Germany to support CCS for industry, allow offshore carbon storage with upcoming strategy
In its quest to reach greenhouse gas net neutrality, the German government has drawn up plans to allow capturing and then storing carbon dioxide emissions under the seabed or abroad. The economy ministry presented key elements of its upcoming Carbon Management Strategy (CMS), laying out how Germany aims to tackle hard-to-abate emissions from certain industrial processes as well as by gas-fired power plants by capturing and storing (CCS) or using emitted CO2 (CCU). Germany will provide state support to CCS for industrial projects, but not in the electricity sector. The government will allow offshore carbon storage but for now continues to ban onshore underground storage.
(Note: Find a detailed description of the planned measures at the end of this article)
"We are taking a pragmatic and responsible strategic decision today: CCS and CCU shall be made possible in Germany," said economy minister Robert Habeck in Berlin. "Otherwise, it will be impossible to reach the climate targets." Not using carbon capture and storage solutions would also hurt Germany's competitiveness, the Green Party politician added.
Habeck argued that CCS would only be a "necessary addition" to the country's climate policy, which continued to focus on avoiding emission in the first place. This included continuing the rollout of renewables, phasing out fossil fuels step-by-step, ramping up a hydrogen economy, and increasing energy efficiency wherever possible. However, industry emissions may be captured and stored if eliminating emissions entirely is very difficult or impossible, for example in cement production or waste incineration.
The minister emphasised the importance of cross-border cooperation in Europe in implementing carbon management approaches: "In order to make all this possible in Germany, a legal reform and an agreement with other countries that have already further developed this technology or have storage facilities available is required," Habeck said at a press conference, pointing at the London Protocol that also governs cross-border CO2 transport.
Years of protest against industry plans to use CCS as a lifeline for coal power for a long time made carbon capture a no-go issue for policymakers in Germany . Yet, the country’s goal of climate neutrality by 2045 reopened debate on the issue of combatting hard-to-abate CO2 emissions. Climate scientists say that CCS will be necessary to reach climate targets, and the European Commission recently presented its strategy for carbon capture, utilisation, storage and negative emissions. In Germany, political parties, including the Greens, are realigning their official stance, and the government coalition has announced it would present the Carbon Management Strategy to define guidelines for dealing with CCS and CCU. While the country largely allows capturing CO2, regulation so far has made large-scale transport and carbon storage practically impossible.
Since the "negative debates" around carbon storage first surfaced in Germany about 20 years ago, two things had changed, Habeck said. "The technology has been further developed in many areas and from my point of view it is mature and safe," he said. In addition, the world was headed towards exceeding the 1.5°C global warming limit of the Paris Climate Agreement, and there was a lack of technological solutions for certain industry sectors such as cement. "Time has run out. We are no longer in a comfort zone where we can continue to wait and see," said the minister.
However, the minister's own party and lawmakers from the governing coalition partners Social Democrats (SPD) have already come out against certain elements of Habeck's plans, making for difficult debates in parliament, reported t-online. "The Green parliamentary group rejects CCS for gas-fired power plants," said Lisa Badum, climate policy MP from the Green Party.
The three parties of Germany's government coalition agreed the key elements of the strategy which they presented today. However, the full strategy still needs to be discussed before the cabinet can eventually adopt it. In a separate Q&A document, the government said that once the new regulation allows CO2 storage in the country, it could take 7 to 10 years from permit application until a storage site can be operational.
Negative emissions needed, because "we will overshoot the 1.5° limit for several decades" – climate economist
Today's proposals are "the next step in the renaissance of CCS in Germany," researcher Felix Schenuit of the German Institute for International and Security Affairs (SWP) told Clean Energy Wire. The carbon management policy expert emphasised that ramping up CCS should not only be seen as a way to decarbonise industry. "In the medium term, it is a key enabler of the ramp-up of CO2 removal – a group of technologies needed, among other things, to compensate for overshooting the 1.5-degree target." Schenuit said that the specific state support conditions would now come into focus. "A transparent taxonomy for differentiating between different applications seems unavoidable," he said, and warned that there would also be calls for state support for the future transport infrastructure. The government says this should be privately operated.
Researcher Ottmar Edenhofer, the director of the Potsdam Institute for Climate Impact Research (PIK), welcomed the proposals, saying they would be "no half-baked compromise." Edenhofer argued they are a "hugely important milestone that will allow us to reach net zero by 2045 and move beyond that point into negative emission technologies."
The PIK director emphasised that industrial CCS had to be seen in the context of negative emissions, adding that CO2 storage options would have to be created.
"We will overshoot the 1.5° target, that is not a question in my view, we will even overshoot it for several decades," he said during the press conference. "If we want to bend the temperature curve back, we can only do so through negative emissions."
