In light of an updated cost estimate for its new carbon capture project, revealing larger expenses than originally planned, Celsio is now looking to pause CCS installment operations at its Klemetsrud plant.
Hafslund Oslo Celsio, previously known as Fortum Oslo Varme, is part of the Norwegian Government’s Longship project, which aims to create and provide a carbon capture and storage infrastructure for companies across Europe.
As part of this agenda, Celsio began work on a CCS project, which brought on a financing agreement with the Norwegian government covering 50% of the costs. The remaining 50% of the funds were secured from other parties.
Amid preparatory activities, in November 2022, state-owned Gassnova, which is in charge of monitoring and overseeing the grant agreement with Celsio, raised concerns over the financial prognosis of the project and asked for a temporary pause in operations.
In government grant agreements, if the maximum budget is exceeded the government is not responsible for further financing, but the participating parties in the contract are obliged to work together on a mutually agreeable solution for the benefit of the project.
On April 5, 2023, Celsio released its biannual cost and uncertainty analysis under the terms of its government funding agreement.
The breakdown showed significant cost overflows and delays, which led the company to interrupt development plans and begin looking for ways to reduce expenses.
In a recent press release, they stated that the project will enter a 12-month cost reduction period and that the organization and its owners are still invested in seeing the successful completion of the project.
The Celsio project holdback will not affect the overall completion of the Longship initiative, as the delay is expected to be only temporary.
Other organizations like Norcem and the Northern Lights Project are already halfway through their construction processes and will start capturing and storing carbon by 2025.