By Chris Stockburger, AU-USEA Writers Fellow

In January 2025, the Swedish Energy Agency awarded Swedish energy company Stockholm Exergi SEK 20 billion (USD$1.8 billion) to support the development of bioenergy-CCS, a technology that captures biogenic carbon dioxide before it reaches the atmosphere. With this funding, Stockholm Exergi is currently building a full-scale carbon capture plant at an existing heat and power biomass plant in Stockholm, Sweden. The Stockholm project, however, was not guaranteed to reach the building stage. Previous BECCS projects, mainly in the United States and Europe, have failed to take off due to financing issues and a lack of policy support. Stockholm Exergi, however, has demonstrated that projects can overcome these financial and policy challenges, with the project receiving support from Sweden, the European Union, and a growing private-sector carbon market. Stockholm’s BECCS project demonstrates to the world that, despite current challenges in establishing BECCS, carefully structured public funding, paired with emerging private carbon markets, can make large-scale carbon capture projects viable.

Bioenergy with Carbon Capture and Storage (BECCS) is a process to produce energy while removing carbon from the atmosphere. It starts with plants or other kinds of biomass - defined as things that grow by taking in CO2 from the air. When this biomass is burned or converted into fuel to generate energy, it emits CO2. Usually, that gas would return to the atmosphere, but with BECCS, the CO2 is captured before it escapes and is stored deep underground. Stockholm Exergi will apply this technology by utilizing byproducts from industries such as forestry, sawmills, and pulp and paper in its power plant. Then, a CCS system will be embedded in the plant to extract CO2 from its exhaust gases, which are then cooled, liquefied, and transported for storage in rock formations under the North Sea. In total, Stockholm Exergi estimates that once the plant is operational in 2028, it will capture 800,000 tons of CO2 per year, more than the total amount of CO2 emitted by Stockholm's road traffic.

So what has made Sweden a good place suitable for BECCS? One of Sweden’s strengths is its geographic access to storage options. Stockholm in particular benefits from its proximity to the North Sea, which can store an estimated 100 billion tons of captured carbon in the sandstone’s seabed, where it will hold the captured CO2 from Exergi. Other Scandinavian countries have successfully demonstrated the feasibility of injecting captured CO2 into the North Sea. Most notably, the Northern Lights project in neighboring Norway successfully injected its first volumes of CO2 into the North Sea in August 2025. This storage option provides a safe and effective way to permanently store captured CO2 away from civilian populations.

Another strength for Sweden is its ability to access funding from a wide variety of sources. The project has three main funding components that enable financing of this plant. The first source of funding is the previously mentioned SEK 20 billion (USD$1.8 billion) from the Swedish Energy Agency, set to be paid out for 15 years when geological storage starts. Second, Stockholm Exergi has received additional funding from transnational organizations, including securing €180 million (USD$208 million) from the EU Innovation Fund, an SEK 2 billion (USD$212 million) loan from the Nordic Investment Bank, as well as a €260 million (USD$300 million) loan from the European Investment Bank. This is the first CCS project the European Investment Bank has financed, in line with its commitments to invest €1 trillion into green projects. The most scalable method that is used to finance the plant, however, is through corporations purchasing negative emissions through voluntary carbon markets, whose funds go into financing the project. Private companies dominate the voluntary carbon market, accounting for over 62% of the market, which is projected to grow by billions of dollars in Europe alone by 2030. Organizations have already rushed to work with Stockholm Exergi, with the company announcing in May 2025 that it has signed a contract with Microsoft for 5.08 million tons worth of carbon removal certificates.

Sweden’s final major strength has been its climate-friendly policy landscape,  and its BECCS investment fits into the country’s broader climate initiatives. Sweden established a national climate framework in 2017, with the national goal of net-zero emissions by 2045, commitments to presenting yearly climate reports in its Budget Bill, and to creating a climate policy action plan every 4 years to describe how the climate goals will be achieved. Additionally, the Swedish government has set aside SEK 36 billion (USD$3.78 billion) between 2026 and 2046 to develop BECCS in the country, with a large chunk of that money going to Stockholm Exergi. When the plant is operational in 2028, Stockholm will