Industry welcomed the proposals. The decision in favour of CCS and CCU is “an important step in the competitive transformation of German industry towards climate neutrality,” said Holger Lösch, deputy managing director at industry association BDI, in a press release. The association also welcomed the government’s focus on application in industry and waste. For a “rapid ramp-up” of CCS/U, the BDI called for the strategy to be translated into a reliable legal and financial framework “as quickly as possible.”
Strategy "roll-back to fossil fuel past" – NGOs
Germany's landscape of environmental NGOs has been split on the issue of CCS in recent years, with some rejecting it outright, others highlighting the possible environmental damages and lock-in effects the technologies could have for fossil fuels, and yet others welcoming them as essential building blocks on the way to climate neutrality.
The strategy would allow even industries for which there are “climate-friendly solutions” to carry on as before and puts the brakes on urgently needed drastic measures to avoid emissions, criticises Karsten Smid from Greenpeace in a press release. “Habeck's key points bear the mark of the energy industry and heavy industry. Instead of minimising climate-damaging greenhouse gases as they are produced and to modernise these industries, a gigantic CO2 disposal infrastructure is to be created,” Smid said, adding that this would be “expensive, unsustainable and imposes further eternal burdens on future generations.” He further argued the cross-border trade of emitted CO2 would “promote a new business model: the more CO2 is produced, the more money can be earned.”
The Environmental Action Germany (DUH) criticised the carbon management strategy as a “roll-back towards the fossil-fuel past,” calling on the federal cabinet and Bundestag (lower house of parliament) not to approve the proposal. “On the one hand, Habeck is allowing life-extending measures for fossil-fuel, gas-fired power plants, while on the other hand he is turning the North Sea into a fossil fuel disposal park,” DUH head Sascha Müller-Kraenner said. “This opens the door to the continuation of fossil fuel business models and makes it more difficult to secure the necessary investments in energy savings and the switch to renewables."
Entire value chain emissions must be taken into account when allowing CCS on gas power plants
Economy minister Habeck replied to criticism that CCS is set to be allowed for gas-fired power plants. State support in the electricity sector would only be given out to hydrogen projects – as recently decided by the government – and the coalition "firmly agreed" the inclusion of upstream emissions, for example methane emissions from fossil gas production and transport to Germany. "In my view, this means that if CCS is used at all in the gas power sector, it will be targeted at locations that cannot be quickly connected to the hydrogen grid."
PIK's Edenhofer also emphasised that CCS for electricity generation from fossil gas is acceptable, if all value chain emissions are priced correctly. He said the EU had to ensure that all the European value chain emissions are included in the emissions trading systems (ETS I and ETS II). In addition, he proposed a border levy for those value chain emissions which happen outside the EU, akin to the carbon border adjustment mechanism (CBAM), which is being introduced by the EU.
The government's document from 26 February says that Germany "supports an ambitious implementation of the European Methane Regulation, including the examination of a prospective pricing of upstream chain emissions from fossil fuels placed on the EU market." The EU Methane Regulation, not yet in force, will require regular reporting and measurement of methane emissions at source and obliges oil and gas companies to regularly test and plug methane leaks.
Key elements of Germany's upcoming Carbon Management Strategy
Carbon Management Strategy – key elements (still to be completed)
- Key elements agreed by government, but full strategy must still be worked out
- Aim is to abolish existing hurdles to CCS/CCU
- Already by 2030, "significant volumes" CO2 must be captured and stored or used
- Areas of application:
- Focus mainly on industries with hard-to-abate emissions, under increasing cost pressure through EU Emissions Trading System (EU ETS), like cement and lime industry, basic chemicals and waste incineration
- Application for other industry processes permissible, "as long as electrification or switch to hydrogen not possible in cost-efficient manner for the foreseeable future"
- Allows CCS/CCU on gas-fired power plants, but no state support
- Coal-fired power plants, however, do not receive access to CO2 pipelines
- State support for CCS/CCU:
- Necessary, because incentives through CO2 price in EU ETS not sufficient for all applications
- Support "will focus on emissions which are hard or impossible to avoid"
- Upcoming strategy will lay out details
- No support for CCS in fossil-fuel power plants
- Support for investments, but also innovation, research, development and negative emissions projects
- Industry support for CCS/CCU also through "climate protection contracts," but not in first auction round
- Cross-border cooperation and international rules
- Germany supports an ambitious implementation of the EU Methane Regulation, including "examination of a prospective pricing of upstream emissions from fossil fuels placed on the EU market"
- Germany will ratify the amendment of the London Protocol to allow CO2 export for storage offshore
- Supports cross-border cooperation on carbon storage
- CO2 storage (details in separate carbon storage law reform proposal):
- Germany will allow exploration of offshore storage sites in its Exclusive Economic Zone (EEZ) or the continental shelf; if suitable, safe and in line with ecological criteria, it can be developed for industrial utilisation
- Germany thus "takes responsibility for the CO2 produced here and at the same time makes itself less dependent on access to storage facilities in neighbouring European countries"
- injection of carbon dioxide in marine protected areas is excluded
- onshore CO2 storage continues to be impossible; however, federal states can request opt-in possibility to be put in law
- Transport infrastructure
- Pipeline network needed, to be privately operated, no state support
- Pipeline network cheapest option for large-scale transport
- Government will adopt existing laws to abolish hurdles for new projects; implement faster planning and permit procedures
- Supports cross-border cooperation on carbon storage in Europe; "
- "Essential" that Germany is quickly connected to existing projects in other countries
More reactions from stakeholders
Politicians
Jens Spahn, CDU/CSU parliamentary faction co-leader and conservative industrial policy expert:
Jens Spahn (CDU), co-leader of the CDU/CSU parliamentary faction, welcomed the key points of the carbon management strategy. “The Green Minister for Economic Affairs is taking a step in the right direction with CCS/CCU,” Spahn told newspapers of the Mediengruppe Bayern. Now the announcements must be followed by action very quickly, as the German economy would be desperately waiting for this “important climate technology.” In practice, however, he warned of implementation problems: “Unfortunately, Habeck is immediately taking another step backward, with many restrictions and high hurdles,” said Spahn.
