Ørsted enters into major carbon removal agreement with Microsoft • Carbon Credits

Ørsted announced a significant expansion of its partnership with Microsoft, agreeing to sell an additional 1 MT of carbon dioxide removal system over 10 years from the Avedøre power plant. It is part of the Bioenergy Carbon Capture and Storage (BECCS) initiative, known as the “Ørsted Kalundborg CO2 Center”. This new agreement builds on Microsoft’s existing commitment to purchase 2.67 million tonnes of CO2 from the Asnæs power plant, bringing the total contracted carbon reduction to 3.67 tonnes.

Key features of the Ørsted-Microsoft agreement

1. Implementation of carbon capture

As part of the Ørsted Kalundborg CO2 Hub, Ørsted will install carbon dioxide capture technology at the woodchip-fired Asnæs power plant in Kalundborg, West Zealand, and in a straw-fired boiler at the Avedøre power plant in Greater Copenhagen. The thermal power plants will capture 430,000 tonnes of biogenic CO2 per year, which will then be transported to a storage tank in the Norwegian North Sea for permanent storage. The hub is expected to be operational in early 2026.

2. Microsoft’s Carbon Zero Commitment

Starting in 2026, Microsoft will collect one million tonnes of coal removal from the straw-fired unit at the Avedøre power plant. This plant uses locally sourced straw, an agricultural by-product, to generate electricity and district heating. By capturing and storing biogenic carbon from biomass power plants, this process not only reduces CO2 emissions, but also removes carbon from the atmosphere, creating negative emissions. This is because biogenic carbon from sustainable biomass is part of the natural cycle.

3. Supporting sustainable development

The collaboration between Ørsted and Microsoft is crucial to the development of the Ørsted Kalundborg CO2 Hub, especially as bioenergy-based carbon capture and storage technology continues to develop. The project, which received a subsidy from the Danish Energy Agency, took into account expected revenues from carbon dioxide absorption certificates in its investment decision. Competitive pricing was a key factor in awarding the subsidy.

4. Importance of BECCS for climate goals

The UN Intergovernmental Panel on Climate Change (IPCC) has highlighted the importance of carbon dioxide removal technologies such as BECCS in limiting global warming. Projects like the Orsted Kalundborg CO2 Hub are essential to help companies like Microsoft achieve their sustainability goals and contribute to global climate goals.

Is Microsoft leading the charge towards a carbon neutral future?

Decoding carbon emissions and net zero plans

In 2023, Microsoft expanded its renewable energy resources to more than 19.8 gigawatts (GW), with projects in 21 countries. Additionally, last year the company secured contracts for the withdrawal of 5,015,019 tons of carbon dioxide over the next 15 years. Its net zero plans focus on three main areas:

1. Reducing carbon dioxide emissions
2. Increasing the use of emission-free electricity
3. Carbon removal

ESG’s latest report suggests that the path to becoming carbon negative has the following steps:

Reducing Scope 1 and 2 emissions

Microsoft’s goal is to almost completely eliminate Scope 1 and 2 emissions by increasing energy efficiency, decarbonizing its operations and achieving 100% renewable energy by 2025. Microsoft achieved a 6% reduction in Scope 1 and 2 emissions compared to the 2020 base year, thanks to progress in green energy purchasing, implementation of green tariff programs and use of unbundled renewable energy certificates

Scope 3 emission reduction

Microsoft’s Scope 3 emissions account for more than 96% of Microsoft’s total emissions. Most of these emissions come from purchased goods and services, downstream capital goods, and downstream use of sold products. By 2030, Microsoft aims to reduce Scope 3 emissions by 50% from a 2020 baseline.

While Scope 3 emissions have increased 30.9% since 2020, Microsoft remains committed to increasing clean energy purchases across its supply chain. It aims to invest in decarbonizing hard-to-reduce industries such as steel, concrete and other materials used in its data centers.

Tracking progress towards carbon negative emissions by 2030

Microsoft’s total emissions increased 29.1% in FY23 compared to the base year. Plus this withdrew 605,354 MT of coal removal as part of its net zero targets.

Can Ørsted’s bold strategies push us towards a zero-emission future? Find out…

Ørsted committed to achieving net zero emissions across the value chain by 2040, aiming to reduce emissions through various initiatives, including renewable energy projects, energy efficiency measures and stakeholder engagement in sustainable practices.

The company reports its own greenhouse gas emissions in three categories: Scope 1, Scope 2 and Scope 3, as defined in the Greenhouse Gases (GHG) Protocol.

Reduction Scope 1 and Scope 2 emissions

Ørsted has significantly reduced Scope 1 emissions by switching from fossil fuels to renewable energy sources such as wind and biomass. For Scope 2 emissions, Ørsted focused on increasing energy efficiency and sourcing renewable energy to reduce emissions from purchased electricity and heat.

• Scope 1 and 2 emissions: 2023 was 38 g CO2e/kWh

Scope 3 emission reduction

To address Scope 3 emissions, Ørsted works with suppliers, optimizes logistics and promotes sustainable practices across its value chain, targeting emissions from fuel production and transportation, wind turbine component production, business travel and the use of products sold.

• Scope 3 emissions: FY 2023 was 80g CO2e/kW

Image showing Ørsted’s installed renewable capacity and greenhouse gas intensity

source: Ørsted

Key sustainability goals

• Scope 1-2 emission intensity: 98% reduction by 2025 and 99% reduction by 2030 (from 2006)
• Scope 1-3 emission intensity (excluding natural gas sales): 77% reduction by 2030 and 99% reduction by 2040 (from 2018)
• Scope 3 emissions (from natural gas sales): 67% reduction by 2030 and 90% reduction by 2040 (from 2018)

The best clean energy and decarbonization projects

Microsoft:

The company invests in renewable energy sources such as wind, solar and hydropower and implements energy efficiency measures across its operations. Like the partnership with Ørsted and other CDR projects aimed at offsetting emissions and removing CO2 from the atmosphere. Through these efforts, Microsoft aims to become carbon negative by 2030, eliminating both direct emissions and those across the value chain.

Microsoft’s remarkable decarbonization achievements include:

Orsted:

Ørsted is a leader in clean energy and decarbonization. It is moving away from fossil fuels towards renewable energy sources such as wind, solar energy and biomass. The company mainly focuses on:

• Large-scale offshore wind farms
• Wind energy on land
• Bioenergy carbon capture and storage projects.
• Solar energy and grid stabilization

These initiatives aim to reduce and remove CO2 emissions, contributing to Ørsted’s goal of achieving net zero emissions across the value chain by 2040. Ørsted is thus making significant progress in the fight against climate change and promoting sustainable energy solutions through these projects.

Ørsted Global footprint

source: Ørsted

Notably, Ole Thomsen, senior vice president and head of bioenergy at Ørsted, commented:

“This expanded partnership with Microsoft is a testament to our shared vision for a sustainable future. By combining Ørsted’s expertise in bioenergy carbon capture and storage with Microsoft’s commitment to reducing its carbon footprint, we show how strategic relationships can accelerate the transition to a greener economy.