New Legal Framework for the Commercial Use of Carbon Capture and Storage (CCS) and Carbon Capture and Utilisation (CCU)

German government launches amendment to the Carbon Capture Storage Act with a draft bill

Under the Paris Climate Agreement and the Federal Climate Action Act (KSG), Germany has committed itself to achieving greenhouse gas neutrality by 2045 and negative emissions from 2050. To achieve these ambitious targets, it is not enough to rely solely on low-emission technologies. Instead, the focus is increasingly shifting to carbon capture and utilisation (CCU) and carbon capture and storage (CCS) processes - technologies that are of strategic importance, particularly for emission-intensive industries (such as the cement industry and oil and gas production).

According to estimates by DNV Energy Systems, the volume of captured and stored CO₂ is likely to increase fivefold from the current level of 41 million tonnes of CO₂ to around 210 million tonnes of CO₂ by 2030. At the same time, the costs for capture and storage are forecast to fall, e.g. for the cement industry from around USD 200 per tonne at present to around USD 150 per tonne by 2040. However, the greatest challenge for the ramp-up is still the existing political uncertainty.

With the draft bill to amend the Carbon Dioxide Storage Act (KSpG) that has now been presented, the Federal Ministry for Economic Affairs and Energy is fleshing out the plans already announced in the coalition agreement to submit a new legislative proposal, establish the overriding public interest in the construction of CCS and CCU plants and introduce a federal state opening clause (see our Insight from 17 April 2025).

The draft creates the basis for legally secure and practicable planning and implementation of commercial CCS and CCU projects in Germany.

Overview of the draft bill

With the draft, the Federal Government is concretising the announced realignment of the KSpG. The aim is to legally enable the permanent storage and transport of carbon dioxide (CO₂) on a commercial scale for the first time and thus improve the regulatory conditions for CCS and CCU projects.

• A central component of the draft is the expansion of the scope of the law. The previous restriction to research, testing and demonstration will be lifted. In future, commercial CCS projects on an industrial scale will also be legally permissible - primarily on the continental shelf and in the exclusive economic zone. CO₂ storage on land remains prohibited but can be authorised by state law in individual cases (so-called opt-in regulation).
• A standardised national planning approval procedure will be created for the construction of the necessary CO₂ pipelines to eliminate the existing legal uncertainties in the approval process. The authorisation procedure for the CO₂ pipelines will be based on the tried-and-tested regulations for gas pipelines, electricity pipelines and hydrogen pipelines under the Energy Industry Act (EnWG). Mixed-use pipelines (e.g. for the use and storage of CO₂) are also covered by the authorisation procedure. In addition, new regulations on the expropriation of real property (or rights to real property), the early start of construction and the reclassification of existing gas pipelines have been created.
• The draft also states that CCS and CCU infrastructure is in the overriding public interest. The statutory determination is intended to increase planning certainty and speed up procedures. At the same time, the draft contains extensive provisions on environmental and marine protection, particularly for offshore storage sites.

• In addition, the obligation to disclose geological data is enshrined to identify potential for future storage facilities. The amended legal framework also implements the requirements of EU Regulation 2024/1735 (Net Zero Industry Act - NZIA), which aims to create a Europe-wide legal framework to promote net zero technologies (such as CCS and CCU), including binding targets for CO₂ injection capacities by 2030.

Selected innovations in detail

Commercial use now permitted but onshore will be an exception

A key element of the draft is the widening of the existing legal framework for the commercial use of CCS technologies. While the Carbon Dioxide Storage Act previously only permitted research, testing and demonstration projects, the new draft creates the possibility of authorising storage projects on an industrial scale in future. The permitted scope of application remains geographically limited: Commercial CO₂ storage should primarily take place on the continental shelf and in the exclusive economic zone. This creates an initial legal framework for transferring CCS into industrial practice as a permanent climate protection technology.

The commercial storage of carbon dioxide on land remains fundamentally inadmissible under federal law, even under the new draft. However, the federal legislator is giving the federal states the option of making their own regulations to deviate from this. A so-called opt-in clause allows federal states to authorise permanent CO₂ storage on their territory - either across the board or limited to certain regions. The prerequisite is that all affected states agree to this in the case of cross-border storage complexes or conclude corresponding state treaties. This solution takes account of the scope for federal planning without fundamentally abandoning the standardised nationwide approach. However, it is unlikely to help projects on land to achieve a breakthrough in view of local opposition and the involvement of all affected federal states.

Accelerating the planning procedure by prioritising consideration

The statutory statement that the construction, operation and significant changes to carbon dioxide pipelines are in the overriding public interest is of particular importance. This assessment not only facilitates the balancing of interests within planning approval procedures in favour of CCS and CCU infrastructure, but also creates a viable basis for expropriations. In addition, it is expressly clarified that CO₂ pipelines serve the constitutionally protected goal of climate protection and must therefore be given special consideration in the planning and judicial assessment.

No adverse effect on offshore wind energy

As the focus of CCS projects in the offshore sector may conflict with offshore wind energy, the draft introduces an important protective provision to ensure that CCS projects do not come into conflict with the expansion of renewable energies and the hydrogen economy. Specifically, CO₂ storage facilities may only be authorised if their construction and operation do not have a significant negative impact on offshore wind turbines, connection lines or other facilities for the production or transport of hydrogen. This takes account of the legislative principle prioritising projects to achieve the climate targets of the Federal Climate Protection Act - in particular offshore wind power and hydrogen. The provision also refers to Section 1 (3) of the Offshore Wind Energy Act, according to which these installations also have an overriding public interest. Accordingly, approval must be obtained from the Federal Maritime and Hydrographic Agency before a decision is made. However, applicants have the option of eliminating potential adverse effects by taking appropriate measures, while purely minor effects - such as the need for coordination or monitoring shipping - are not considered.

Regulations on the development of a national CO₂ transport infrastructure

A key subject of the draft is the legal safeguarding of the development of a national CO₂ transport infrastructure. To this end, a separate planning approval procedure for carbon dioxide pipelines is being introduced, which includes both pure CCS pipelines and mixed-use pipelines for CCU purposes. The aim is to eliminate existing legal uncertainties and enable standardised, accelerated procedures. In addition, the new term “carbon dioxide pipeline network” is defined by law; it refers to a non-discriminatory organisation of network access and the contractual framework conditions - based on the provisions of energy industry law. The explicit categorisation of such pipeline projects as projects in the overriding public interest also creates a sound basis for weighing up decisions and for expropriation procedures.

Outlook

The draft bill marks a decisive first step towards a reliable legal framework for CCS and CCU technologies in Germany. It remains to be seen whether and in what form the draft will pass through the Federal Cabinet and then the Bundestag. The extent to which CCS and CCU technologies will achieve a breakthrough on a large scale in Germany is unclear. Due to the opt-in regulation and the associated political and planning complexities, there are doubts about widespread implementation on land. In the offshore sector, there is also the question of how CO₂ storage and the massive expansion of offshore wind energy can be reconciled in individual cases - particularly in view of the limited amount of available land.