Klimamonitor.

Eventually, Ørsted won the first tender with CCS projects at its Avedøreværket bioenergy power plant near Copenhagen — the largest CO2 emission source in Denmark — and the much smaller Asnæsværket near Kalundborg. Ørsted's projects will not store their CO2 in Denmark. Instead, Ørsted entered a partnership with the Northern Lights storage site in Norway.

Ørsted has been awarded 8.2 billion Danish Kroner over 20 years for capturing 430,000 tons of CO₂ annually. This translates to about 120 € or 140 US$ per ton of CO2. Ørsted has announced partnerships with Microsoft for the off-take of carbon removal certificates. "Even though the project was awarded a subsidy from the Danish Energy Agency, the revenue from the sale of carbon removal certificates was included before investment decision and then in the offer submitted through the Danish subsidy scheme," Ørsted wrote in a press release in 2024.

Ørsted's projects were supposed to start capturing CO₂ in 2025, but the start was delayed. Ørsted currently expects a start in 2026, but it will likely not reach the capture targets for 2026 and will face fines that were part of the deal.

Three Biomethane projects awarded in NECCS tender

In a second tender, Denmark specifically targeted negative emission technologies. (Such projects could, as we have seen, also participate in the "generic" tenders.)

In April 2024, the Danish Energy Agency announced the results of this NECCS tender and awarded contracts to three companies for the removal of atmospheric CO₂. All three of them plan to capture and store CO₂ from Biomethane upgraders. By far the largest project is operated by the Biomethane producer BioCirc.

As mentioned, Biomethane facilities have the advantage of already providing a concentrated stream of CO₂, skipping the need for an expensive extra step to separate diluted CO₂ from flue gas. However, even though Denmark has some of the largest Biomethane upgraders in the world, the CO₂ emissions per facility are much smaller compared to many other sources, which adds challenges.

Despite Biomethane's advantages, even the lowest bid in this round was slightly higher (968 DKK) than the subsidies given to Ørsted in the first round (~890 DKK).

Third tender: Biomethane projects excluded early

The third tender was, again, open to all applicants, and offered significantly more money than the previous tenders (28.7 billion DKK).

In May 2025, the Danish Energy Agency published a list of 10 contenders pre-selected from 16 applicants. The selected projects included the cement producer Aalborg Portland, two bioenergy plants, and seven waste-to-energy plants.

While the list of all applicants was not made public, I was able to access it through a freedom of information request. (The companies that did not make it through the pre-selection were Biogem Carbon Removers ApS, Bioman ApS, Carbon Clean Solutions Limited, CO2 CLEANUP Danmark ApS, Mission Zero Technologies Ltd, NG NORDIC DENMARK A/S.)

After the second tender was won entirely by Biomethane projects, no Biomethane project made it into the final round of the third tender. It was not due to a lack of interest. Two of the companies that won the second tender have submitted additional projects to the third.

Ørsted, the energy company that won the first tender and is now facing penalties due to delays, also participated in the third tender with plans to equip additional bioenergy plants with CCS. But in early August 2025, Ørsted announced that it would drop out of the process and not submit a final bid.

Ørsted faced multiple challenges at the time that were unrelated to its bioenergy or CCS business. The company made a strategic decision to focus on its offshore wind energy business. Whether that strategic shift was the main reason for their decision to drop or the experiences Ørsted made with their first two BECCS projects remains speculation.

A few months before Ørsted decided not to bid in the CCS tender, the company had cancelled another project: FlagshipONE, a planned E-Methanol factory in Sweden. While they may seem unrelated, both Ørsted's CCS projects and FlagshipONE would have involved capturing CO2 from the flue gas of a bioenergy plant.

Shortly after Ørsted's decision not to bid, another large player dropped out. Eon and ARC, a local waste management company in Copenhagen, decided not to pursue CCS at the Amager Bakke waste incinerator, also known as CopenHill.

Two of the largest players in the tender had left the field. Eon and Ørsted likely had better means to run such a project than most other contenders, many of them small and municipal companies. Therefore, it is perhaps unsurprising what happened next: one project after another dropped out. In December 2025, it looked like nine out of ten contenders had given up. The last remaining bidder was Aalbort Portland, the cement company.

