Q&A - Germany’s draft Carbon Management Strategy
[This Q&A is part of a comprehensive package on the role of CCS, CCU and negative emissions in Europe's quest for climate neutrality by 2050. On Germany, the package includes a Q&A about CCS, and articles about carbon storage and negative emission technologies and targets.]
Content
- Why is Germany working on a carbon management strategy?
- Which type of emissions does Germany aim to use CCS/CCU for?
- Who will pay to ramp up CCS and CCU technologies?
- Which sectors can receive state support for CCS/CCU?
- What is the European context for Germany’s carbon management plans?
- What does the government plan on carbon storage?
- What does the government plan on carbon capture?
- What does the government plan on carbon transport?
- What does the government plan on carbon utilisation?
- How is the strategy embedded in other German climate and energy policies?
- How do experts react to the strategy?
In September 2024, German media reported on the German economy ministry’s draft Carbon Management Strategy. The government had already agreed key provisions of the strategy earlier this year, together with a draft reform to the country’s carbon storage law. The ministry’s draft, seen by Clean Energy Wire, will now be negotiated among the relevant ministries and then decided by the full cabinet.
Why is Germany working on a carbon management strategy?
Germany aims to reach climate neutrality by 2045. The draft strategy emphasises that emissions reductions achieved by a fossil fuel phase-out, renewables buildout, improving energy efficiency, a functioning circular economy and the ramp-up of green hydrogen will be the focus of climate efforts.
However, simply reducing emissions step by step to eventually reach zero is not always possible, because a relevant amount is considered hard or impossible to abate with technologies known today. This is true for certain industrial processes, such as cement production, but also in waste incineration or in agriculture – for example for methane emissions from cattle. This means that by 2045, remaining greenhouse gas emissions must be balanced out either through natural sinks like forests, or by technological means, such as direct air capture of CO2 and permanent storage underground (DACCS). The government strategy says that Germany’s natural sinks will not be sufficient.
Reports by the United Nations Intergovernmental Panel on Climate Change (IPCC) have said it will likely even be necessary to remove more from the atmosphere than is emitted to return global warming to 1.5°C following a higher peak this century. The German government will address this in a separate long-term strategy on negative emissions, and wants to adopt a 2060 target for net-negative emissions.
With the Carbon Management Strategy, Germany wants to create the framework for using technologies to capture, store and utilise carbon, especially regarding emissions difficult or impossible to avoid. It is meant to be a key building block of the country’s efforts to reach climate targets in industry and waste management, and to ensure Germany’s competitiveness as an industrial location, the draft says.
It should also lay the groundwork for transparent communication around controversial topics, such as carbon capture and storage (CCS) or utilisation (CCU). This is necessary to ensure public acceptance of these “sensitive issues,” even though CCS is safe and “not a high-risk technology,” says the strategy. The government will establish a body of experts and specific working groups with stakeholders to regularly evaluate the strategy and the environment for carbon management.
Which type of emissions does Germany aim to use CCS/CCU for?
The strategy says CCS and CCU should be used especially for unavoidable greenhouse gas emissions, as well as for those “hard-to-abate”. For a transitional period, it could also be used to deal with emissions from industrial processes whenever a switch to hydrogen or electrification is not yet possible. The strategy states that coal power plants will not get access to CO2 pipelines and storages.
The government emphasises that the use of CCS and CCU “should not undermine efforts to switch to a renewable and sustainable energy and economic system and should not prolong fossil fuel business models, but instead maximise climate benefits.” It says there should be a low risk of locking in dirty methods.
- Accordingly, these technologies should be employed where there are no alternative solutions for decarbonisation currently and for the foreseeable future. The draft strategy highlights unavoidable process emissions as a key application. These are emissions from the chemical transformation of raw materials – not from burning fossil fuels as an energy source. The strategy names cement and lime production as key examples. The draft also defines waste incineration emissions as unavoidable. While the waste slated to be burned can be reduced significantly through a circular economy, a lot of waste will still have to be incinerated by 2045, it says.
- In addition, the strategy allows CCS and CCU for hard-to-abate emissions for some time to help speed up emissions reduction. The strategy defines emissions that are difficult to avoid as those that will continue to occur in the medium or long term, because the alternatives to the processes that cause them are not yet available. Economic, technological and societal developments are set to change, so the government intends to continually evaluate the level of hard-to-abate emissions.
“As long as the electrification of production processes or the switch to hydrogen is not yet possible, CCS can be used in a transitional period for other industries with emissions that are difficult to avoid,” it says. The government currently sees emissions from basic chemical production as especially hard to abate.
