The Dutch Climate Agreement stipulates that subsidising Carbon Capture and Storage (CCS) should not come at the expense of developing alternative, clean energy technologies. Therefore, subsidisation of CCS projects is regulated through the Sustainable Energy Production and Climate Transition Incentives (SDE++). One way of doing this is through ‘sieve methodology’, which looks at whether there are demonstrably cost-effective alternatives to CCS. There are several different categories for technologies using CCS in SDE++. If cost-effective alternatives are identified for any of these categories, the relevant SDE category will be excluded from a subsidy.
At the request of the Ministry of Economic Affairs and Climate (Ministerie van Economische Zaken en Klimaat), CE Delft re-examined the method of sifting or identifying possible cost-effective alternatives to CCS. We present our revised sieve methodology in the report ‘Revision of Sieve Methodology CCS for SDE++’. In essence, this methodology involves identifying alternative technologies for all industrial processes for which CCS is potentially relevant and then calculating their cost-effectiveness based on the ‘Onrendabele Top-model’ (OT-model) of the Netherlands Environmental Assessment Agency (PBL).
We then elaborated our sifting methodology with a view to the 2023 subsidy allocation. This elaboration can be found in the report ‘Cost-effective alternatives to CCS’. We conclude that a cost-effective alternative to CCS currently exists only for the process of evaporating aqueous solutions, namely Mechanical Vapour Recompression (MVR). Given that the SDE categories using CCS are much broader than this particular process, it is not possible to exclude a particular SDE category from subsidisation based on this alternative.
For the 2024 subsidy allocation, we performed a concise update (report ‘Updated sieve study for SDE++ subsidy round 2024’). We again found that mechanical steam recompression (MVR) is the only more cost-effective option compared to CCS. We found that the costs of renewable alternatives increased relatively more than those of CCS compared to last year. This is not beneficial to the development of these alternatives.
For the 2025 SDE++ subsidy call we applied the full sieve methodology again (report ‘Updated sieve study for SDE++ subsidy round 2025’). We added one new clean technology to the list of alternative technologies: Reduced Iron Fuel Technology (RIFT).
A key difference with last year’s study is that the calculation method of the subsidy intensity in the ‘Non-profitable Top Model’ (OTM) of the Dutch environmental assessment agency (PBL), on which our method is based, was changed. Because of this, the subsidy intensities of CCS technologies and clean alternative technologies are now better comparable than in earlier versions of this model. This is reflected in our results, as the cost effectiveness of several clean alternative technologies is now closer to that of CCS than found by our earlier sieve methodology studies.
We conclude that for several industrial processes there are clean alternative technologies available. But especially for the production of hydrogen, the clean alternative (green hydrogen) is still very costly. Because of particularities of the SDE scheme, it is therefore not possible yet to exclude an entire SDE++ category for CCS from subsidy for 2025. However, the Minister for Climate and Green Growth has decided, on the basis of our study report, that SDE++ subsidy is not possible anymore for CCS associated with the processes of evaporating aqueous solutions and the production of low temperature steam. This was announced in the Letter to Parliament on the 2025 SDE++ call for subsidy and will be included in the regulation in due time.