Industry and business
Kerstin Andreae, head of the German Association of Energy and Water Industries (BDEW):
According to the energy industry association BDEW, the strategy is “another important step towards climate neutrality,” with a focus on the use of hydrogen in power plants. “It is also important to create the financial framework conditions to build the necessary additional pipelines behind the hydrogen core grid through which industry and power plants can obtain hydrogen,” BDEW head Kerstin Andreae said in a statement. Accordingly, the extent to which CCS can play a role for gas-fired power plants in the future would depend on the costs, infrastructure and flexibility of the plants. Furthermore, the BDEW considers it positive that the storage of carbon onshore is not currently planned, however, views the opt-in option by the federal states “with the utmost scepticism.”
Ingbert Liebing, Head of the Association of Local Utilities (VKU):
CCS/U would be “important building blocks in climate protection,” VKU head Ingbert Liebing said in a press statement, welcoming the government’s carbon management strategy and the presented amendment of the Carbon Dioxide Storage Act. “However, these processes must not compromise the protection of our drinking water resources under any circumstances.” Furthermore, the VKU welcomed that the ministry has “rightly” recognised that “CCS must play a particularly important role in thermal waste treatment,” as residual emissions of carbon dioxide could not be avoided during thermal waste utilisation. While countries such as Norway, Denmark and the Netherlands “are already leading the way with concrete projects” for CCS in thermal waste treatment plants, Germany “is still lagging behind,” according to VKU.
Michael Vassiliadis, head of IG BCE, the German trade union for mining, chemicals and energy industries:
To maintain competitiveness and to future-proof industrial jobs and locations, the government’s carbon management strategy would be “absolutely essential,” clearing up a “German aberration,” according to trade union IG BCE. “While half of Europe is already planning or operating CCS projects, the politicians of the EU's largest industrialised country have demonised the technology for years,” said Michael Vassiliadis, head of IG BCE, in a press release. “Yet it has long been clear that there can be no transformation of industry to climate neutrality without CCS.” The strategy would be a signal of solidarity to Europe, “that we are prepared to put our own house in order and not just export isolated CO2 to our neighbours,” Vassiliadis stated.
Timm Kehler, head of lobby group Zukunft Gas:
Lobby group Zukunft Gas welcomed the new carbon management strategy and the emphasis on the role of gas-fired power plants and CO2 transport infrastructure, calling it a “further building block for effective climate protection” in a press release. “With regard to the power plant strategy, the handling of CO2 and a realistic carbon management strategy are also crucial to ensure that Germany does not fall behind, particularly with regard to industrial development,” Zukunft Gas head Timm Kehler said. The lobby group also welcomed that the application of CCS/U would be made possible for power generation plants using gaseous energy sources: “Against the backdrop of an expected rise in the price of CO2, this opens up solution options for new and existing gas-fired power plants and CHP plants,” Zukunft Gas stated. Furthermore, according to the lobby group, it would be “very pleasing” that the government has mentioned the planned market-based and technology-neutral capacity mechanism as part of the CMS, “which we have long been calling for.”
Wolfgang Große Entrup, head of the German Chemicals Industry Association (VCI):
The chemicals industry association VCI also welcomed the future deployment of CCS/U in Germany. “We must see these technologies as an opportunity,” said VCI head Wolfgang Große Entrup in a statement, highlighting that speed regarding the legal framework would now be important: “In addition to the important decarbonisation of German industry, it is also a matter of quickly tapping into new technological market opportunities with our industrial expertise,” Große Entrup said.
