There has been no development on the carbon capture and storage stage in Germany in the last two years since Angela Merkel called the technology in May 2019 a potentially key element for the country’s efforts to tackle climate change.
The carbon capture policy agenda in Germany is suffering from a lack of progress. There is one EU CCS directive at the moment, introduced in 2009. It sets a legal framework for the environmentally safe geological storage of CO2 but it is not enough to support its commercial deployment. Some recent developments, however, are putting the CCS technology back on the German map.
BDI – Germany’s largest industry association renewed talks about the need for deployment of CCUS in the industrial sector in order for Germany to reach its 2050 net zero target. The association issued a new paper in German. There, it explains what needs to be addressed to allow new decarbonization technologies and procedures to take hold in various CO2 intensive industries like cement, steel and chemicals production.
BDI points out that the next government will have to address the lack of CO2 transport infrastructure. According to the paper, there is also a lack of funding for the transformation of industries, and public opposition against CO2 storage.
There have been protests in Germany for years against the adoption of CCS for coal power which made the government put a break on the technology. New climate goals, however, leave the country no other choice but to move forward with the development of the carbon capture infrastructure as Angela Merkel has confirmed.
Another policy that signals a move forward for carbon capture is a funding directive in German that the government announced at the beginning of February. The directive serves for commercializing capture technologies and proves that German politicians have started to think ahead.
The 2030 Climate Action Program that Germany approved back in 2019, also states that carbon capture technology offers “a comparatively low-cost reduction possibility for unavoidable emissions from industrial processes in the mid-term.”
EU Policies Influencing Carbon Capture In Germany
Apart from implementing a directive about the safety of storage sites, the European Union has also introduced the EU Emissions Trading System (ETS). This is the most significant legislation with an impact on CCS. It affects Germany as well and allows the technology to play a role in the effort to address climate change.
ETS also serves as an equivalent of the 45Q tax credit system in America but instead of rewarding companies for reducing emissions, it sets a limit on GHGs that can be emitted. It also aims to drive investment in low-carbon technologies like CCS.
Another policy that the EU is devising that affects CCS is a carbon border adjustment mechanism. The European Parliament has recently backed the introduction of the mechanism which is seen as an essential part of the EU Green Deal.
A carbon border adjustment mechanism imposes a charge on imports into the EU of certain raw materials from “less climate-ambitious countries”. The policy could be considered an extension of the ETS.
So far, the trading system doesn’t cover caps or taxes on emissions embedded in imported goods and services. That means EU companies comply with the emissions caps in Europe but there is nothing stopping them from outsourcing their operations abroad to avoid restrictions. A tax on imported goods would eliminate this problem and help industries reach carbon neutrality by 2050.
Germany is ideally positioned to benefit from widespread deployment of carbon-removing technologies. It can also lead the commercialization of carbon capture the same way it led the development of solar power.
It is also well-positioned geographically, close to CO2 storage projects under the North Sea. The renewed talks about taking effective measures to achieve the net zero 2050 goal signal progress in a positive direction. It also paves the way for CCS to be implemented at scale.