It is now certain that under the new federal government of CDU/CSU and SPD, the items of carbon dioxide storage or Carbon Capture and Storage (CCS) and Carbon Capture and Utilisation (CCU) will quickly return to the agenda of MPs. An entire paragraph was even dedicated to these technologies in the new government’s coalition agreement. Following an assessment of the current situation, we now present the new plans of the future German government.

Significance for German industry

In 2023, German industry produced around 144 million tonnes of CO₂, making it the country’s second-largest emitter. CCS is essential in the long-term for competitive industry - be it steel, chemical, cement and lime industries or glass and ceramics production - to reduce emissions from production processes (so-called process emissions). CCS technology is intended to address emissions that are currently difficult or otherwise technically unavoidable. CCS also offers a temporary solution for industries where emission reduction technologies are not yet available or where the switch to green hydrogen and the electrification of production processes is currently not economically viable.

History

Due to the break-up of the traffic light coalition at the beginning of November 2024 and the dissolution of the Bundestag at the end of December 2024, some legislative projects that had already been planned could not be further implemented. In detail:

CCS within the framework of the Power Plant Security Act

One component of the legal framework is the Power Plant Security Act, which lacked the majority to be implemented following the break-up of the traffic light coalition. The aim of the Power Plant Security Act was to secure the energy transition with new gas-fired power plants in times when the sun and wind do not provide enough electricity. From 2025, around 12 GW of new gas-fired power plants were to be put out to tender - including 7 GW of hydrogen-capable gas-fired power plants (“H2 ready”) and 5 GW of conventional natural gas-fired power plants. However, the CDU/CSU refused to provide the support necessary for the law to be passed following the break-up of the traffic light coalition. Instead of a mandatory switch to hydrogen (H2) after eight years, the operators should be left to decide whether they want to convert to hydrogen or continue to operate the power plants with gas plus supplementary CCS technology. As part of the power plant strategy, which forms the basis for the Power Plant Security Act and whose key points were presented for the first time in February 2024, the CDU/CSU urged the widespread implementation of CCS technology in gas-fired power plants. 

The Carbon Dioxide Storage Act as the cornerstone for the roll-out

In the same way as the Power Plant Security Act, the amendment to the Carbon Dioxide Storage Act (KSpG) also failed to get off the ground after a long period of preparation. However, the KSpG is potentially the key to achieving Germany’s climate targets.

According to the current legal situation, CO2 storage facilities in Germany may only be built for test purposes under the KSpG. There are also many legal obstacles to exporting CO2 abroad, particularly regarding offshore storage off Norway, which is favoured by the EU. The amendment already planned was intended to support industries that are unable to switch their production processes to climate-friendly hydrogen, or only with difficulty. As described above, there was disagreement until the end on the question of whether gas-fired power plants should also be allowed to make use of CCS technology or whether the pressure on operators of gas-fired power plants to switch to hydrogen would be mitigated too much by promoting CCS.

As part of the amendment, the basis for the creation of a transport infrastructure - i.e. a CO2 pipeline network - should also be created. The transport infrastructure is fundamental for a successful roll-out of CCS.

The failure of the Power Plant Security Act and the amendment to the Carbon Dioxide Storage Act was a setback for industry. Both laws could have provided the planning security that companies urgently need for investment decisions on CCS projects.

The plans of the new federal government

The previous legislative procedures cannot simply be continued after the early parliamentary elections because of the principle of discontinuity. However, it is to be expected that the new federal government consisting of the CDU/CSU and SPD will submit a new and probably more far-reaching legislative proposal. The coalition agreement now states in a separate section: “We will immediately adopt a legislative package that enables the capture, transport, utilisation and storage of carbon dioxide, particularly for emissions from the industrial sector that are difficult to avoid and for gas-fired power plants.” The overriding public interest in the construction of these CCS/CCU plants and pipelines should be established. Regarding the planned offshore storage, the ratification of an amendment to the London Protocol, which currently prevents the export of CO2 under international law, and the creation of bilateral agreements with neighbouring countries should be given top priority. CO₂ storage should be made possible both offshore outside the territorial sea in the exclusive economic zone (EEZ) and the continental shelf of the North Sea and onshore where geologically suitable and accepted. A country opening clause is also to be introduced for this purpose. Direct air capture technology - which is not yet available in Germany - is to be used to a greater extent to leverage negative emissions in future.

However, some of these plans have also been criticised. The decision to authorise carbon capture and storage at gas-fired power plants, for example, is viewed by Nina Scheer, former spokesperson for climate protection and energy policy for the SPD parliamentary group, as “extremely critical especially in combination with the privileged treatment of carbon transport infrastructure”. A commitment to CCS must be “brought into a reasonable relationship with the necessary ramp-up of green hydrogen. After all, the hydrogen core network stands or falls on the availability of sufficient hydrogen,” said the member of the Bundestag, speaking out in favour of the purely industrial use of CCS technology.

Companies such as EWE and Sunfire had also warned against playing CCS and hydrogen off against each other: CCS should only be used for unavoidable emissions, whereas hydrogen should be used for the energy transition. Clear demand stimuli for green hydrogen, including for gas-fired power plants, are important for the hydrogen economy.

For example, EnBW primarily relies on the use of hydrogen in its gas-fired power plants. As these, in contrast to base load plants, do not regularly run continuously, the CCS plants would only be operated during the hours in which the power plant is in use. This would significantly extend the amortisation of the CCS plants in particular. 

Aurubis also pointed out that a transport network would be needed to utilise the stored CO₂, which so far only exists in the plans of various gas network operators. Furthermore, there is currently no market-ready and economical technology for capturing exhaust gases with a very low CO₂ content. Further research and funding are needed for this.  

European pioneers

One successful example of the implementation of CCS projects is Norway, where more than 19 million tonnes of CO₂ have been stored under the North Sea since 1996.

Denmark has also already issued six licences for the exploration of CO₂ storage facilities. As part of the Greensand project, 1.5 million tonnes of CO₂ per year are to be stored in the seabed from 2025/2026 and eight million tonnes from 2030. The project is part of an emerging Europe-an CCS infrastructure. Denmark has also reached agreements with several countries on the cross-border transport of CO₂ for storage in the seabed. The Greenstore project is also the first licence to store CO₂ underground on land. 

The Netherlands is also considered a pioneer when it comes to CCS. According to the government, the Netherlands has the potential to store up to 3,200 mega tonnes of CO2 by 2050. Work is currently underway in the port of Rotterdam to construct pipelines and compression stations to store CO2 off the coast in the former P18 gas field. The project could go into operation in 2026 and become a model for other European countries.

Outlook

It remains to be seen whether and when the new federal government’s plans will be implemented. Our insights will keep you up to date with all future developments. We already provide clients with comprehensive advice on the planning and implementation of CCS and CCU projects. Our experts cover the entire process, from planning and authorisation procedures through to contractual guarantees.