The government has conducted a scoring of CCS as a climate measure in different applications based on categories like cost, technological availability, emissions mitigation potential and lock-in risk. The cement and lime industries and waste incineration are the highest priorities, followed by certain chemical production processes. Coal is at the bottom, as there are ample alternatives to using the fossil fuel.
Who will pay to ramp up CCS and CCU technologies?
The government wants the bulk of investments in carbon capture, storage and utilisation to come from the private sector. However, to ensure a swift market ramp-up, there will be incentives and state support in some areas.
At the base, rising CO2 prices, especially in the EU ETS, are meant to provide incentives for investment in CCS/CCU. However, the government says that prices will likely remain too low for many technologies, and there is a high degree of uncertainty about costs of facilities at industrial scale. There is also a lack of data on necessary information, such as value chain emissions of products and even oil and gas extraction and transport.
State support should be implemented in a way that it does not favour just one single technology and is “limited to the necessary extent,” the strategy says.
Incentives mentioned in the strategy:
- Green public procurement, such as sustainable cement for the construction of public buildings
- Government will examine whether and how selected upstream chain emissions from fossil fuels placed on the EU market can be priced
- Support for first movers who want to install carbon capture mechanisms on waste incineration plants
State support mentioned in the strategy:
- Existing carbon capture project support through EU Innovation Fund
- Future support for cross-border EU CO2 infrastructure
- National support programme “Federal Support for Industry and Climate Action,” predominantly for research, development and pilot projects at industrial scale
- Auctions for German “climate contracts” for industry for first large-scale projects in energy-intensive industries
- Loan programmes, for example through the state-owned development bank KfW
- Several research funding programmes, including Horizon Europe and national programmes like CO2-WIN
Which sectors can receive state support for CCS/CCU?
State support is focused on emissions that are difficult or impossible to avoid in the industry and waste sectors. Those impossible to avoid are given priority.
Examples of projects on emissions impossible to avoid:
- Process emissions in cement plants with clinker production and lime kilns
- Waste incineration
Support for hard-to-abate emission projects requires that other alternatives to decarbonise will not reach market maturity for the foreseeable future and are not available at large scale. Currently, this includes only steam crackers. Those used to produce synthetic fuels can be excluded from support.
Other sectors with predominantly hard-to-abate process emissions can receive state support, such as basic chemical or glass production. Support might be restricted to innovation, research and development.
What is the European context for Germany’s carbon management plans?
The European Union has also said that CCS and CCU will be necessary to reach climate neutrality and the European Commission presented its proposal for an EU Industrial Carbon Management Strategy in February 2024. The Commission aims to set up "a European single market for industrial carbon management," to be ramped up over the coming years and decades.
Cross-border cooperation, uniform standards and a joint infrastructure are crucial. Germany, for example, aims to send parts of its carbon to storages in neighbouring countries like Norway. “The German government will therefore work at European level to create favourable framework conditions for a rapid ramp-up of CCS/CCU applications,” the draft strategy says. It also says the government will aim for bilateral agreements with other countries regarding carbon exports for storage.
Other countries, such as France and Austria, also have or develop carbon management strategies.
What does the government plan on carbon storage?
It is currently legally impossible to start a CO₂ storage project in Germany, but the government aims to change that.
It has already presented a draft reform of the country’s carbon storage law, paving the way for previously prohibited underground CO2 storage. It would allow injection of CO2 off the country's coasts, excluding marine protected areas. In addition, it would enable federal states to decide whether to also allow onshore storage on their land. The government says that domestic storages would ensure lower prices than for exports and storage abroad, and Germany could set its own security and environmental standards.
The government does not consider carbon storage a high-risk technology, and says that the risks of leakage, induced seismicity, damage to ecosystems and other potentially negative effects of CO2 storage facilities can be reduced “to an acceptable minimum by taking appropriate precautions.”
The strategy says that Germany must start carbon storage and export even before 2030 to reach its climate targets, and that storages in Norway, Denmark or the Netherlands will likely be the only options available by that time.
Once the necessary regulation is in place, the first German offshore CO2 storage facilities could be put into operation after around 7-10 years, due to the long lead times of such projects – from application to exploration, authorisation and technical implementation, the strategy says.
What does the government plan on carbon capture?
Analyses that underpin the German Carbon Management Strategy assume that about 34 million tonnes of CO2 will have to be captured from industry and waste in 2045. This represents around 20 percent of emissions saved in these sectors, while the switch to renewables and energy efficiency is responsible for the bulk. Three-quarters of the captured carbon would be stored underground and the rest used to make products.
The government aims to establish at least one “large-scale” carbon capture project each in the cement and lime industry and in waste incineration before 2030. It says that Germany is well-placed to play a leading role in developing and producing technologies to capture carbon, as it is a key business location for mechanical engineering.
