(Bloomberg) -- Microsoft Corp. is buying credits for CO2 captured at two Danish power plants and then stored beneath the North Sea in a sign that corporate emission-reduction goals can help spur carbon storage technology.  

The tech giant’s deal with Orsted A/S helped the utility in its bid to secure backing from the Danish government to trap CO2 from the biomass-fired power stations. It’s a key step for the scaling up of a technology that will be crucial for Europe to reach its goal of net zero emissions by 2050. 

“It’s a combination between a private company who’s offtaking the credits and then a state subsidy, and together this has made it possible,” Ole Thomsen, head of Orsted’s bioenergy business, said in an interview.

Orsted will be paid by the Danish government for every metric ton of CO2 that it stores, with a target to trap 430,000 tons a year. Additionally, Microsoft agreed to buy credits for 2.76 million tons of carbon removal over a period of 11 years. If Orsted can meet its annual capture target, that would see Microsoft paying to take credit for more than half the annual emissions stored. 

The project set to start in 2025 will capture emissions from two stations that produce both electricity and heat. Orsted signed a €200 million ($218 million) deal with specialist Norwegian firm Aker Carbon Capture ASA for equipment to trap gases at its power stations and liquefy it before being transported to Norway for storage at a facility operated by a joint venture of oil giants Equinor ASA, Shell Plc and TotalEnergies SE. 

Key to the project’s attractiveness for corporate buyers is that the CO2 comes from plant material, known as biogenic, according to Orsted’s Thomsen. Electricity from biomass is considered renewable even though it produces emissions when combusted, because the idea is that new plants will absorb an equivalent amount of CO2. 

But by trapping carbon at the plant, it is being counted as a negative emissions technology. That claim will have to be rigorously proven after previous analyses found that the emissions from cutting down, chopping and transporting trees can often be higher than the CO2 they trap.

Orsted will look for further deals to sell credits from the remaining carbon not already bought by Microsoft. It is also looking to potentially replicate the project at other biomass units in Denmark. 

 

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