With the amendment to the Carbon Dioxide Storage Act (KSpG), which came into force on 28 November 2025, Germany has fundamentally changed its previous restrictive legal situation regarding CO₂ capture, transport and geological storage. The law, now known as the Carbon Dioxide Storage and Transport Act (KSpTG), should not be perceived as an industrial policy instrument for expansion, but instead as a legal alignment with developments in EU law to end the special national path pursued by Germany.
Under the previous KSpG of 2012, not a single CO₂ storage facility was approved. Due to volume restrictions, an application deadline that expired in 2016 and far-reaching state exclusion clauses, its scope was effectively reduced to zero. However, this legal situation was increasingly at odds with developments at European level, where CO₂ transport and storage infrastructures have been explicitly treated as part of industrial transformation and infrastructure policy for years. The European Commission’s Industrial Carbon Management Strategy (ICMS), the Net-Zero Industry Act (NZIA) and its binding target of at least 50 million tonnes of CO₂ injection capacity per year by 2030 have created a regulatory environment designed for the cross-border integration of infrastructure.
Legal classification of the KSpTG
Against this backdrop, the amended KSpTG can be primarily classified as follow-up and compatibility legislation. The reform lifts the de facto ban on commercial CO₂ storage and removes the previous licensing restrictions. In addition, a consistent legal framework for the pipeline transport of CO₂ is being created for the first time. Whilst carbon capture and storage (CCS) is legally possible, it is neither politically prioritised nor economically promoted.
The main changes can be summarised in three dimensions:
Firstly, the KSpTG fundamentally expands the scope of application. CO₂ transport is no longer treated merely as an annex to individual industrial plants but is recognised as an independent infrastructure object that can potentially serve multiple emitters and storage sites. In addition to pipelines for transport to storage sites, CO₂ pipelines for other purposes, such as carbon capture and utilisation (CCU), are now also covered. This makes it possible for the first time to plan CO₂ transport networks independently of individual capture projects and to integrate them into supra-regional or cross-border structures in the future. At the same time, the legislator has deliberately refrained from making any predetermined decisions regarding network regulatory instruments such as fee regulation, unbundling or mandatory third-party access. Regulation is limited to negotiated network access with minimal regulation. The amendment follows a sequential regulatory logic in which the legal facilitation of market and network regulation is given priority.
Secondly, the KSpTG contains extensive acceleration instruments. For example, the construction, operation and significant modification of CO₂ pipelines and storage facilities are legally classified as being in the “overriding public interest”. This assessment directive is binding on authorities and courts: the weight of public interest in CO₂ infrastructure is “preset” for weighing and discretionary and other assessment decisions, so that conflicting interests can only prevail in atypical and particularly justified exceptional cases. In addition, the planning approval procedure is closely aligned with the Energy Industry Act (EnWG), first-instance jurisdiction is introduced for the higher administrative courts, and priority processing by the authorities is established for the first time. Existing natural gas pipelines can also be converted to CO₂ pipelines without a new planning approval procedure, similar to the conversion to hydrogen pipelines.
Thirdly ,the geographical scope of the Act is redefined. According to this, CO₂ storage facilities may only be approved in the German exclusive economic zone (EEZ) and on the continental shelf. Injection into coastal waters is excluded. Onshore storage is only permitted nationwide for research purposes. Commercial onshore storage requires an explicit opt-in decision by the respective federal state. The approval requirements for offshore storage are demanding and include, among other things, minimum distances from marine protected areas, noise protection requirements for the benefit of porpoises, and the priority of wind energy and hydrogen plants.
Open flanks and challenges
Despite regulatory progress, the practical relevance of this opening remains fraught with considerable uncertainty.
So far, no federal state has announced that it will make use of the opt-in clause. Some even expressly reject CO₂ storage on their territory. The EEZ is already largely over planned due to shipping, wind energy, pipelines and marine protected areas. Identifying suitable and legally feasible offshore storage sites is therefore extremely challenging. As long as CCS is not integrated into maritime spatial and technical planning, the primary use case for CCS in Germany in the short to medium term is likely to be CO₂ export – particularly to Norway and Denmark. The necessary international legal basis for this was created with the laws passed on 29 January 2026. The ratification of the amendment to Article 6 of the London Protocol on the Prevention of Marine Pollution allows cross-border CO₂ export for storage purposes.
