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Good morning. [Foreign Language].
Good morning. Aker Carbon Capture's first quarter included the start-up of the Brevik CCS EPC project and several new partnerships. We have experienced positive market development in the quarter with continuous increase in CO2 quota prices, several countries and companies setting more ambitious targets for CO2 reduction and most important, increased activity in group. Our focus is on the CCUS market only, and our customers will have our full attention. And for investors, this opens up for investments in a pure-play company, not a conglomerate of segments.Our proprietary technology has been developed over 20 years, and it's validated over 50,000 operating hours and certified for several applications by D&B. Aker Carbon Capture's technology is cost effective, robust and flexible to us. They want to reduce their emissions and not introduce new emissions or hazardous chemicals. That is why our technology's unique HSE characteristics are also a commercial differentiator.Now highlights of the quarter. The Brevik CCS contract marks a breakthrough for Aker Carbon Capture and the carbon capture industry. This is the first carbon capture product at a cement facility in the world. The Brevik CCS project is part of Longship, the greatest climate project in Norwegian industry ever. This is a full value chain CCS development, including Brevik CCS as well as the transportation and storage project, Northern Lights. The storage project has excess capacity and will further advance the carbon capture market.In March, Aker Carbon Capture, Ørsted and Microsoft signed an MoU to explore ways to support it or remove carbon from the atmosphere, negative emissions, as carbon from sustainable biomass is part of a natural biogenic carbon cycle.Later in March, Aker Carbon Capture and Siemens Energy signed an MoU aimed at developing combined offerings for carbon capture solutions that can be applied to gas turbines and gas-fired power plants. The intention is also to explore ways to jointly fast track developments of major projects globally, the 10 million tonne per year of CO2 by 2030. Therefore, major U.K. opportunities are moving forward. Large-scale gas-to-power plants with carbon capture are planned to decarbonize industrial clusters.As a consequence of increased market activity, Aker Carbon Capture is establishing presence in Denmark and U.K. Today, Aker Carbon Capture announced a collaboration agreement with SINTEF, one of Europe [Audio Gap]. The current collaboration includes membrane technology, hydrogen application and testing of higher capture rates. Now we are ready to take the next phase of challenges to develop even more cost-effective carbon capture solutions.Varying national and regional pricing initiatives impact effective carbon price. This includes not only ETS, but also national tax, regional tax and fine. And in the U.S., tax since end December 2020. Even though CCUS more and more is becoming part of our client's license to operate, rising carbon prices clearly supports for growth in the CCUS market.Today, CCUS developments require governmental funding. We haven't reached breakeven yet. However, we have already seen that the effective carbon price is increasing. Are part of the economy, CO2 per year and Big Catch, which is a tailor-made capture plant for the biggest emission points, over 400,000 tonne per year, up to 7 million tonne per year.Renewables like solar and wind have demonstrated significant cost reduction, like we have done for Just Catch, where we have been able to reduce the cost with 90% since 2012. The cost can and must be further reduced. There is not one quick fix. We have modularization. Reuse of designed solution reduces cost and increases efficiency. Modularization opens up for low-cost fabrication and efficient hookup. Three, digitalization. We have established a digitalization program with our Aker sister companies, Aize and Cognite. It's called Elektron, a 5-year partnership dedicated to embedding industrial software, to put raw data in context as well as build attractive solutions. Five, long-term supply chains. We will take advantage of ongoing projects to establish long-term cost-efficient supply chains. And finally, six, learning by doing. Brevik CCS is our first Big Catch delivery. We expect to learn a lot from this and be able to reduce the cost considerably for later Big Catch developments.Let us now take a look at the status of [indiscernible], Benelux and U.K. leading the way. And here, the market interest from prospective customers and the regulatory environment to support adoption of carbon captive technology is most mature. We will prioritize to deliver our carbon capture products to 4 market segments: Cement, bio and waste-to-energy, blue hydrogen and gas-to-power. To strengthen our offering and position in prioritized market, we have secured MoU and collaborate of global CO2 emissions.CCS is the solution to decarbonize this hard to abate segment. In December 2020, the Norwegian Parliament approved a Longship project to establish the entire CCS value chain, from capture to transport and permanent storage underneath the North Sea. Longship includes the Brevik CCS project, where Aker Carbon Capture will deliver a complete CO2 capture plant in 2024.The plant will have superior heat integration with existing cement plant and capture 400,000 tonne of CO2 per year, equal to total emissions from about 200,000 cars from the roads.Aker Carbon Capture's technology has been verified for application to the cement industry, to extensive testing with our mobile test unit in Brevik. The EPC projects commenced in January and an experienced project team has been mobilized, West Coast of Norway. From here, CO2 will be pumped to pipelines to a reservoir beneath the sea bottom. The full value chain CCS development Longship is scheduled to be in operation from 2024.With Twence in the Netherlands, we have signed an EPC contract for carbon capture at their waste-to-energy plant. Planned startup of the EPC project is in Q3 this year, pending final government approval. Already, Aker Carbon Capture has been contacted -- contracted by Twence to update technical documentation, project schedule and commercial conditions. This is a Just Catch modular plant with a capacity of 100,000 tonne CO2 per year. The captured CO2 will be sold and utilized as fertilizer at a greenhouse.In March, Aker Carbon Capture, Ørsted and Microsoft signed an MoU to explore waste to support the development of carbon atmosphere as carbon from sustainable biomass is part of a natural biogenic carbon cycle. It is our ultimate vision to drive forward the process of facilitating negative emissions and reaching actual operation of a commercial and technical setup, creating substantial negative emissions.In February, Aker Carbon Capture signed an MoU with Lisa and Forus Energy to explore CCS opportunities in the Stavanger/Sandnes region in the nationally and internationally.And in January, Aker Carbon Capture and Hitachi Zosen Inova signed an MoU aimed at accelerating carbon capture solutions in the waste-to-energy