However, in February 2026, the story took an unexpected turn: the Danish Energy Agency announced that it had received two final bids for the tender. One of the bidders is Aalborg Portland, but who is the second? It looks like one project had announced to drop out, but then decided to reverse course.

"No comments" from Copenhagen Infrastructure Partners

Before the final bids were due, the Danish Energy Agency was asked to postpone the process by one of the participants. According to the news site Energy Supply, internal documents revealed that this request came from Copenhagen Infrastructure Partners (CIP) and Vestforbrænding.

Vestforbrænding is a waste incinerator in Copenhagen and was already participating in the first tender. Both companies had entered the third tender with a project named Gaia. In December 2025, Vestforbrænding announced their withdrawal in a press release. Copenhagen Infrastructure Partners (CIP) has, however, made no such announcement.

The news page Energywatch reported that the company behind the Gaia project was restructured recently. Board members from Vestforbrænding left, and Copenhagen Infrastructure Partners is now the sole owner of the company, which was previously jointly owned by them and a subsidiary of Vestforbrænding.

"Gaia is a joint venture between Vestforbrænding and Copenhagen Infrastructure Partners (CIP)," Louise Wendelbo from Copenhagen Infrastructure Partners wrote in response to multiple questions for this article. "We have no comments regarding the CCS tender."

With 8 of 10 projects dropping out, what do we take away from that? KPMG has released a report based on interviews with the drop-outs. Unsurprisingly, the penalties were considered as a major barrier. (One might, of course, argue that the penalties have done their job: discourage bidders who probably could not deliver.)

A further significant barrier was uncertainty about storage sites. At the moment, the options for companies seeking to permanently store their CO2 are limited. Northern Lights and Greensand only became available in recent years, and most of their storage potential in their early build-out is already booked. Whether that capacity will be available on time and whether it will be expanded is not necessarily within the control of companies needing a place to permanently dispose of their CO2. Onshore CO2 storage sites in Denmark are under development, but are not yet available.

Is CCS a good solution for Waste Incinerators and Bioenergy power plants?

Denmark will likely have a cement plant and multiple Biomethane upgraders with CCS in the coming years, both of which are among the less controversial targets for CCS.

For now, we will only see a limited number of bioenergy and waste-to-energy plants with CCS. For those plants, it is worth asking whether CCS is a good idea to begin with. Capturing diluted CO2 from the flue gas of combustion power plants with amine scrubbing is costly and energy-intensive. Alternatives like oxyfuel CCS require plant redesign and have not been tested at an industrial scale.

Waste avoidance strategies, material efficiency, improved recycling rates, residual waste sorting, chemical recycling, and possibly even landfills with proper pre-treatment should all be prioritized over waste incineration. Biomass resources, even if sustainably sourced, should be prioritized for hard-to-abate sectors, including irreplacable carbon uses in metallurgy, chemical feedstocks, and advanced biofuels for shipping and aviation.

If bioenergy should play any role in a future energy system, its best use is likely as a backup energy source during periods of low wind and solar energy output. Many of the Danish power plants already operate on a seasonal pattern, as they are linked to district heating networks.

Flexible and seasonal operations increase the economic challenges for CCS projects, which come with significant capital costs. Having an expensive CCS power plant that is in stand-by mode most of the time makes little sense.

Author: Hanno Böck

Brief

• The Norwegian and Swedish broadcasters NKR and SVT report on potential problems with a hydrogen-powered ferry project in Norway. In 2022, ferry operator Torghatten Nord won a contract to operate hydrogen-powered Ferries connecting the Lofoten islands with the Norwegian mainland. The journalists were able to see internal documents from PowerCell, the Swedish company manufacturing the fuel cells, that indicate much shorter lifetimes than expected. PowerCell published a statement saying that these internal documents refer to "tests of technology that is two generations old".

• Podcast recommendation: a recent interview with Brimstone, a company working on an alternative cement production process, about their plans to utilize co-products.