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Ørsted inks new major CDR deal with Microsoft

Ørsted inks new major CDR deal with Microsoft
Ørsted owns and operates Avedøre Power Station located in the Greater Copenhagen Area. The combined heat and power (CHP) plant consists of two wood pellet-fired units and a straw-fired unit that supplies power to the Danish power grid and district heating to the Greater Copenhagen area (photo courtesy Ørsted).

In a new landmark deal, Denmark-headed energy utility major Ørsted A/S has announced that it will sell a further one million tonnes of carbon dioxide removals (CDR) to Microsoft over a ten-year period from its Avedøre Power Station, which is part of the bioenergy with carbon capture and storage (BECCS) project ‘Ørsted Kalundborg CO2 Hub’.

According to a statement, this new agreement builds on an existing commitment by Microsoft to buy 2.67 million tonnes from Asnæs Power Station, bringing the total purchase under contract to 3.67 million tonnes of carbon dioxide (CO2).

As part of the ‘Ørsted Kalundborg CO2 Hub’, Ørsted will establish carbon capture at its wood chip-fired Asnæs Power Station in Kalundborg in western Zealand and at the Avedøre Power Station’s straw-fired boiler in the Greater Copenhagen area.

The 430,000 tonnes per year of biogenic CO2 from the combined heat and power (CHP) plants will be shipped to a storage reservoir in the Norwegian part of the North Sea and stored permanently.

The ‘Ørsted Kalundborg CO2 Hub’ is set to become operational by the beginning of 2026.

An additional one million tonnes

The new agreement between Ørsted and Microsoft entails that Microsoft will take one million tonnes of carbon removal from the straw-fired unit at Avedøre Power Station starting in 2026.

The CHP plant converts locally sourced straw, a by-product of agriculture, into electricity and district heating.

According to Ørsted, by capturing the biogenic carbon from biomass-fired CHP plants and storing it underground, it is possible to reduce and remove CO2 from the atmosphere, as biogenic carbon from sustainable biomass is part of a natural biogenic carbon cycle, negative emissions are achieved.

The collaboration between Ørsted and Microsoft will play a vital role in developing the ‘Ørsted Kalundborg CO2 Hub’, as bioenergy-based carbon capture and storage is still in its early stages.

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 the investment decision and then in the offer submitted through the Danish subsidy scheme, which put great emphasis on competitive offers with the lowest amount of subsidy per tonne.

According to the UN’s Intergovernmental Panel on Climate Change’s (IPCC) latest report, carbon removal technologies such as BECCS are crucial for limiting global warming.

This, the company says, underscores the importance of projects such as the ‘Ørsted Kalundborg CO2 Hub’, which can support companies like Microsoft in achieving its sustainability goals and contribute to achieving global climate targets.

This expanded collaboration with Microsoft is a testament to our shared vision for a sustainable future. By combining Ørsted’s expertise in bioenergy carbon capture and storage with Microsoft’s commitment to reducing its carbon footprint, we’re showcasing how strategic relations can accelerate the transition to a greener economy, said Ole Thomsen, SVP and Head of Ørsted’s Bioenergy business.

For Microsoft, the agreement represents another large-scale carbon removal deal toward the company’s aspiration to be carbon-negative in 2030.

We’re proud once again to announce a landmark offtake agreement with Ørsted, which is pioneering responsible carbon removal development in Denmark while also meeting the needs of a decarbonized energy system. The urgency around climate goals means translating great planning into rapid action – and Ørsted remains a valuable collaborator in bringing big ideas to life. Today’s announcement is yet another tangible step towards building the technologies and commercial capabilities towards becoming carbon-negative by 2030, said Brian Marrs, Senior Director of Energy & Carbon Removals at Microsoft.

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