Stockholm Exergi announces permanent carbon removal agreement with Microsoft, world's largest to date
STOCKHOLM, May 15, 2024 /PRNewswire/ -- Stockholm Exergi has announced that it has signed a contract with Microsoft covering 3.33 million tonnes of permanent carbon removals from bio-energy with carbon capture and storage (BECCS) at Värtan, Stockholm. The agreement represents the world's largest permanent removals deal to date. The deliveries of the carbon removal certificates to Microsoft are planned to start in 2028 and continue for a period of ten years.
"The agreement with Microsoft is a huge step forward for our BECCS project, Stockholm Exergi as a company and the climate. It is the strongest possible recognition of the significance, quality and sustainability of our project and takes us an important step closer to a final investment decision in Q4 2024. I believe the agreement will inspire corporations with ambitious climate objectives, and we target to announce more deals with other pioneering companies over the coming months," says Anders Egelrud, CEO of Stockholm Exergi.
The contract represents a milestone for climate change mitigation. While emissions reductions remain an over-all priority, there is today consensus that global warming cannot be limited to 1.5 °C or well-below 2 °C without permanent carbon removals. By demonstrating commitment to ambitious, voluntary corporate climate objectives, Microsoft and Stockholm Exergi hope to contribute to the much-needed growth of the industry, to allow corporates to meet their net-zero targets and nations to meet the objectives of the Paris Agreement. Building on this announcement, Stockholm Exergi intends to seek complementary state aid and additional private carbon removal deals, both of which are necessary to reach financial close.
Since 2020, Microsoft has pursued the goal of being carbon negative by 2030, with a reductions first strategy, complemented by building a portfolio of carbon removal offtake agreements. It has publicly set out its criteria for high-quality removals, pursued financeable offtake agreements, communicated lessons learned, and reported its progress annually.
"We are extremely proud to announce this carbon removal offtake with Stockholm Exergi from its pioneering Värtan BECCS project. Leveraging existing biomass power plants is a crucial first step to building worldwide carbon removal capacity. In this case, we are pleased with the efficiency of recovering heat from carbon capture and adding it into district heating networks. Finally, it is crucial to sustainably source the biomass for BECCS projects and we were impressed with Stockholm Exergi's commitment in this regard," said Brian Marrs, Senior Director, Energy & Carbon Removal.
As confirmed in the agreement with Microsoft, Stockholm Exergi will deliver carbon removals following strict quality requirements. This includes criteria for sustainable sourcing of forest biomass developed together with Microsoft, conservative quantification of net removals and comprehensive monitoring, reporting and verification (MRV).
In line with the policy of the Swedish government, the carbon removals exchanged in this agreement will be used by Microsoft to negate its own emissions and will be transparently reported as fitting under Sweden's climate targets, similarly to how corporate emission reductions contribute to national climate targets.
About the BECCS-facility
When in operation, Stockholm Exergi's plant will permanently remove up to 800,000 tonnes of CO₂ from the atmosphere per year.
The environmental permit for the project at the Stockholm site was obtained on March 28th this year. The construction of the carbon capture unit, liquefaction and intermediate storage is planned to start 2025 and will be an addition to Stockholm Exergi's existing biomass-based combined and heat power plant in Stockholm, in operation since 2016. The biomass feedstock for the project will continue to be safeguarded to ensure sustainable management of forests, protection of sensitive areas, stable carbon stocks, and to ensure that feedstock is not sourced from roundwood that would otherwise be used for long-lived wood products. Permanent geological storage will take place in the Nordic region.
The permanent carbon removals are contingent on Stockholm Exergi's final investment decision, planned for Q4 this year. To reach final investment decision, Stockholm Exergi targets to successfully participate in the Swedish aid program for BECCS, expected to be concluded before the end of the year, as well as closing other agreements on the voluntary carbon market. The funding of the project also relies on already awarded means from the EU Innovation Fund. Notwithstanding government aid and the EU funds, additional revenues from selling carbon removal units on the voluntary market are required for the project to reach financial close. This business model, which will combine the agreement with Microsoft (and other private buyers) with EU funding and state aid, is a strong validation of how public-private co-funding can maximize the quantity of permanent removals and removal projects that can be realized within a nation's budget for climate action.
About Stockholm Exergi
As Sweden's leading district heating company with a €700 million in turn-over, Stockholm Exergi pioneers sustainable and circular heating, electricity and cooling solutions in Stockholm, Sweden. With a history of launching innovative solutions ranging from heat-recovery from data centers, advanced waste sorting to intelligent energy management, Stockholm Exergi is now working to become the largest supplier of permanent carbon removals within the European Union. Stockholm Exergi is owned by the City of Stockholm and a consortium of leading European pension funds (APG, Alecta, PGGM, Keva and AXA).
Contact
Daniel Löfstedt
Press Manager
Stockholm Exergi
daniel.lofstedt@partners.stockholmexergi.se
Phone press service: 0046 20-30 20 40
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