A possible CCS roadmap, for discussion.

In both its Industrial Carbon Management Strategy^[1], and President Von der Leyen’s recent speech to the European Parliament and accompanying Political Guidelines^[2], the Commission acknowledges that without an important contribution from Carbon Capture, Utilisation and Storage (CCUS), the EU will not be able to achieve its Green Deal and Net Zero ambitions.

The Commission’s Carbon Management Strategy is clear in that CCS will be needed for at least three reasons – unavoidable process emissions (for example from cement production), fossil fuel emissions from energy intensive industry where renewable energy options would be technically unavailable or too expensive, and for the negative emissions that will be needed to counterbalance those that the EU will not succeed in eliminating before the 2050 ‘net-zero’ deadline.

It remains to be seen whether, and to what extent, CCS will also be needed in areas where it may be seen as competing with renewable energy, notably for balancing electricity and low-carbon hydrogen, but there are a number of indications that for these uses CCS may, depending on the circumstance, be a very competitive option.

Whichever way one looks at the issue, one reaches the conclusion that the EU will need a CCS value chain at scale and rather quickly.

In fact, the EU will need a cost-effective ‘no-regrets’ CCS value chain to be in place at latest by the time that the ETS price rises to match the cost of CCS for energy intensive industry (estimated to be around €150-200/tonne) and when CBAM industry (Iron and steel, cement, fertilisers…) is fully exposed to the effects of the ETS (2034). If the ‘no-regrets’ grid is not in place by that date, parts of this industry will not be able to decarbonise as CCS is their only cost-effective option, and will be forced instead to buy ETS allowances – thus raising costs for steel, cement, fertilisers etc. for EU citizens and industry, but not necessarily reducing GHG emissions in these sectors^[3].

But the key challenge for the EU in this respect is that, until this ‘ETS price/CCS cost’ tipping point is reached when free ETS allowances for industry are eliminated, companies will have too limited an incentive to invest in the capture facilities required for CCS, or to sign long-term CO2 transport and storage contracts that infrastructure investors need to de-risk investments. Without specific action at EU and Member States level to catalyse the building of the CCS value-chain on an ‘anticipatory investment’ basis, by the time that it becomes essential, the grid will therefore not be in place.

Data Collection

There is an urgent need for further concrete data on the cost of CCS, including its relative cost compared to other decarbonisation options and the cost of using CCS to achieve zero or negative GHG electricity and hydrogen.

Planning

The data collected, will enable the development of the ‘no-regrets’ CCS grid, evolving as more data becomes available, and based on detailed market-testing.

Carbon Contracts for Differences (CCFDs) and/or state guarantees for anticipatory grid investments

Without state action, the CCS grid will develop too late to be compatible with its decarbonisation aims and the full impact of the ETS on CBAM sectors, given the decade or more needed from planning to entry into operation. This may be resolved through a combination of an accelerated train of CCFDs and state guarantees for anticipatory infrastructure development, implemented within the context of a CCUS IPCEI.

UK and Norway Involvement

For a rational EU CCS system to emerge, the CO₂ storage capacity of the UK and Norway will be essential. Efforts should be made to bring Norway under the NZIA, negotiate a CCS agreement with the UK, and ensure that all other relevant rules are adapted so that CCS applies seamlessly between the EU and these countries.

Accelerating planning procedures

Whilst the EU has taken action to ensure that Member States implement accelerated planning procedures for essential investments in RES, there are no such provisions regarding CCS. The above mentioned future proposal on establishing a regulatory framework for the CCS grid and storage would be good opportunity to do so.

Establishment of CO₂ Purity and Other Relevant Standards

Standards for CO₂ purity and other relevant aspects will need to be established, for example via CEN.

Introduction of a Mass Balancing and Certification System:

A mass balancing and certification system for CO₂ will need to be introduced, which could, for example, be included in the Commission proposal for a regulatory framework for CO₂ grids.

Finalisation of the ratification of the amendment to Article 6 of the London Protocol

The London Protocol^[4] was amended by contracting parties in 2009 to allow for cross border transportation of CO2 for sub-seabed storage, but the amendment must be ratified by two thirds of contracting parties to enter into force.

This suggested Roadmap provides a basis for consideration regarding possible priorities for the next Commission. It is not exhaustive, and the various Working Groups of the ICM Forum are identifying other needed actions.

^[1] https://energy.ec.europa.eu/topics/carbon-management-and-fossil-fuels/industrial-carbon-management_en

^[2] https://commission.europa.eu/document/download/e6cd4328-673c-4e7a-8683-f63ffb2cf648_en?filename=Political%20Guidelines%202024-2029_EN.pdf

^[3] Unless other, potentially more costly transformations of these industries, were supported via State aid earlier than expected.

^[4] https://www.iea.org/reports/carbon-capture-and-storage-and-the-london-protocol