For the first time, Germany is also getting a legal framework that will enable industry to transport, use, and store CO₂ underground. At the beginning of August, the Federal Cabinet approved a draft bill on the necessary amendment to the Carbon Dioxide Storage Act. Just one month later, immediately after the summer break, the parliament discussed the bill in its first reading. Legislators are expected to give the final green light before the end of this quarter. After years of back and forth, the use of CCS (carbon capture and storage) and CCU (carbon capture and utilization) will then also be permitted in Germany.

CCS and CCU are now considered an indispensable component of industrial decarbonization. They offer a solution for process-related CO₂ emissions in some industries that are considered very difficult or even impossible to avoid. These include, in particular, the cement and lime industries, some areas of the basic chemicals industry, and thermal waste processing. In the future, the carbon dioxide produced here will be captured directly at the source and then stored long-term in suitable underground storage sites. Transport to these onshore or offshore storage sites will be carried out via a special pipeline network, which first needs to be built in Germany, by truck, or by ship.

The fact that Federal Minister for Economic Affairs Katherina Reiche was able to present a draft bill so quickly was also due to the extensive preparatory work carried out by the last coalition formed out of SPD, the Greens and FDP. In May 2024, it had already agreed on key points for a carbon management strategy (CMS) that was intended to pave the way for CCS and CCU in Germany. Reiche's predecessor, Robert Habeck, had already made it clear at the time that without this step, the climate protection targets would not be achievable. However, the Greens, SPD, and FDP were then unable to get their bill through parliament.

The major political debates on CCS – which ultimately came to nothing – began in the early 2010s, particularly with regard to its use in fossil fuel power plants. The buzzword at the time was „clean coal.“

Even if it works this time, coal-fired power plants will still not be allowed to use CCS in the future. That was the decision of the traffic light coalition, and has now been also adopted by the black-red coalition. The situation is different when it comes to the controversial issue of gas-fired power plants. For Reiche's energy policy, CCS is an indispensable pillar for gas-fired power plants. Compared to Habeck, she wants to secure Germany's energy supply with significantly more new gas-fired power plants. And unlike her Green predecessor, Reiche is not counting on the conversion of new power plants to hydrogen happening so quickly. CCS/CCU is therefore the logical alternative for the CDU politician.

However, this planned widespread use of the technology, which goes far beyond the focus on unavoidable emissions, also drew a lot of criticism at an expert hearing in the parliament last week. „We see a great danger that this could lead to a lock-in effect in energy production for the fossil fuel natural gas,“ warned Christine Wilcken, deputy managing director of the German Association of Cities. Wolfgang Köck from the German Advisory Council on the Environment (SRU) argued similarly: dependencies on fossil technologies would be cemented. This would delay or block the transformation of the energy sector and industry.

The industry estimates that it will take seven to ten years to build a CCS infrastructure in Germany, from pipelines to storage facilities. In order to be ready to go in the first half of the 2030s, the Federal Ministry of Economics now wants to label these investments as being „in the overriding public interest“ in order to achieve maximum acceleration in planning and approval.

This is intended to enable Germany to catch up with other European countries where CCS ramp-up began long ago. Denmark in particular is playing a leading role in the EU, where several large-scale projects for storing CO₂ in the North Sea are already underway and infrastructure is to be in place by 2030, partly with the help of public funding. Norway is focusing in particular on the Northern Lights project, a joint venture between Equinor, TotalEnergies, and Shell, in which the Norwegian government is also involved. Here, too, the aim is to establish a comprehensive CCS infrastructure in which CO₂ is ultimately transported via a pipeline to an offshore storage facility deep below the seabed.

In the Netherlands, there is already a major project called „Porthos“ for CO₂ transport and storage in the port of Rotterdam, in which Gasunie, among others, is involved. The so-called „Delta Rhine Corridor“ (DRC) is also in the starting blocks, aiming to establish a carbon dioxide and hydrogen pipeline network between Germany and the Netherlands. BASF, Gasunie, Open Grid Europe (OGE), and Shell have already signed a cooperation agreement to this end.

These projects are also being received with great enthusiasm in Brussels. The EU Commission had already published an Industrial Carbon Management Strategy in February 2024. This strategy envisages that by 2040, over 250 million tons of CO₂ and by 2050 as much as 400 million tons of CO₂ will be captured from industrial processes or, more and more, also directly from the air. The plan, for which a concrete EU legislative package is currently being drafted, is to store this carbon dioxide but also to reuse it more extensively in industry in the long term.

In its national draft bill to amend the Carbon Dioxide Storage Act, the federal government is focusing primarily on CO₂ storage in the North Sea – outside coastal waters and marine protected areas. Storage on the mainland would be cheaper, but is being pursued only very defensively for fear of lack of acceptance and protests among the population: In the future, the federal states will have the option to opt in to onshore storage in their territory.

Whether the use of CCS and CCU will be profitable for companies will depend primarily on the price of CO₂ and government subsidies. In its new bidding process for differential and climate protection contracts launched this month, the Federal Ministry of Economics has for the first time also recognized CCS and CCU projects as eligible for funding. In contrast to the development of the hydrogen core network, however, the construction of CO₂ pipelines is not considered a government task, but is to be borne by the companies. And there are already isolated complaints from the business community that the CDU/SPD coalition is currently providing too few investment incentives.