Denmark's government has awarded energy group Ørsted a 20-year contract to capture and store 430,000 mt of carbon dioxide emissions annually from two heat and power plants, the Danish company said on May 15.

In 2021, Denmark allocated 16 billion Danish crowns (US$2.37 billion) in CCS subsidies as part of a plan to cut greenhouse gas emissions by 70% by the end of this decade compared to 1990 levels, one of the world's most ambitious climate goals.

Ørsted will receive about 8 billion crowns of this to establish the CCS project, the Danish Energy Agency said in a separate statement.

Ørsted in turn said it had awarded Norway's Aker Carbon Capture (ACC) a contract to provide CO2 capture technology, sending the Oslo-listed shares of the Norwegian company up 18% by 1045 GMT.

ACC said its new contract was worth more than 200 million euros (US$220 million).

The project also involves U.S. tech giant Microsoft, which in 2021 agreed to cooperate with Ørsted to further its plan to remove as much carbon as it has emitted since its founding in 1975.

Microsoft will purchase 2.76 million tonnes of carbon removals over 11 years from the CCS project at the wood chip-fired Asnaes Power Station, Ørsted said, without providing a value for the contract.

"Given the nascent state of bioenergy-based CCS, Danish state subsidies and Microsoft's contract were both necessary to make this project viable," Ørsted added.

The captured CO2 will be shipped from Denmark to Norway for injection under a seabed at the Northern Lights CO2 storage site, Ørsted said.

It is the second commercial CO2 storage contract for Northern Lights. Norway's Yara signed one last year.