Climate project under the North Sea appears to be especially lucrative for major polluters | climate

The Porthos CO2 storage project can provide companies such as Shell with a significant advantage, while the government loses income, according to a report published by the Court of Audit on Thursday. “The government is actually doing itself a disservice,” says board member Barbara Joziasse of the Court of Audit.

Porthos will collect CO2 that companies such as Shell and ExxonMobil capture from their smokestacks. The greenhouse gas is transported via pipelines and disappears about 20 kilometers from the coast in an empty gas field, kilometers deep under the sea.

After a considerable delay, partly due to a lawsuit at the Council of State, Porthos wants to start in 2026. About 2.5 million tons of CO2 will then disappear under the sea every year, until the gas fields are full in 2042.

The Court of Audit states that the project is “more than effective” in achieving climate goals. “In other words: the taxpayer gets value for his money,” says Joziasse.

The government provides a subsidy for every ton of CO2 that does not escape into the air. The amount of the subsidy is linked to the CO2 price that European companies already have to pay for their emissions.

When climate minister Rob Jetten decided to provide a subsidy for the Porthos project in 2020, it seemed that as much as 1.8 billion euros in subsidy might be needed over a period of sixteen years. But the CO2 price has now risen sharply and the subsidy amount is likely to decrease. Perhaps no subsidy is paid at all.

That is good news for the government, but according to the Court of Audit, insufficient account has been taken of the possible excess profits that Shell and other customers of Porthos can expect. Their return from CO2 storage is expected to be tens of percent. That is much higher than the “reasonable return” of 7.5 percent that was expected when the subsidy was granted.

Yet this has not been taken into account: no agreements have been made about sharing those profits with the government. This often happens abroad; For example, wind farms that receive subsidies in the United Kingdom must share their profits with the government when energy prices are high. The Dutch government can only hope that companies like Shell will pay more profit tax at the end of the year.

While the same government is taking major risks in the Porthos project, the Court of Audit concludes. Porthos is owned by three state-owned companies, so in fact the pipelines were built with taxpayers’ money. But due to setbacks, Porthos can expect a return of only 2 percent. Much less than the major CO2 emitters that are customers. Even if there are CO2 leaks or other incidents in the future, the government will remain responsible for the costs “until the end of time”.

The Court of Audit says it understands that Porthos will face setbacks due to its “pioneering character”. It will be one of the first major CO2 storage projects worldwide. But it won’t be the last, so the government must learn from its mistakes.

“You can already see Aramis coming, a project ten times bigger than Porthos,” says Joziasse. “It is important to learn those lessons now, because the government’s investments will soon be much greater.”

Ontvang meldingen bij nieuws Stay informed with notifications

The Court of Auditors makes another remarkable finding in the report. Porthos appears to have to pay millions in compensation to the gas company TAQA from Abu Dhabi. This is the operator of the gas field where Porthos can store its CO2.

It turns out that there is still a small amount of natural gas in that gas field. When the price of gas rose during the energy crisis, it became attractive again for TAQA to extract that gas. Porthos and its customers therefore pay compensation to the company.

It is not clear exactly how high this is, but according to the Court of Audit it is certainly tens of millions of euros. During the crisis, an amount of hundreds of millions was even taken into account, because the price of gas was so high at the time.

The Court of Audit calls it “remarkable” that the Ministry of Economic Affairs and Climate never reported this setback to the House of Representatives. It has never been announced that there is still natural gas in the field that Porthos wants to use.

This was also not made public when the ministry decided to provide a guarantee at the end of 2022 due to other setbacks during the construction of Porthos. That guarantee, worth 175 million euros, had to be approved by parliament.

In response, outgoing minister Micky Adriaansens says that in the future she will be more transparent about unextracted natural gas in CO2 storage projects. But according to her there is “no substantive connection” between the guarantee to Porthos and the compensation deal with TAQA.

Om een vraag te kunnen stellen dien je in te loggen. Log in of maak binnen 1 minuut jouw gratis account aan.