With the presentation of key points for its Carbon Management Strategy, the German government has made a clear commitment to CO2 storage and utilisation. These are to be used primarily for emissions in industry and waste management that are difficult to avoid. The first step is to amend the Carbon Dioxide Storage Act.
Key points for CO2 management
The Federal Ministry for Economic Affairs and Climate Protection (BMWK) published a strategic paper for CO2 management in Feburary 2024. In August it was adopted by the Cabinet. They envisage the application of Carbon Capture and Storage (CCS) and Carbon Capture and Utilisation (CCU) technologies for hard-to-abate emissions.
Such a strategy had already been announced for 2023. From March to August 2023, a stakeholder dialogue was held with representatives from businesses, environmental associations, and scientists.
This process followed the evaluation report on the Carbon Dioxide Storage Act (KSpG) from 2022, which examined ways to enable to permanent storage of CO2.
After initial resistance, the debate on CO2 management has opened up. Experts recognize that long-term climate targets are only possible with CCS and CCU. The German Climate Protection Act (KSG) stipulates that greenhouse gas neutrality must be achieved by 2045.
This also follows the line of the EU, which recently published its strategy for industrial CO2 management. This provides a political framework for action – also in support of the 2040 target to reduce emissions by 90%. In addition, the Net-Zero Industries Act (NZIA) provides for CCS and CCU as strategic projects.
Germany now also aims to catch up with other countries. France has already presented an ambitious strategy. Denmark, Norway and the Netherlands are also working intensively on the construction of CO2 storage sites.
Focus on CCS and CCU
In contrast to the EU’s Carbon Management Strategy, the German strategy does not include approaches for carbon dioxide removals (CDR). These are currently being developed in the “sister strategy” for negative emissions. These 2 strategies overlap – mainly in solutions for transporting and storing CO2.
Even though the use of CCU is also mentioned, the focus of the strategic paper is on CCS. Areas of application, funding opportunities and infrastructural priorities for CO2 transport and storage are outlined without concrete targets.
Use of CCS and CCU
The strategic paper emphasizes the use of CCS and CCU for difficult or unavoidable emissions in industry and waste management. In particular, it mentions:
- Cement and lime production: Emissions during production cannot be reduced to zero with today’s technologies.
- Thermal waste treatment: To date, there are no alternative treatment processes that avoid emissions.
- Production of basic chemicals: Here, too, current production technologies remain emission-intensive.
CCS and CCU make it possible to achieve climate neutrality targets without having to cut emissions completely in these sectors. As backbone of German industry, keeping these sectors competitive is a big policy concern.
CCS and CCU are explicitly not to be promoted in electricity generation. Access to CO2 pipelines is even ruled out for coal-fired power plants. Here decarbonisation pathways are already defined with the coal phase-out and expansion of renewables.
Funding for CCS and CCU
The strategic paper also calls on the EU Emissions Trading Scheme (ETS) to provide economic incentives. CO2 stored through CCS can already be deducted from the required emission allowances. The amendment of ETS regulations, aim to account for CO2 permanently utilized through CCU.
However, it is noted that even with full recognition of CCS and CCU in the EU ETS, in the short to medium term the costs of climate-neutral production will remain higher than those of conventional production.
Government subsidies are intended to offset these additional costs in order to enable a ramp-up of CCS and CCU:
- Federal Funding Guideline for Industry and Climate Protection (FRL BIK): The current draft provides for a module for CCS and CCU from April 2024.
- Carbo contracts for difference (CCfD): The current version of the funding guideline supports projects in which emission reductions are achieved through CCS or CCU.
The scope of funding and prioritisation of CCS and CCU projects eligible for funding have not yet been further detailed. It will also be necessary to focus on economic efficiency criteria, such as the avoidance costs per tonne of CO2.
Infrastructure for CCS and CCU
The ramp-up of CCS and CCU technologies also requires an expansion of the infrastructure for CO2 transport and storage sites. The strategic paper focuses on:
- Expansion of a CO2 pipeline infrastructure with which CO2 can be transported more cost-effectively than currently by trucks, ships or trains.
- Enabling off-shore CO2 storage by developing own geological sites in order to reduce dependence on neighbouring countries and transport routes.
The strategic paper emphasises the importance of economic and ecological criteria when selecting sites. With competing demands for space, including for wind energy, integrated planning will be essential.
Amending the Carbon Storage Act
A draft bill to amend the KSpG was also presented with the strategic paper. These amendments aim to open up opportunities for the transport and storage of CO2.
The amendment is also intended to enable the exploration of offshore storage sites in the German Exclusive Economic Zone (EEZ) or the continental shelf. Onshore storage on the German mainland remains excluded for the time being. However, it should be possible for federal states to opt in.
Ratification of the amendment to the London Protocol from 2013 is also planned to enable CO2 exports for CO2 storage in third countries. The German High Seas Contribution Act is to be amended accordingly.
The key points and the draft of the KSpG are now going through the departmental coordination process. A consultation with the federal states and associations will follow before the final cabinet decision. At the same time, a comprehensive strategy for CO2 management is to be developed.
(This blog is regularly updated – last update on August 7, 2024)
Sources and further information:
- BMWK: Press Release on the Use of CCS (German only)
- BMWK: Key Points for a Carbon Management Strategy (German only)
- BMWK: Building Blocks for a Climate-neutral and Competitive Industry (German only)
- BMWK: Key Points for the Long-term Strategy for Negative Emissions (German only)
- BMWK: FAQ on CCS and CCU (German only)
- BMWK: Draft Bill to Amend the KSpG (German only)
- European Commission: Strategy for Industrial CO2 Management
Photo by Anton Eprev on Unsplash
