Alongside the legislative proposal for a 90% emission reduction target for 2040, the European Commission published a strategy for industrial carbon management. The strategy outlines measures for carbon capture, storage, utilization and removals. To compensate for hard-to-abate emissions, 450 Mt CO2 would need to be captured in 2050.

A framework for carbon management

The European Commission has unveiled a long-awaited step in its climate action package –  a strategy for industrial carbon management (ICM).  

This strategy goes hand in hand with a legislative proposal for an EU 2040 target to reduce emissions by 90% in 2040. These communications form part of the EU’s efforts to reach climate-neutrality in 2050.

Recognising that some industrial processes, such as chemicals and cement production, face hard-to-abate emissions, the strategy outlines a policy framework to manage residual emissions to achieve net-zero emissions in 2050.

3 options to manage carbon

Complementing emissions abatement, the strategy highlights three options to actively manage carbon in industry:

1. Carbon capture and storage (CCS), whereby emissions are prevented through their capturing and transportation for permanent storage
2. Carbon capture and utilization (CCU), whereby emissions are delayed by capturing the CO2 to substitute fossil-based carbon in products or fuels
3. Carbon dioxide removals (CDR), whereby emissions are compensated by permanently removing CO2 from the atmosphere

Towards targets for carbon management

Notwithstanding criticism of these industrial options, their role in neutralizing some emissions has been recognized. Yet so far, they have not yet been translated into concreted targets or policy measures.

Only the role of carbon removals in the 2030 target to reduce emissions by 55% had been clarified in the European Climate Law. Herein it was “limited to 225 Mt CO2e” with the “aim to achieve a higher volume of its net carbon sink in 2030”.

For the first time a target for land-based carbon removals from natural sinks was set in 2023. The revisions to the LULUCF regulation (amendment 2023/839) aim to remove 310 Mt CO2e per year by 2030.

In addition, the Commission’s action plan for Sustainable Carbon Cycles from 2021 highlighted the importance of ICM. It includes a target of 5Mt CO2 to be annually removed from the atmosphere and permanently stored.

The final agreement for the Net-Zero Industry Act (NZIA) includes CCS and CCU as strategic projects, with a target to build an annual storage capacity of 50 Mt CO2 by 2030. The agreement is pending approval to move on to legal adoption.   

In recognition that reaching the new EU climate target in 2040 and climate neutrality in 2050 would require a larger contribution of CCS, CCU and CDR, the Industrial Carbon Management strategy now substantially raises the level of ambition.

Measures to manage industrial carbon

Based on the impact assessment for the EU 2040 climate target, the strategy plans for the capture of 450 Mt CO2 in 2050. With abatement of emissions from fossil fuels and industrial processes, close to half of the captured CO2 would need to come from biogenic sources or directly from the atmosphere by 2040.

The capturing of CO2 is a first step in CCS, CCU, and CDR, which all require CO2 transportation. To establish a single market for industrial carbon management, the strategy outlines policy measures for these.

Capturing and storing CO2

CCS involves capturing hard-to-bate industrial emissions before they are released to the atmosphere. The captured CO2 is then transported to geological sites where they can be permanently stored.

Requirements for selecting sites for CO2 storage and the safety conditions for transporting and storing CO2 are defined in the CCS Directive from 2009. To provide economic incentives for CCS, the EU Emissions Trading System (ETS) allows deductions of stored CO2 from the emission allowances needed.

Yet bringing together actors and services across the CO2 value chain remains challenging. At an initial stage, developing capture and transport infrastructure and storage sites will require support, e.g., as strategic projects under the NZIA.

Modelling results for the EU climate target imply the need for an annual storage capacity of 250 Mt CO2 in the European Economic Area by 2040.

In support of these CCS targets, the Commission defines the following measures:

1. Develop a demand aggregation platform for CO2 transport or storage services
2. Create an investment atlas of potential CO2 storage sites
3. Develop sectoral roadmaps for ICM
4. Develop guidance for permitting processes for CO2 storage projects

Capturing and utilizing CO2

CCU is a way to recycle captured CO2 to replace fossil feedstocks to produce carbon-based chemicals, fuels or other materials. There is a wide range of potential commercial use cases. Globally already 230 Mt CO2 are used every year – mostly in the fertilizer industry – according to an earlier IEA assessment.

When CO2 is only temporarily stored in these products, CCU postpones emissions from the captured CO2. It cannot permanently avoid these emissions, contrary to CCS.

To provide incentives for CCU, the EU is working to tweak ETS rules to define the conditions under which utilized CO2 can be considered as permanently chemically bound in a product.

In addition, the Commission plans the following measures to promote CCU:

1. Consider options for the uptake of CO2 as a resource in industrial sectors
2. Developing a framework to account for climate benefits

Removing CO2

CDR is an option to compensate residual emissions by taking CO2 from the atmosphere through carbon removals. By 2050, the EU will need removals of about 400 MtCO2e per year, as estimated in the assessments for the 2040 target.

With biological boundaries to natural carbon sinks, industrial carbon removals will play an increasing role. Combined with CCS technology, they mostly involve direct air capture (DACCS) and bioenergy capture (BECCS).

Standards for carbon removals are still to be developed. The EU Carbon Removal Certification Framework (CRCF) sets out voluntary criteria to define high-quality removals.

So far, industrial carbon removals are not yet covered by the EU climate governance framework. Fully integrating them into the EU-ETS or covering them by a separate compliance mechanism could provide the necessary incentives.

To this end, the Commission will take the following measures:

1. Assess removal objectives in line with the 2040 and 2050 climate targets
2. Develop policy options and support mechanisms for industrial removals
3. Boost research, innovation and demonstration for novel industrial removal removal technologies

Transporting CO2

The transportation of CO2 plays a key role in moving captured CO2 to places where it is stored or utilized.

While it is already a commercial activity, the transportation of CO2 at the envisioned scale of the strategy needs the build-up of a functioning CO2 transport network and infrastructure.

Measures to be taken by the Commissions include:

1. Preparation of a CO2 transport regulatory package
2. Proposing an EU-wide CO2 transport infrastructure planning mechanism
3. Establishing minimum standards for CO2 streams in transport and storage infrastructure

Scaling up industrial capacities

Based on these policy measures, industrial carbon management capacities will need to be ramped up quickly. IEA estimates show that annual capacities for CO2 capture and CO2 storage are currently around 50 Mt CO2 globally – equivalent to the EU target in 2030.  Most of these capacities stem from CO2-enhanced oil recovery.

To support the deployment of the required technologies in the EU, the strategy includes policy measures to create an enabling environment:

1. Investments and funding for CO2 transport infrastructure, CO2 capture installations, and other ICM solutions
2. Raising public awareness and support for ICM infrastructure
3. Promoting research and innovation for ICM technologies
4. Ensuring cross-border and international co-operation

ICM also needs to be promoted at the national level. As frontrunners, Denmark and the Netherlands are building geological storage at industrial scale. In its draft national strategy, France aims to capture 4-8.5 Mt CO2. Germany is currently working on strategies for carbon management and negative emissions.

(This blog is regularly updated – last update on February 29, 2024) 

Sources and further information:

• European Commission: How to Sustainably Capture, Store and Use carbon
• European Commission: Towards an ambitious Industrial Carbon Management
• European Commission: Europe’s 2040 Climate Target
• European Commission: Sustainable Carbon Cyles
• Council of the European Union: Proposal for the Net-Zero Industry Act 

Photo by Maxim Tolchinskiy on Unsplash