ARTICLE
6 September 2024

Carbon Capture – A Technology And Legal Sphere To Keep An Eye On

L
Lindahl

Contributor

The energy sector is one of the industries that focuses most clearly on innovation and climate-friendly solutions.
Sweden Energy and Natural Resources

The energy sector is one of the industries that focuses most clearly on innovation and climate-friendly solutions. At Lindahl, we have extensive experience of providing support in these matters and, following the development of solar energy and hydrogen in recent years, carbon capture is now high on the agenda. Per Mildner, a partner at Lindahl, and his colleagues Lina Stenson and Adam Boije, are among the lawyers who are most familiar with this area of law in Sweden.

One element in achieving the EU and UN climate goals consists of reducing levels of carbon dioxide in the atmosphere. Carbon capture is predicted to play an important role in achieving this. The method involves capturing carbon dioxide and storing it permanently in the bedrock – so-called CCS (Carbon Capture and Storage). The captured carbon dioxide can also be converted to a range of fossil-free products.

"Most of the carbon dioxide emitted by a cogeneration company, for example, can be captured using this method. The captured carbon dioxide is then converted to a liquid carbon dioxide gas, which is transported to special receiving stations where it is pumped into pockets in the seabed. Facilities for receiving and handling the liquid gas are currently being constructed in Norway and elsewhere. Over a relatively short period – around 15-80 years, depending on the bedrock – the carbon dioxide gas will be transformed to completely harmless rock," says Per Mildner, a partner at Lindahl.

The innovative emerging technology leads to tremendous opportunities for Sweden, where the paper and pulp industry and the cogeneration sector give rise to large-scale emissions of biogenic carbon dioxide on which the technology can be used. The Government has also taken note and the Ministry of Finance has put forward a proposal that will increase the incentives for investment in carbon capture through tax exemptions on the electricity used for the actual capture.

Because carbon dioxide emissions from sustainably produced biofuels (which many cogeneration plants use) can already be considered carbon neutral in the long term, the positive environmental impact of carbon capture will be considerable.

What does Lindahl do in carbon capture?

Lindahl is one of the foremost advisors in the Swedish market and the firm is already working on several live projects on carbon capture, says Per Mildner.

"Lindahl's extensive experience and clear focus on the energy sector means that we have been monitoring developments for many years and we are also supporting several clients who have carbon capture projects at various different stages. At present, we're helping a major Swedish operator in the contract negotiations for a facility of this kind. We're also helping several other Swedish operators with feasibility studies and initial contract work.

In addition to providing guidance for clients, Lindahl's experts also hold training courses on the topic, for example for energy companies that want to learn more about the types of agreement that are suitable, which is an extremely topical question due to the current tremendous interest in procuring carbon capture methods.

"There are many legal aspects to be considered. This applies both to the suppliers' focus on confidentiality and protection of the technology and to the financing of the projects. Since it is a question of an advanced but relatively new technology and expensive investments, the design of the agreement should be carefully considered," says Per Mildner.

The cost of building the required facilities is high and Per Mildner predicts that requests for state aid will increase in future:

"There's no doubt about the upside and the benefit of carbon capture since it effectively reduces the amount of carbon dioxide in the atmosphere. However, it requires large investments and the companies building the facilities don't receive any "sales revenue" from the captured carbon dioxide, but instead incur an additional cost for transportation and storage of the carbon dioxide. That means that many companies considering carbon capture want the EU and the state to step in and provide financial support." We will probably read a lot more about this in future.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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