industry in Europe, both for new and existing waste incinerators. Hitachi Zosen Inova, a major turnkey waste-to-energy plant provider, has delivered over 70 plants over the last 2 decades.Growing opportunities to realize the establishment of a blue hydrogen production facility on the Aker island in Western Norway. The Aker hydrogen hub project will rely on access to natural gas from the local gas processing plant. The hydrogen plant will split the natural gas into hydrogen and CO2. The clean blue hydrogen can be used for sea and road transport as well as being our existing and qualified capture technology for blue hydrogen from steam methane reforming. The Aker development represents a large-scale new-build hydrogen production facility. However, the market for retrofit of existing hydrogen production should not be underestimated.Decarbonizing the existing hydrogen market by adding carbon capture is a key to unlock the emerging hydrogen market in Europe. The European provider for hydrogen production from natural gas is Aker Carbon Capture's partner for cost-effective blue hydrogen. Together, we offer a complete solution for low-carbon hydrogen production, both retrofit of existing plants, but also new blue hydrogen plants.The fourth prioritized market segment is carbon capture for gas-to-power plants. In U.K., the green [Audio Gap] BP has secured funding for the first phase to accelerate development of U.K.'s first decarbonized industrial clusters, including Net Zero Teeside power station, equipped with carbon capture and storage. Aker Carbon Capture has been prequalified for carbon capture for this plant. The design capacity of the carbon capture plant is approximately 2.2 million tonne per year of CO2 capture, 5.5x the carbon capture plant -- [ design ] capacity of the carbon capture plant is approximately 2 million tonne per year, CO2 capture, 5x the carbon capture plant in Brevik.In March, Aker Carbon Capture and Siemens Energy signed an MoU aimed at developing combined offerings for carbon capture solutions that can be applied to gas turbines and gas-fired power plants. The global collaboration will initially focus on the European market for new and existing low carbon -- ambitious political climate targets has been set at the start of the year. The United States is back in the Paris agreement and a new target is set. U.S. will reduce emissions, 50% to 52% by 2030 compared to 2005 level. Canada increased 2030 emission target to 40% to 45% by 2030 compared to 2005 level. This is an increase of 4% to 9%. U.K. [Audio Gap] by 2050.For Aker Carbon Capture, the activity level in the quarter has increased compared to 2020. With projects, studies, tender and support to AU innovation fund applications, we are investing in the company with recruitment and technology development. There is no doubt that CCUS is part of the solutions to mitigate climate change and that the long-term carbon capture market potential is huge.In order to focus [Audio Gap] with strong signal for CCUS market growth and a stronger market position for Aker Carbon Capture, our target remains. Our ambition is to secure contracts to capture 10 million tonne per year of CO2 by 2025.Going forward, the following will be prioritized. The Brevik CCS EPC project is our most important reference project. It is the world's first carbon, reducing the cost of carbon capture. We will continue with standardization, digitalization, modularization, technology improvement and learning by doing. We will take an active role in developing the CCUS market through customer and complementary technology partnerships. This enables truly integrated solutions for efficient and sustainable offering to reduce CO2 emissions. And we will continue developing opportunities in prioritized markets in accordance with our mission.[Audio Gap] before, and it's a pleasure to have you on board, Egil, and we are now both open for questions.
Thank you, Valborg.
First of all, to everyone listening and watching, we do apologize if there has been issues with the broadcast. Obviously, working to rectify that. But there is time for a couple of questions. The first one comes Rachel Fetcher at Morgan Stanley. You've said you'll spend NOK 100 million on R&D per year going forward. Can you confirm how much was spent on R&D in the first quarter?
First quarter, we have spent about NOK 10 million in R&D, technology and innovation. Going forward, we're going to continue to invest in the company. We're going to spend money on technology and our strategic partnerships, digitalization programs, and we're also going to spend on standardization and modularization of our products.
And over to our technology strategy, it includes improving current technology, but also looking into follow the market and look for opportunities also for collaboration because we want to maintain our leading technology position in this industry.
Okay. Next question is from James Carmichael of Berenberg. Asking, what should we read into the prequalification announcements in the U.K.? Are there other capture providers also prequalified?
Well, of course, these mega-scale projects in the U.K. are very attractive, also to our competitors. And I cannot respond. And I expect that the operators are really ambitious of presenting attractive development solutions at COP 26 in November.
Yes. Also questions from Carmichael about the EU innovation funding and asking if the contract is specifically related to the EU innovation funding? And more generally, on the projects we have seen, announcing that they are through to the next round of all the funding opportunities?
So first, to comment on as such. When it comes to the EU innovation fund, we haven't seen an official list from EU, which projects has been awarded funding in the first place. We know that some have already announced that they are moving forward. But we also hear from EU that there will be another round of funding now coming up this autumn. And there's a lot of activity both with our customers and the ones that has already been awarded funding. A comment on the value for this one. It all depends on the final contract model and how this is set up.When it comes to the timing, what we can say about this is, as I already confirmed, the projects will move into a feed phase this year. In U.K., there are several projects. I mentioned too, and there are several clusters now in storage project moving forward. The government has decided to develop 2 of these in the mid of the decade. And then there will be another 2 by [Audio Gap].
[ Victoria McCulloch of ] RBC Capital markets. In the more mature projects, like those, you have -- where you have prequalified for carbon capture, are you seeing the opportunity for different contract structures? Or are these also EPC-style contracts?
No. I think what we will see going forward is various kinds of contract models. Yes, there will be EPC contracts like we see now for Brevik and Twence. There could also be more license-type contract with key equipment and standardized modules. And there could be [Audio Gap].
[Audio Gap] for listening and following the presentation this morning. Thank you.