Denmark’s high-profile carbon capture and storage (CCS) tender has been widely framed as a disappointment. A multi-billion-euro subsidy program launched to jumpstart a competitive CCS market ultimately attracted only a handful of final bidders, falling short of its original capacity ambitions. For some observers, that outcome signaled a policy misfire.
Rather than a collapse, the Danish tender functioned as a full-scale stress test of CCS policy under real market conditions. It surfaced the practical constraints, risks, and timing mismatches that still define large-scale carbon capture deployment.
Denmark committed roughly €4 billion ($4.7 billion) to support projects capable of capturing and storing more than two million tons of CO2 annually over the next two decades.
For a country of its size, the initiative was unusually ambitious, positioning CCS as a central pillar of national climate strategy rather than a niche experiment.
Initial interest appeared strong, with a broad pool of applicants entering the early stages. But as projects moved closer to binding commitments, participation narrowed sharply, with 8 out of 10 bidders walking away.
In a comment for the Carbon Herald, Jannick Buhl, Head of CCUS, CDR and biomass at the Danish District Heating Association, said: “The developments in the tender over the past couple of months have shown that political ambitions and practical reality don’t always work on the same timeline, and that strict tender requirements in an emerging market can in fact become a barrier.”
“My analysis is that we will see a slight delay in developing the CCS value chain in Denmark compared to the political ambitions, but I think it is worth applauding the two companies that have managed to submit a binding offer.”
Where the Tender Ran Into Reality
Several structural pressures converged. Development timelines were closely tied to near-term political targets, compressing schedules for permitting, storage appraisal, infrastructure buildout, and financing, all of which typically unfold over longer horizons. That imbalance shifted substantial risk onto developers.
Access to commercial-scale, licensed CO2 storage also proved decisive. While Denmark has promising offshore geology, bankable storage capacity remains scarce, making it difficult for capture projects to reach final investment decisions.
Tender design further compounded the challenge, as strict penalty regimes and price caps limited flexibility at a stage when costs remain highly site-specific and uncertain. In an early-stage market, such constraints deter participation rather than encourage discipline.
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Yet the projects that endured offer an important signal. The most advanced bid comes from Aalborg Portland, representing the cement sector – one of the hardest industries to decarbonize. For cement, CCS is proving to be essential, and the emissions reductions on offer are material at a national level.
Denmark’s experience underscores a broader lesson for CCS policy worldwide. Early funding rounds are unlikely to maximize competition. Their real value lies in revealing where systems are ready, where they are not, and how policy frameworks must evolve.
“The Danish government has recently decided to prioritize €8 billion (DKK 60 billion) to meet the new Danish 2035 climate target of 82 percent emission reductions compared to 1990 levels. While no decision has been made on how the funds should be used and hence how much will be directed towards CCS, I believe there is a good chance that more funds will be allocated to CCS,” Buhl told us.
“However, instead of rushing into a new tender using the same model, I believe we should use the learnings from the recently finished tender to find a subsidy model which deals with the high project-on-project risk and is better aligned with timelines across the value chain, including the expected timelines for exploration and development of onshore storage sites in Denmark.”
Read more: Aalborg Portland Targets 1.4 Mt CO2 Capture with Bid for Denmark’s CCS Funding Pool