From early ambition to system-level learning
When CO₂ Hub Europe was first established, the core ambition was simple but demanding: to help move CCS in Denmark – and Europe – from concept to reality by focusing on system design rather than isolated projects. The underlying conviction was that CCS will only scale if capture, transport and storage are developed as one integrated system, supported by clear regulation, risk sharing and long-term infrastructure planning.
Against that backdrop, the Danish CCS tender deserves recognition – not only for its ambition, but also for the substantial effort invested by the Danish Energy Agency (Energistyrelsen) and the Ministry of Climate, Energy and Utilities (Klima-, Energi- og Forsyningsministeriet), . Designing one of Europe’s first large-scale CCS support schemes is inherently complex, and Denmark has been willing to move early, learn fast and adjust.
At the same time, the outcome of the tender process highlights a fundamental truth about CCS:
Moving early without sufficient system readiness carries real risk.
CCS is only as strong as its weakest link: access to storage
A central lesson from the Danish experience is that access to proven, cost-effective CO₂ storage is not a secondary issue – it is the foundation of the entire CCS value chain.
Several projects have withdrawn not because capture technology failed or ambition was lacking, but because storage availability, maturity and cost could not be secured with sufficient certainty at the time bids had to be submitted. In a market with very few mature storage options, project economics become extremely sensitive to changes in storage assumptions.
This reinforces a reality that must be reflected more clearly in policy design:
Without storage projects that are sufficiently mature to reach Final Investment Decision (FID), capture projects become premature – regardless of how strong the climate case may be.
Why Europe needs many storage projects – not just a few “winners”
International experience shows that more than half of identified storage sites never reach development, due to geological uncertainty or lack of economic viability. This has two important implications:
First, early development of multiple storage sites is essential. Betting on a small number of “promising” sites creates systemic fragility. If one site fails to mature, the entire CCS system is exposed.
Second, competition between storage operators must be enabled early. Across Europe – including Norway and the UK – CO₂ storage licences are often concentrated in relatively few hands. While this may accelerate early progress, it also risks limiting competition, slowing cost reductions and locking in suboptimal outcomes.
A robust CCS strategy therefore requires:
- rapid geological appraisal of multiple sites in parallel,
- clear work programmes and decision gates, and
- mechanisms to return licences that do not mature, so areas can be reallocated.
Put simply: storage competition does not emerge by itself – it must be designed into the system.
Infrastructure as both carrot and pressure point
Public prioritisation of CO₂ infrastructure can play a decisive role in de-risking storage development.
Well-planned transport infrastructure – pipelines, hubs and terminals – does more than move CO₂. It:
- reduces commercial risk for storage operators,
- improves utilisation rates, and
- makes certain storage sites structurally more competitive than others.
This creates a powerful incentive mechanism:
The better the infrastructure connection to a storage site, the stronger the commercial case for that site to move quickly towards FID.
In this way, infrastructure planning becomes both a carrot and a pressure point, encouraging timely maturation of storage projects while maintaining competition.
A missed opportunity: the Copenhagen cluster case
The Danish tender also illustrates the cost of treating CCS projects as stand-alone investments rather than clusters.
A CO₂ pipeline solution connecting Copenhagen to shipping facilities in Kalundborg and/or storage near Havnsø is expected to require commitments of around 1.5 million tonnes of CO₂ per year. This volume is well below the combined emissions from major actors in the area, including ARGO, ARC, HOFOR, Vestforbrænding and Ørsted (Avedøre).
Had the framework enabled these actors to develop a shared CCS cluster (ie building on C4 – now CCS Zealand), several benefits could have followed:
- a more economic and scalable transport solution,
- mutual de-risking between projects,
- lower unit costs for each participant, and
- a clearly superior socio-economic outcome.
Instead, projects were largely forced to stand alone – increasing costs, risks and complexity for everyone involved.
This is not unique to Denmark. It is a general warning for Europe: fragmented CCS development is structurally more expensive than coordinated, cluster-based solutions.
Competitive tenders are powerful – but not sufficient in early CCS markets
The Danish CCS tender was designed to drive cost efficiency and competition. That logic works well in mature markets. CCS, however, is not yet a mature market.
Early-phase CCS is characterised by:
- very high CAPEX,
- strong interdependencies across the value chain,
- limited alternatives, and
- asymmetric risk between public and private actors.
In such a context, market creation must precede full market competition.
Infrastructure financing: risk matters more than capital
One of the most encouraging recent developments is the growing recognition that CO₂ transport infrastructure must be financed differently from ordinary commercial projects.
Pipelines are long-lived, capital-intensive assets with strong public-good characteristics. Financing them in an immature market as high-risk merchant investments will inevitably lead to excessively high cost of capital – and therefore high tariffs.
Recent assessments from the financial sector confirm this picture: CCS projects reach FID primarily where governments actively backstop volume, ramp-up and subsurface risk. Where emitters are left to carry the full value-chain risk alone, projects may be technically feasible, but remain financially fragile.
In this context, Denmark’s move to enable state-backed financing mechanisms for CO₂ infrastructure, including re-lending arrangements via the state-owned operator Evida, is not just positive – it is essential.
The conclusion is straightforward:
Trying to finance society-critical CO₂ pipeline infrastructure in an undeveloped market without risk sharing is destined to fail.
From national learning to European progress
The Danish CCS experience should not be seen as a setback, but as early system learning.
At European level, it strengthens the case for:
- coordinated CO₂ backbone planning,
- cross-border infrastructure corridors,
- early development of multiple competing storage sites, and
- a clear public role in absorbing early-stage risk.
This is precisely where current EU work on CO₂ transport regulation, infrastructure planning and the Net-Zero Industry Act can make a decisive difference.
A constructive way forward
Denmark still has all the prerequisites to become a central CO₂ hub for Northern Europe. The key is to sequence development correctly:
- mature storage and infrastructure first,
- ensure open-access, low-cost transport,
- then scale capture through competition.
If these lessons are absorbed – nationally and at EU level – the first CCS tenders will not be remembered as failures, but as necessary steps in building a resilient European CCS system.
And that, ultimately, was the ambition from the very beginning.
Peter Kristensen CO₂ Hub Europe
