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Shell and Exxon are aiming for multi-billion dollar green subsidies

English translation of an article published today by the Dutch Financial newspaper, the FD.


Shell and Exxon are aiming for multi-billion dollar green subsidies

Carel Grol: 16 November 2020

Four multinationals that want to store the greenhouse gas CO₂ in an empty gas field off the Dutch coast will apply for a subsidy at the end of this month. According to estimates, this subsidy could amount to around € 1.5 billion.

In brief

  • Four multinationals, including Shell, want to participate in a large-scale CO₂ storage project in a gas field under the North Sea.
  • It is estimated that a subsidy of € 1.5 billion will be applied for.
  • If the subsidy is paid, there will be less money for solar energy.

Four multinationals, including Exxon and Shell, will apply for a subsidy for CO₂ storage in a gas field under the North Sea. This grant is controversial as it is a huge amount for something that has never been done on this scale. There are less than 25 active large CO₂ storage projects worldwide. The so-called Porthos project in the North Sea should really be a breakthrough for Europe.

CO₂ is captured from the flue gas that is released when fossil fuels are burned. This is transported via pipelines to, in this case, an empty gas field. In Rotterdam, Road has already been worked on for years, also a project to store CO₂ under the seabed. Despite € 150 million in subsidy, of which about 10% has been paid out, Road was not realized.

Shell, ExxonMobil, Air Liquide and Air Products are therefore making a second attempt with Porthos. To this end, they will claim subsidies for greening the Dutch energy facilities (SDE). Until now, this money has mainly gone to the construction of solar meadows and wind turbines. From 24 November, companies can also apply for a subsidy for the capture and storage of CO₂, or CCS (carbon capture and storage).

EU money

The subsidy application is still waiting for the final signatures, say spokespersons for both Shell and ExxonMobil. But it is evident that the application will be made. Last month it was announced that the European Commission wants to provide a subsidy of € 102 million. If the companies apply for a subsidy, there is a good chance that they will also receive the money, those involved say to the FD.

Storage in a gas field must prevent CO₂ from entering the air. Last summer, Minister Eric Wiebes of Economic Affairs and Climate Policy wrote that since 2008 the government has paid out approximately € 4.5 billion in SDE subsidies. With those billions, about 42 megatonnes of CO₂ emissions have been saved.

If all goes well, Porthos should save about 37 megatonnes of CO₂ emissions in fifteen years. With a subsidy of an estimated € 1.5 billion. “CCS is cheaper than almost all other measures,” said a Shell spokesperson.

‘Technical and social experiment’

‘It is a technical experiment, and therefore also a social experiment. You have to question whether it will work out, ‘says Ebel Kemeling of consultancy MJ Hudson Spring about Porthos. “So this could be a political target.”

He wonders whether CO₂ capture is ‘the new biomass’. Energy companies received billions in subsidies to burn wood pellets in coal-fired power stations. There was more and more resistance. Co-firing also leads to CO₂ emissions and opponents pointed out that trees were cut down in North America to disappear in Dutch coal-fired power stations.

Resistance to co-firing reached as far as political The Hague. This summer, the government coalition decided to stop providing new subsidies for the combustion of woody biomass in power stations. Kemeling: ‘Even now we play billions to the large companies.’

The CO₂ capture will soon be largely financed by households, via the Sustainable Energy Storage (ODE), which every household in the Netherlands pays. Wind and solar projects are also financed with this storage. Only with sun and wind was already experience, where Porthos is unexplored territory. And money for CO₂ capture does not go to wind and solar projects.

‘Storage not a sustainable energy supply’

Alex Kaat, head of public affairs at industry association Holland Solar, fears that the subsidy row will soon be partly empty before solar parks are next. “This is the ghost for many solar park developers,” he says of CCS. The production of green electricity and the capture of CO₂ are different techniques, says Kaat. The Sustainable Energy Storage is intended for the generation of green energy. CO₂ capture does not provide energy, but captures emissions. His conclusion: “It’s actually unfair competition.”

Yet it seems certain that CCS will come. The capture and storage of CO₂ is an objective in the Climate Agreement. The Netherlands will not achieve its climate targets without CO₂ capture. For Chairman Olof van der Gaag of the Dutch Sustainable Energy Association, CO₂ capture was not our preference, but it is an acceptable compromise. Ultimately, I would rather have CO₂ underground than in the air. ‘

Kemeling is in favor of CO₂ capture, but not with SDE as financing. The subsidy assumes that we know and can weigh up what CCS costs. ‘It has never been proven. Not on this scale, not in gas fields, ‘he says. “It’s a blow in the air.”


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