Offtake agreement will see Microsoft purchase 2.76 million tonnes of durable carbon removal credits from Danish biomass energy and carbon capture project

The carbon removal market chalked up another high profile deal today, after Microsoft announced it has agreed to acquire 2.76 million carbon removal credits from Danish energy giant Ørsted.

The 11 year deal, which was hailed by the companies as "one of the world's largest carbon removal offtake agreements by volume", will see Microsoft purchase credits issued by the Ørsted Kalundborg Hub, which is set to deploy carbon capture capabilities at its wood chip-fired Asnæs Power Station in Kalundborg in western Zealand and the Avedøre Power Station's straw-fired boiler in the Greater Copenhagen area.

The news comes as the Danish Energy Agency (DEA) separately awarded Ørsted a 20-year contract for the pioneering carbon capture and storage (CCS) project.

"We're incredibly pleased with the outcome of the tender process, and we look forward to initiating the work of establishing a carbon capture facility at two of our combined heat and power plants running on sustainable straw and wood chips," said Ole Thomsen, senior vice president and head of Ørsted's bioenergy business.

"According to the UN's Intergovernmental Panel on Climate Change (IPCC), capture and storage of biogenic CO2 is one of the tools we must use to fight climate change, and our CCS project will contribute significantly to realising the politically decided Danish climate targets for 2025 and 2030."

Under the contract with the Danish government, the Asnæs and Avedøre combined heat and power plants will begin to capture and store biogenic carbon by 2025. From 2026, the two units are expected to capture and store approximately 430,000 tonnes of biogenic CO2 a year.

Ørsted said it has teamed up with Norway's Aker Carbon Capture to deliver its Just Catch technology to the CHP plants.

"We're proud of our partnership with Ørsted and see this project as a milestone for our standardised Just Catch offering to the mid-scale emitter market," said Valborg Lundegaard, CEO at Aker Carbon Capture. "We look forward to working with Ørsted and to contributing to their decarbonisation journey and to Denmark's CCUS ambitions."

The 430,000 tonnes of biogenic CO2 captured at the two sites each year will be shipped to the Northern Lights storage reservoir in the Norwegian part of the North Sea.

"We're very pleased that Ørsted has selected Northern Lights as CO2 storage provider," said Børre Jacobsen, managing director of Northern Lights. "This agreement confirms the commercial potential for CCS and demonstrates that the market for transport and storage of CO2 is evolving rapidly."

The project builds on a previous agreement between Microsoft, Ørsted, and Aker Carbon Capture to drive forward the development of biomass energy with carbon capture and storage (BECCS) technology. The latest deal will see Microsoft purchase carbon removal credits issued by the Asnæs Power Station.

Melanie Nakagawa, chief sustainability officer at Microsoft, said the "landmark" long-term agreement with Ørsted provided a further boost to the tech giant's plans to become carbon-negative by 2030. "[The deal] sends a strong demand signal to scale the market, and showcases the power of partnership and the technological innovation needed to help the world make the clean energy transition," she added.