For the chemical industry, the use of carbon from CO2 would be an important alternative to fossil raw materials. “Every gram of carbon that can be kept in the cycle deploying CCU does not have to be extracted from fossil sources or injected into the ground using CCS. That's why we need rapid and massive funding for research and development of CCU,” adds Große Entrup.
Christian Seyfert, head of the German Association of energy intensive businesses (VIK):
According to VIK head Christian Seyfert, CCS/U is a “proven and safe technology” that has been used internationally for more than 20 years. “There is no objective reason why Germany should stand on the sidelines any longer,” he said in a press release. The ministry's emphasis on technological openness and the possible use of capture in gas-fired power plants could be considered “a positive signal,” the VIK wrote. “Whether this type of application will ultimately be utilised is by no means certain and should definitely be left to the market,” the statement stated. The association emphasised that the decisive draft legislation as well as the legal basis should be brought forward quickly, as the companies had projects at the ready.
Bertram Brossardt, managing director of Bavaria’s industry association vbw:
According to the vbw, the necessary CO2 transport infrastructure in particular must be built quickly. "The networks for electricity, gas and hydrogen must be planned, built and linked together with the transport network for captured CO2," Bertram Brossardt, vbw’s managing director, said in a press release. "Large CO2 emitters such as the cement and lime industries as well as CO2 users must be connected as a priority. We will only achieve our climate targets with interlinked concepts that are implemented quickly,” said Brossardt. However, this would also require the onshore storage of CO2 in Germany."
Research
Lee Beck and Toby Lockwood at advocacy group and think tank Clean Air Task Force:
“As Europe's largest economy and biggest emitter, all evidence points to the fact that carbon capture and storage will need to be deployed on a significant scale if Germany is to reach its climate targets,” said Lee Beck, senior director for Europe and the Middle East at Clean Air Task Force in a press release. “The Carbon Management Strategy is a significant first step to deploying carbon capture and storage, which German governments must now deliver on.”
“The Strategy sets in motion several key actions for enabling carbon capture and storage in Germany, including the legislative revisions needed to establish CO2 pipeline networks and allow offshore storage of CO2 under Germany's North Sea,” added Toby Lockwood, the think tanks' technology and markets director. “Following the example of some other EU Member States, carbon contracts for difference will be used to cover the funding gap still faced by the hard-to-abate sectors that will rely on carbon capture and storage to decarbonise.”
Environmental NGOs
Leif Miller, managing director of the German Association for Nature Conservation (Nabu):
Although Germany would need regulations for the use of CO2 reduction technologies such as CCS as quickly as possible, the federal government has “overshot the mark” with its plans, said Leif Miller, managing director of NABU in a press statement. Including now also emissions from fossil-fuel powered power plants, would “send out the wrong signal”; “Only unavoidable residual emissions, such as those from lime and cement production processes and waste incineration, can be considered for the capture and underground storage of CO2,” Miller stated. He added that the government would be well advised to “limit the planned utilisation to a minimum in the further implementation steps in order not to gamble away social acceptance.”
Olaf Bandt, head of Environmental lobby group Friends of the Earth Germany (BUND):
Environmental lobby group BUND also said of the Ministry of Economic Affairs so-to-speak broke the dam on “CCS gas-fired power plants and CO2 landfills in the sea,” arguing that the ministry has opened “pandora's box today by deregulating commercial CCS technology,” according to a press release. “With the plans for CCS at gas-fired power plants, Federal Minister Robert Habeck is jeopardising the phase-out of fossil fuels,” BUND head Olaf Bandt warned. The alleged limitation of the use of CCS would be a labelling scam: “With the free licence for CCS announced today, CO2 pipeline networks and landfills will become a business for the gas companies, which is all the more profitable the more CO2 is produced.” The parliamentary groups in the Bundestag should now ensure that the risks for the population and climate and environmental consequences are assessed and publicised, Bandt said, calling for a prevention of “this impending U-turn in climate protection policy.”
Heike Vesper, WWF Germany's board member for political and economic transformation:
According to WWF, the government's carbon management strategy can be considered a threat to climate and marine protection in Germany and worldwide and opens the door to carbon capture in the energy sector. “This carbon management strategy reveals the chancellery's obsession with gas and the FDP's myth of technological openness is now being fully realised,” commented Heike Vesper from WWF Germany in a press release, adding that the government would breath new life into technology approaches “that were actually declared dead,” instead of creating a future-proof economy. CCS should not be used for gas-fired power plants, Vesper argued: “The stakeholder process has been reduced to absurdity with the current far too broad opening of the strategy to gas.” CCS is associated with many risks and uncertainties and must be used in a very limited and targeted manner, Vesper stated.
