With the Danish Climate Agreement for Energy and Industry of 22 June 2020, a majority of the Danish Parliament decided that carbon capture and storage is to be an important element in achieving Denmark’s climate policy objectives. This prompted the setting up of technologically neutral and market-based funds (CCUS funds) of DKK 16 billion scheduled for deployment between 2024-2048. The funds are deployed in two phases. This tender concerns the first phase.
The DEA considers the deployment of funds for the first phase and conclusion of the contract to be a subsidy scheme encompassed by the European Commission’s Guidelines on State aid for climate, environmental protection and energy 2022. The designation of the contract as a services contract in section II.1.3) etc. does not change this. The competitive bidding process for the first phase will be conducted as a negotiated procedure in accordance with the rules and principles of section II of the Danish Public Procurement Act.
The DEA wishes to enter into one Contract pursuant to which the recipient of the subsidies (“the Operator”) shall ensure and be responsible for capture, transportation and permanent storage of CO2 (“the Contract”).
The funds are intended to provide subsidy for carbon capture and storage on flue gasses emitted by incineration. The funds are not intended to provide subsidy for carbon capture and storage on biogenic sources emitted without incineration. See https://kefm.dk/Media/637750803075155837/Faktaark_Tilskudspuljer%20til%20fangst%20og%20lagring%20af%20CO%E2%82%82_V02.pdf. The funds are not intended to provide subsidy for carbon emissions that originate from flaring related to oil and gas production in the Danish North Sea.
As described in the tender documents the Operator shall ensure that the CO2 reductions equate to a minimum quantity of 0.4 MTA captured and permanently stored CO2 per year starting with year 2026. The Operator may also capture and permanently store CO2 from start of operation until 31 December 2025, and/or capture and permanently store additional quantities of CO2 from 1 January 2026. The Operator may deliver the reductions with one point source, a combination of point sources or a portfolio of several point sources.
The subsidy will be paid per ton CO2 captured and permanently stored.
If the Operator achieves a larger quantity of reductions than the guaranteed quantity in any given year, the Operator may receive subsidy for such larger quantity if and to the extent that there are available funds within the limit of the yearly maximum allocated subsidy.
In addition to the CO2 reductions, it is expected that the Operator shall deliver various documentation and reporting and make available various information/knowledge, data, etc. to the DEA and to third parties.
The Contract is expected to have a duration of approx. 20-21 years of operation (in addition to the prior pre-construction and construction phases), unless terminated earlier in accordance with the terms set out in the Contract.
The DEA will notify the funds to the European Commission as an aid scheme in accordance with the procedure prescribed by Article 108 of the Treaty on the Functioning of the European Union and the deployment of the funds is dependent on the European Commission’s prior approval. The tender procedure, including the award of the Contract, is conducted subject to the necessary legislative changes. See further the Tender Specifications, paragraph 3.
The DEA expects that an information meeting prior to the deadline for requests for participation will be held 20 May 2022, at the address specified in section I.1). Candidates interested in participating in the meeting are asked to sign up via the electronic tendering system not later than 3 days before the meeting with indication of name of business and number of participants. The DEA may reduce the number of participants per business. The DEA will draw up brief minutes of the information meeting which will be published via the electronic tendering system.
The negotiation process is expected to be conducted with one negotiation round. See further the Tender Specifications and Appendix B.
See the Tender Specifications, paragraph 9, regarding the requirement methodology. It is emphasized that all requirements that are not Minimum Requirements may be subject to negotiation and may be changed or withdrawn according to the DEA’s decision. Thus, the DEA encourages all economic operators who can comply with the Minimum Requirements (and fulfil the minimum requirements for participation, see sections III.1.2) and III.1.3)) to apply for prequalification, even if the economic operator cannot comply with all General Requirements. Also see the Tender Specifications, Appendix B, regarding the expected topics for negotiation.