* Will finance CCS at HeidelbergCement cement plant
* Norway wants EU to help finance CCS at Fortum waste plant
* Will finance storage facility by Equinor, Shell and Total
(Adds PM, background, analysis, quotes, reaction)
By Nora Buli and Nerijus Adomaitis
OSLO, Sept 21 (Reuters) - Norway will finance two-thirds of
a large-scale project to capture and store carbon dioxide - its
second attempt to cut greenhouse gas emissions in a plan that
was previously touted as the oil-producing country's moon
landing.
Dubbed Longship after the vessels used by Vikings, the
project would help the world to reach the goals of the Paris
climate agreement, Norway's Prime Minister Erna Solberg said.
Solberg told Reuters achieving the Paris climate targets
would be more costly without carbon capture and storage.
"When we are now developing a storage facility ... it will
be an important step because there will be a possibility for
safe storage for a lot of other countries who would also like to
capture their CO2."
Carbon capture has long been highlighted as a way to reduce
CO2 emissions but there are few commercial projects in
existence.
Norway tried a decade ago to create a carbon capture project
at a gas power plant.
State oil company Equinor, then called Statoil,
failed to complete the plan - touted at the time as Norway's
moon landing - because of cost issues.
Under the latest proposals, Norway would fund a carbon
capture project at a cement factory in southern Norway operated
by Germany's HeidelbergCement.
The government would also finance a facility to capture
emissions at a waste incineration plant in Oslo operated by
Fortum - if the Finnish company can find external
investment.
Oslo will also finance Northern Lights, a joint venture
between Equinor, Shell and Total
that would transport and bury the captured emissions, up to 1.5
million tonnes per year initially, in a geological formation in
the North Sea.
Norway would finance 16.8 billion crowns ($1.83 billion) of
the estimated total cost of 25.1 billion crowns for all the
projects.
"We will create a whole new value chain that is needed to
deliver on the Paris Agreement," Sverre Overa Johannesen,
Equinor's leader for Northern Lights, told Reuters.
The plans could also be important for decarbonising the
industrial use of gas, including the production of
emissions-free hydrogen, effectively extending the gas
industry's lifetime as well as offering a new revenue stream for
Norway, Europe's second largest gas supplier after Russia.
SECOND ATTEMPT
"I believe that this time Norway will succeed," said Camilla
Svendsen Skriung, who advises the green think tank Zero
Foundation on CCS, pointing to the close cooperation among
industrial partners.
Equinor last year signed memoranda of understanding with
seven companies, including Sweden's largest refiner
Preem and the world's largest steel producer
ArcelorMittal to store CO2 at Northern Lights.
Preem, which operates two refineries on Sweden's west coast,
said it was planning to capture and store up to 500,000 tonnes
of CO2 per year from 2025 at the site.
HeidelbergCement told Reuters Norway's backing for building
a carbon capture facility at its cement plant, with an estimated
cost of 3.3 billion crowns, was key, especially as European
carbon prices are not high enough to attract the investment.
The price of emitting carbon under Europe's emission trading
scheme last stood at around 27 euros per tonne. HeidelbergCement
declined to say what capturing one tonne of CO2 at the Norwegian
plant would cost. Some studies estimate cement carbon capture
costs at around 100 euros per tonne.
Fortum said it was pleased about Norway's pledge to fund
carbon capture at its waste plant if the company can get extra
funding, even though this could delay the project.
Norway, part of the European single market but not of the
European Union, wants Brussels to help fund the Fortum plant.
Jannicke Gerner Bjerkaas, director of CCS at Fortum's Oslo
subsidiary, told Reuters that having to apply to the EU for
money could mean the plant would come into operation in 2026
rather than 2024.
Oslo said it would fund 2 billion crowns, out of the total
4.3 billion estimated total capital cost, if Fortum can secure
the remainder.
Solberg said she was confident the proposals would pass
parliament as there was broad political consensus to back carbon
capture.
($1 = 9.3269 Norwegian crowns)
(Editing by Gwladys Fouche and David Evans. Editing by Jane
Merriman)
