Northern Lights Phase 2 secures NOK7.5bn investment from Equinor, Shell, and TotalEnergies to scale CCS in Europe

The Northern Lights carbon capture and storage project has reached a significant new milestone with Equinor, Shell, and TotalEnergies approving a NOK 7.5 billion investment to launch Phase 2 of the development. This phase will dramatically increase the project’s CO₂ injection capacity, marking the transition from demonstration to large-scale commercialization. With European industries under mounting pressure to decarbonize and the EU committed to achieving net-zero emissions by 2050, Northern Lights is emerging as a vital piece of the continent’s climate solution.

What distinguishes Phase 2 is its ability to shift CCS from a proof-of-concept model to a commercially viable and scalable infrastructure for industrial emissions. The expansion builds on the momentum of Phase 1, which is now fully booked and set to begin operations this summer. The new investment, bolstered by a €131 million grant from the European Union’s Connecting Europe Facility, is intended to expand Northern Lights’ annual CO₂ storage capacity from 1.5 million tonnes to at least 5 million tonnes by 2028.

How does Phase 2 enable cross-border CO₂ transport and storage?

The expansion follows the signing of a 15-year agreement with Stockholm Exergi, a Swedish district energy company, to transport and permanently store up to 900,000 tonnes of biogenic CO₂ annually beginning in 2028. This deal is the latest in a series of commercial agreements Northern Lights has secured, joining earlier commitments from Heidelberg Materials in Norway, Yara in the Netherlands, Ørsted in Denmark, and Oslo-based waste-to-energy firm Hafslund Celsio.

This growing customer base illustrates how the Northern Lights project is enabling cross-border CO₂ transport and permanent storage—critical capabilities for European emitters located far from geological storage sites. Liquefied CO₂ will be shipped from customer facilities to the Northern Lights receiving terminal at Øygarden on Norway’s west coast, before being injected via pipeline into a subsea reservoir 2,600 meters beneath the North Sea. This storage model allows companies in countries without suitable geological formations to participate in carbon capture strategies, creating a European carbon transport and storage network.

What infrastructure upgrades are included in Northern Lights Phase 2?

The Phase 2 expansion is designed to scale up both onshore and offshore infrastructure. On land, the Øygarden terminal will receive new storage tanks and a new jetty, while offshore additions include extra injection wells and enhanced pipeline capacity. These upgrades are expected to be operational by the second half of 2028. The architecture builds directly on the foundational work completed in Phase 1, much of which was financed by the Norwegian government under its Longship initiative—a national programme aimed at demonstrating full-scale CCS value chains.

Equinor, acting as the technical service provider, will lead development and operations for Phase 2, just as it did for the earlier stage. According to Anders Opedal, CEO of Equinor, the move to Phase 2 is a direct result of public-private collaboration that reduced early-stage risks and attracted commercial customers. Opedal noted that customer demand and policy support remain vital to enabling the project’s evolution into a market-ready solution.

How does Northern Lights fit into Europe’s wider energy transition strategy?

The European Commission’s Clean Industrial Deal, published earlier this year, placed carbon capture and storage at the heart of its roadmap for decarbonizing hard-to-abate industries. Cement, chemicals, steel, and waste management sectors are all considered essential to European infrastructure, yet they emit significant quantities of CO₂. For these sectors, CCS represents one of the few technologically viable ways to achieve deep emissions cuts in the near term.

Northern Lights is currently the most advanced CCS project offering open-access services to multiple emitters. Its ability to aggregate CO₂ from across the continent and permanently store it in offshore Norwegian reservoirs is helping create the framework for a pan-European carbon market. By leveraging maritime transport and centralised injection infrastructure, Northern Lights is solving one of the most challenging logistical bottlenecks in the CCS landscape: how to connect emitters and storage at scale.

What does the investment mean for the companies behind the project?

The NOK 7.5 billion investment comes at a time when all three joint venture partners—Equinor, Shell, and TotalEnergies—are seeking to balance their traditional fossil fuel portfolios with long-term sustainability goals. Each has publicly committed to reducing operational emissions and expanding their presence in decarbonization technologies.

Equinor’s stock recently rose 1.78% to $26.92, buoyed by a strong fourth-quarter 2024 earnings report showing adjusted operating income of $7.9 billion. Analysts have rated the stock a moderate buy, with price targets ranging between NOK 290 and NOK 340. Equinor’s central role in the Northern Lights project reinforces its position as a global leader in CCS development, and investors view this as a long-term growth vector.

Shell, currently trading at $73.05, has maintained a neutral outlook in recent sessions, reflecting investor focus on near-term returns. Under CEO Wael Sawan, Shell has prioritised shareholder returns through expanded buybacks and disciplined capital allocation. While some analysts remain cautious about the pace of Shell’s low-carbon investments, the company’s ongoing support for Northern Lights signals that CCS will remain part of its transition portfolio. Market consensus indicates a hold rating, with expectations of upside as strategic projects like this scale.

TotalEnergies is trading at $64.49 and has delivered a 19.6% gain over the past three months, outpacing its peers. J.P. Morgan maintains a buy rating with a target price of €66.63, suggesting a further 11.5% upside. The French major has been investing heavily across the clean energy spectrum, and its involvement in Northern Lights further positions the company as a frontrunner in the energy transition.

What’s next for industrial-scale carbon capture in Europe?

With construction underway and additional customer agreements in negotiation, Phase 2 of the Northern Lights project marks a new chapter in Europe’s approach to climate mitigation. While CCS alone cannot deliver net-zero, it provides a critical backstop for sectors that cannot fully electrify or transition to green hydrogen in the short term. Projects like Northern Lights serve as testbeds for regulatory alignment, commercial engagement, and technology integration.

According to Irene Rummelhoff, Equinor’s executive vice president for Marketing, Midstream and Processing, CCS will be indispensable to the continent’s decarbonisation pathway. She emphasised the importance of developing scalable solutions that align with the EU’s industrial and environmental strategies.

The groundwork laid by Northern Lights is already being replicated elsewhere. Equinor, Shell, and TotalEnergies are involved in additional CCS projects across Europe and North America, aiming to turn early learnings into global standards for carbon management.

As Phase 1 enters operations and Phase 2 advances toward commercial launch, Northern Lights is evolving into a central node in Europe’s decarbonisation infrastructure. Its model—built on flexibility, scale, and collaboration—may soon become the blueprint for a future in which CO₂ is no longer an unavoidable byproduct of industry, but a safely stored legacy of a transitioning economy.