A (late) comeback for CCUS in Germany?

On 29 May 2024, the German government adopted a draft bill to amend the existing Carbon Dioxide Storage Act of 2012 (Draft CCUS Bill) and a position paper on a carbon management strategy (Carbon Management Strategy). As CCUS is regarded by parts of the energy industry as a key component in achieving global net zero targets, it is not surprising that a number of projects are currently underway around the world and legislators, including the European Union, are adopting regulatory frameworks to support its growth (see our briefing on the state of play in the EU). Germany, however, trails behind other countries in this respect, not least due to very stringent regulatory hurdles making CCUS – so far – almost impossible to develop in Germany. The Draft CCUS Bill, if implemented, will remove three key regulatory obstacles:

Obstacle 1: domestic storage capacity

Apart from a small research facility in Brandenburg, there are no CO₂ storage facilities in Germany. This is because under the old Carbon Dioxide Storage Act, all applications for CO₂ storage facilities had to be filed by the end of 2016. As no applications were submitted by this deadline, and the deadline was never extended, no CO₂ storage facilities have been permitted in Germany so far. 

The Draft CCUS Bill would allow the construction of CO₂ storage facilities for the first time since 2016, a prerequisite for a more widespread use of CCS. The construction of CO₂ storage facilities will initially be limited to offshore areas (except for marine protected areas). However, each of the 16 federal states has an opt-in right to authorise onshore storage in its territory.

While the removal of the application deadline is good news for CCS in Germany, domestic CO₂ storage facilities will not be available in the near future. The German government assumes it will take 7-10 years for the entire approval process, while the EU Net Zero Industry Act states that the permit-granting process for CO₂ storage facilities shall not exceed 18 months. German permitting procedures may therefore need to be accelerated. Furthermore, storage facilities are not open to all emission sources. In its Carbon Management Strategy, the German government states that the strategic focus will be on hard or impossible-to-abate emissions (e.g. from lime and cement production) while expressly excluding emissions from coal-based energy production.

Obstacle 2: export restrictions on CO₂

Exporting CO₂ is subject to legal restrictions under public international law. The export of CO₂ for storage under the seabed is prohibited by the 1996 Protocol to the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter (London Protocol). At the moment, the only legal option to export CO₂ is therefore for onshore storage. Since most foreign CO₂ storage facilities are located under the seabed, the London Protocol’s export ban is seen as one of the main legal obstacles for CCS at the current time.

In its Carbon Management Strategy, the German government confirmed its intention to remove this regulatory obstacle by ratifying an amendment to the London Protocol which would allow CO₂ export for offshore storage. To ensure investment security until the amendment enters into force, the German government will also declare the provisional application of the amendment. So far, there is no precise timetable for these measures. The German government has however pledged they will happen in the short term. 

Obstacle 3: Unclear and inconsistent rules on CO₂ pipelines 

Constructing CO₂ pipelines is already possible under the current legal regime. One reason why there are so few is the lack of realistic prospects for CO₂ storage so far. Another reason is that the Carbon Dioxide Storage Act is vague on key issues, such as the specific safety requirements for CO₂ pipeline transport that are currently based on existing rules for gas pipelines, which may not always be the best fit. In addition, the Carbon Dioxide Storage Act only applies to pipelines leading directly to a CO₂ storage facility. Pipelines for CCU are subject to a different set of rules.

The Draft CCUS Bill creates a single regulatory framework for CO₂ pipeline transport in Germany, regardless of whether the pipelines are used for CCS or for CCU. There will also be specific safety standards for these pipelines. Other means of CO₂ transport (e.g. ship, lorry, rail) will be covered by regulations for the transport of dangerous goods.

Outlook

If enacted, the Draft CCUS Bill and the further measures described in the Carbon Management Strategy would remove the main regulatory obstacles to large-scale implementation of CCUS in Germany. Its publication is a clear sign that there is strong political support for the development of CCUS in Germany and current thinking is that the Draft CCUS Bill could become binding law by end of 2024. German companies considering whether to enter the CCUS market may wish to begin assessing the technical and commercial feasibility of their projects. Permitting procedures can however only be initiated after the Draft CCUS Bill actually enters into force.