Furthermore, there is still no comprehensive political strategy. There is neither a robust carbon management strategy (CMS) nor a long-term strategy for negative emissions or a finalised power plant strategy. Thus, the legislative act precedes the political strategy. Without such a decision on the direction to take, the necessary orientation for investment decisions is lacking. In addition, the gap between the estimated costs of CCS projects (approx. 130–300 EUR/t CO₂) and the current price of emission allowances (approx. 90 EUR) is still too large. State support is to be limited to emissions that are difficult to avoid, but a binding definition of these terms is still pending.
It should also be noted that the European Commission has announced its own legislative initiative for cross-border CO₂ networks, including a regulatory framework, for the third quarter of 2026. Depending on the design of this European regime, there may be a need for further adjustments at national level shortly after the KSpTG comes into force.
Funding framework
In parallel with the legal opening up of the market through the KSpTG, the German government has launched the Federal Funding for Industry and Climate Protection (BIK) programme, a funding instrument designed to provide targeted support for the economic implementation of CCS and CCU projects. Module 2 of the BIK funding guideline specifically addresses the application and implementation of CCU and CCS and is divided into two sub-modules. The first sub-module provides funding of up to €30 million for investment projects for the technical implementation of CCU and CCS technologies in existing or new industrial plants. The second sub-module is aimed at innovation projects involving application-oriented research and development for the further development and scaling of capture, transport and storage technologies. It provides for funding of up to €35 million.
The key criterion for funding is what is known as funding efficiency. This involves assessing how much CO₂ will be saved by the respective project by 2035, measured against the funding provided. In addition, the funding must have an incentive effect – the project must not be feasible without the funding, or at least not to the same extent or within the planned timeframe. The funding itself is granted as a non-repayable subsidy as part of proportional financing and is limited to a maximum amount. The current submission deadline for the second call for proposals for Module 2 is 28 February 2026.
International comparison of KSpTG
A comparison with the United States shows that German and European regulation takes a different approach to control than the American one. There, CCS and direct air capture (DAC) projects are closely linked to fiscal support instruments that establish a legally fixed revenue claim per tonne of CO₂ permanently stored. These instruments have led to a high concentration of projects, especially in the DAC sector. Nevertheless, it remains unclear what proportion of the announced projects will actually be realised. Data from the International Energy Agency (IEA) show a comparatively low capacity, with an actual installed global capture capacity of around 50 million tonnes of CO₂ per year. There are considerable uncertainties between project announcement, approval, financing and commissioning. The European approach differs in that it has so far focused primarily on setting the framework and enabling infrastructure, while demand and revenue models are largely left to national or market-based decisions.
Significance for industry
The KSpTG results in a changed but still cautious starting position for industry. The law does not impose any obligation to act or invest and does not replace existing decarbonisation requirements. Its significance lies in the fact that CO₂ capture and storage are now legally permissible and can therefore be considered in long-term transformation, location and investment considerations. In this way, Germany remains fundamentally compatible with European CO₂ infrastructure projects without committing itself to their use at an early stage.
Emissions-intensive companies must consider that, once the issuance of new emissions allowances ends in 2040, affected facilities will only be able to continue operating if the CO₂ they produce is not emitted. However, the economic viability of potential CCS applications continues to depend on emissions prices, regulatory developments and the actual availability of cross-border transport and storage solutions. For emitters located far from the coast or clusters, which are not in the immediate vicinity of the first pipeline network, there is a potential risk that no CO₂ network will be established in their region or that they will not be able to connect to it on economically reasonable terms.
Conclusion
Overall, the amendment to the KSpG should be viewed less as a climate protection instrument with short-term effects and more as an institutional precautionary measure. It removes legal obstacles, synchronises national law with the European regulatory framework and opens up a robust space for future industrial and infrastructure policy decisions. Particularly in view of the dynamic but uncertain technological developments in the field of carbon capture, utilisation and storage (CCUS), the law does not create a path for expansion, but instead a legally secure horizon of expectations. It is only within this horizon that economic and political decisions can be made in a meaningful way. Whether the KSpTG will bring about the hoped-for breakthrough for CCS in Germany will depend largely on whether the outstanding issues relating to storage access, funding frameworks, overall political strategy and social acceptance can be resolved quickly and consistently.