The strategy says that other possible applications for carbon capture include the glass and paper industries, and generating so-called “blue hydrogen,” where hydrogen is separated from fossil gas and the remaining carbon emissions are captured and stored.
Germany will also allow carbon capture on gas-fired power plants, but will not provide state support.
What does the government plan on carbon transport?
Germany aims to have the first facilities in the country’s north connected to a CO2 pipeline network by 2030, the draft says. Until then, CO2 would be transported by rail, inland waterways or trucks. By 2045, Germany would have a CO2 grid of a total length of 4,500 kilometres. The government sees regional CCS/CCU clusters to emerge for example in the industrial west. It plans for the grid to be financed through access and utilisation fees paid by users to the operators. However, it is “examining specific measures to reduce the risk of long-term investments and avoid the resulting higher charges for first users and a delay in the ramp-up.” This could be state support through the new “climate contracts” for industry, or state guarantees for financing, for example through the government-owned development bank KfW.
The government says that Germany is set to become a CO2 transit country, because neighbouring countries are set to send their carbon dioxide through the country to have it stored under the North Sea. Within Germany, it expects carbon to be transported from the clusters to port cities in Germany (e.g. Wilhelmshaven and Brunsbüttel) or abroad (e.g. Eemshaven, Antwerp). It plans to closely coordinate and cooperate with neighbours to build a cross-border CO2 infrastructure, and proposes a “multilateral platform to develop cross-border CO2 transport.”
Transporting captured CO2 to its storage destinations still requires Germany to ratify changes to the London Protocol for exports, and to make changes in national law -- both of which the government intends to push. A reform of the CO2 storage law proposed in May 2024 is meant to deal with current hurdles to carbon transport. It includes provisions to speed up planning and permit procedures.
Coal power and heating plants will not be connected to a CO2 grid.
The government aims to have high environmental and safety standards for carbon dioxide transport, and wants to make use of synergies between the CO2 grid buildout and the hydrogen grid construction, such as using the same routes for pipelines.
What does the government plan on carbon utilisation?
Today, carbon is used in the manufacture of products such as plastics and chemicals, and it is mostly derived from fossil fuels. In a climate neutral economy, this carbon must be re-used, so that no new fossil-based carbon gets into the atmosphere. However, capturing carbon and using it to produce new materials is extremely energy-intensive.
The government aims to work out a concept for the sustainable supply of the chemical industry's future carbon requirements. Finding alternatives to products and materials that require carbon is the highest priority for the government. Then, as a second priority, it wants reduce primary CO2 consumption through circular economy measures, such as re-using materials.
Using sustainable biomass and CCU for the chemical industry is also part of the strategy, because its potential is limited by the availability of renewable electricity and green hydrogen. “Of all the options for reducing primary carbon demand, certain CCU processes, especially the production of synthetic fuels, require the most energy,” the strategy says. Decisions on state support should always be based on a full lifecycle analysis of a product’s greenhouse gas emissions.
The strategy emphasises that in the end all carbon used in industry would have to come from sustainable sources. However, for a transitional period, it could be captured from fossil production processes.
The draft says that the lack of renewable energy limits Germany’s ability to satisfy demand for precursors and feedstock through domestic production, and imports will be necessary.
According to the strategy, the integration of CO2 use into the EU ETS is “a basic prerequisite for the ramp-up of CCU,” and the government would contribute to relevant legislative processes at the EU level. It also plans to set up a working group on CO2 utilisation to work closely with the EU-level working group on the same issue.
How is the strategy embedded in other German climate and energy policies?
The Carbon Management Strategy is part of Germany’s overall climate policy architecture. In coordination with the long-term strategy for negative emissions, the circular economy strategy, the national biomass strategy, the national hydrogen strategy, the industry strategy, the system development strategy, the lightweight construction strategy; several law reforms such as the carbon storage law; and initiatives at EU level, it will create a framework for carbon management in Germany.
How do experts react to the strategy?
Researcher Felix Schenuit of the German Institute for International and Security Affairs (SWP) welcomed the draft strategy as good news for a climate-friendly industry policy, and emphasised the rapid change of the government’s stance on controversial CCS. The draft strategy shows “how quickly and comprehensively the CCS renaissance has been driven forward by the German government,” he told Clean Energy Wire. Germany’s push is also an important input into the process at the EU level.
Schenuit criticised that the opt-in provision for onshore carbon storage in the German federal states makes planning of infrastructure across the country more difficult and called for an instrument to ensure better coordination.
Several environmental NGOs have warned of the risks of CCS and CCU technologies, criticised the choice to store CO2 under the North Sea, and argued that residual emissions should be stored in natural sinks instead. They have generally called for very strict guidelines for the use of these technologies.
