Out-Law News 3 min. read

CCS/CCU: Germany outlines carbon management strategy as part of decarbonisation initiative

Germany’s Federal Ministry for Economic Affairs and Climate Action (BMWK) has published the outline for its carbon management strategy alongside a draft law to amend the Carbon Dioxide Storage Act (KSpG) based on it.

The carbon management strategy outline and draft law emphasise the importance of achieving carbon neutrality by 2045, as Germany aims to be one of the first major climate-neutral industrialised countries.

The primary task of the strategy outline is to address emission issues, with decarbonisation remaining at the core of current climate action. Additionally, the application of carbon capture and storage (CCS) as well as carbon capture and utilisation (CCU), transport of CO2 via privately owned carbon dioxide pipelines, and offshore storage of captured CO2 in Germany will be enabled. The German government will also ratify the amendment to the London Protocol to enable the export of carbon dioxide, making the changes to the High Seas Contribution Act to do so.

The updates follow a report from the Intergovernmental Panel on Climate Change (IPCC) which clarified that CCS as well as CCU are necessary measures in protecting the climate against hard-to-avoid emissions.

“CCS and CCU projects are already developing at pace in many jurisdictions, like the UK, and this announcement shows that Germany want to be at the forefront of this exciting market as well. With limited global supply-chain capacity to deliver these projects, it’s important for different countries to demonstrate that they are going to commit to making CCS and CCU a reality. Otherwise the project developers, funders and suppliers will go elsewhere. If implemented, these announcements not only remove barriers to develop the domestic opportunity for Germany, but the London Protocol amendment ratification will also open up the global opportunity of being able to export CO2 to other jurisdictions. Moving quickly to implement the proposals will be important, but so will learning the lessons from those jurisdictions that are further developed in implementing CCS & CCU projects” said expert for the energy sector and CCS/CCU projects Stacey Collins of Pinsent Masons.

Germany is continuing to gradually phase out coal as an energy source, with aims to eliminate fossils fuels entirely. However, for emission-intensive industries it can often be difficult to decarbonise, meaning CCS/CCU technologies are crucial. These technologies capture and then use and/or safely store carbon dioxide emissions from power plants and industrial processes, preventing them from escaping into the atmosphere. A prime example is waste incineration, which unavoidably produces carbon dioxide.

If carbon dioxide is captured during the incineration of municipal waste, thermal waste treatment could become a climate-positive technology, according to the German Association of Local Public Utilities of municipally determined infrastructure undertakings and economic enterprises (VKU).

“Internationally, the ramp-up of CCS/CCU technology is developing dynamically. If the amendment to the law comes into force quickly, a German CCS/CCU ramp-up by 2030 seems realistic, helping not only public utility companies but all emissions-intensive industries” said energy expert Dr. Sönke Gödeke Pinsent Masons.

The BMWK is considered to be at the forefront of Germany’s decarbonisation initiative, with the planned revisions are a significant step towards Germany’s commitment to the Paris Agreement and its goal of limiting global warming to well below 2 degrees Celsius. The draft law aims to provide a road map for the use of these carbon dioxide storage methods, underscoring the critical role of businesses in this endeavour as well as urging firms to step up to play a part in creating a sustainable future.

The draft law permits offshore storage of carbon dioxide, for example in the German Exclusive Economic Zone (EEZ). However, it excludes the injection of carbon dioxide into marine protected areas. Onshore storage will still not be possible. To avoid climate-damaging emissions in electricity generation, the draft law also focuses on accelerating the expansion of renewable energies in Germany. 

The initiative does not only focus on environmental stewardship, but it is also about economic prosperity. The energy transition in 2022 provided employment for more the 387,000 people. The employment in renewable energies increased by 14.9%, adding 50,400 additional jobs compared to previous years.

The initiative provides investment opportunities in CCS technologies with possible contributions to Germany’s, and the world’s, fight against climate change, as well as possibilities to boost the economy.

In Europe, Denmark, Norway, the Netherlands, Iceland, Italy, France, Croatia, Poland, Romania, and the UK are already operating or planning geological storage facilities. The USA is promoting CCS/CCU technologies with the Inflation Reduction Act. The European Commission is also promoting the Europe-wide application of the technology via the Net Zero Industry Act, among other things. On 6 February 2024, the Commission also published a communication with an Industrial Carbon Management Strategy.

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