Microsoft and Stockholm Exergi announced a permanent carbon removal agreement, the world’s largest permanent removals deal to date.
The contract covers 3.33 million tonnes of permanent carbon removals from bio-energy with carbon capture and storage (BECCS) at Stockholm Exergi's planned BECCS facility at its plant in Värtan, Stockholm. The deliveries of the carbon removal certificates to Microsoft are planned to start in 2028 and continue for a period of ten years.
Negating emissions
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. 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.
“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 Microsoft's Brian Marrs, Senior Director, Energy & Carbon Removal.
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 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.
More funding needed
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. 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.
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.
