Concession contract concerning the construction and operation of a carbon capture facility co-owned with HOFOR

HOFOR wishes to award a concession contract concerning the construction and operation of a carbon capture facility in connection to Amagerværket ("AMV") with a private partner ("Concessionaire Company") who will be entitled to optimize the sale and use of the carbon (the “Project”) to the joint benefit of the parties (“Concession Contract”). Upon the proper completion of the carbon capture facility HOFOR wishes to become the minority shareholder of the company which owns and operate the carbon capture facility once completed (“Joint Company”). The following description of the elements of the concession are explicitly subject to further clarification during the dialogue phase: The Concessionaire Company shall be responsible and bear the risks for the design, engineering, procurement, construction and financing of a carbon capture facility at or near the land of AMV, located at Amager, Copenhagen. The land to be used for the location of the facility will be identified by HOFOR and made available to the Concessionaire Company as part of the concession. It is to be expected that the Concession Contract and/or the shareholders agreement will contain various requirements aimed at ensuring a reasonable level of transparency and comfort for HOFOR in respect of the Concessionaire Company´s ability to maximize the value of the CO2 produced from the facility for the joint benefit of the parties and while adhering to the climate objectives of the Project. The facility shall be capable of capturing and processing (incl. if relevant providing liquefaction) of an agreed mass of CO2 emissions (expectedly to be agreed within a range between 500,000-900,000 tonnes of CO2 per annum) from the post combustion flue gas of AMV, which currently has a total annual emission of approx. 1 million tonnes of CO2. Further information of relevance to the expected functioning of the facility and its integration with AMV will be made available to the tenderers at the latest when invited to submit final proposals. It is expected that it will be necessary to carry out various works on AMV in order to prepare for the integration between the facility and AMV. The integration works and the various responsibilities of respectively the Concessionaire Company and HOFOR will be discussed during the dialogue phase. Ownership of the facility, once established, shall be held by the Joint Company, registered in Denmark and governed by Danish law. The Joint Company is to be established by either the Concessionaire Company or HOFOR. The road towards establishing the Joint Company will depend on the outcome of the dialogue phase and will need to reflect the relevant legislation in place at such time, including the legislative ability of HOFOR to establish and co-own the Joint Company. The Concessionaire Company, HOFOR and/or the Joint Company, may need to enter into certain agreements, grant rights or respect certain obligations (including legislative restrictions) with respect to both the energy consumption needed for the facility, as well as exchange and off-take of heat generated from the facility, with the counterpart being either a company affiliated with HOFOR and/or a third party. The Joint Company may also be granted rights or be obliged to enter into certain agreements for the delivery of services by HOFOR or companies affiliated with HOFOR, including operational services, technical services-, warehouse- and/or surveillance-related agreements, in order to facilitate reasonable levels of personal- and/or technical safety and/or in relation to uphold security in relation to parts of the facility or the interface towards AMV, including agreements needed to safeguard potential critical infrastructure, whether constituted by the facility itself or infrastructure in the vicinity of the facility. The Concessionaire Company shall be responsible for ensuring sufficient ongoing revenues (financial contributions) to cover the operations of the carbon capture facility throughout the concession period and to ensure sufficient accruals (in the Joint Company) for decommissioning costs at the end of the concession period where the Joint Company is expected to be dissolved (terms for exit will be subject to further dialogue). HOFOR further expects to require certain financial securities for the proper performance of the Concessionaire Company under the Concession Contract. The Concessionaire Company may explore the feasibility of preparing a bid for the coming rounds of the CCS subsidy scheme, administered by Danish Energy Agency (Energistyrelsen) and currently planned for two rounds of tenders (mid 2024 and mid 2025). The parties will discuss how HOFOR may, directly or indirectly, participate in or support such bid. The Concession Contract may be entered into by a subsidiary ultimately owned 100% by HOFOR Forsyning Holding P/S. The subsidiary may be an existing subsidiary, or a new subsidiary established only for the purpose of the Project. The tender procedure is subject to the necessary legislative changes to be made in order to allow for HOFORs investments and engagements in achieving its strategic goal of carbon capture within the framework of a concession. A final investment decision may also be conditioned upon necessary legislative changes being made, including to allow for a potential financial contribution from HOFOR to the Joint Company (if any and if relevant) whether this is in relation to the establishment of the Joint Company or as potential security for any obligations of HOFOR under the Concession Contract (if relevant).