The German government is promising to publish a strategy on carbon capture, opening a door that has previously been closed to developing this technology. In the first of a series of articles, Simon Göss and Hendrik Schuldt at carboneer look at why the nation is changing its mind, before laying out the reasons why carbon capture will be essential for Germany to meet its emissions goals. Unlike the power grid, there’s no easy way to decarbonise industry, hence the need to capture the carbon. The authors scope out how the technical potential for CCS applications for target industries (steel, cement, lime, chemicals, waste incineration) amounts to 40-50 Mt CO2. That number neatly equates to the projected demand for carbon in Germany’s chemical industry by 2045, estimated to be approximately 50 Mt CO2. By using all the CO2, the permanent underground or underwater storage problems go away. If the laws, policies and incentives are finally realised, Germany’s challenge will be to synchronise the build-up of capture, transport, storage and utilisation capacities in a practical and affordable way.
This is the first article of a series on the potential of carbon capture, use and storage in Germany that will be published by carboneer over the coming weeks. In this article, we look at the implications of a climate neutral Germany in 2045 on the demand for carbon management and carbon capture use and storage (CCUS). The topic has long been neglected in public debates but experienced a recent revival. CCUS can serve the dual purpose of (i) supporting the decarbonisation of industrial facilities, and (ii) supplying especially the chemical sectors with CO2 as a resource for the production of primary products.
A brief history of carbon capture policy in Germany
While research on large-scale underground CO2 storage started in 2004 at the Ketzin pilot site close to Berlin, industrial carbon management activities (carbon capture, utilisation and storage – CCUS) are virtually absent in Germany at present.
The European Union’s Carbon Capture and Storage Directive from 2009 provided its Member States with a framework to implement corresponding national legislation. The German Carbon Dioxide Storage Act (Kohlendioxid-Speicherungsgesetz – KSpG) came into force in August 2012 (cf. figure 1) but failed to establish favourable conditions for CCUS applications.
The storage discussion at that time in Germany was closely linked to the continuation of coal power generation and met strong public resistance. The expansion of renewable energy generation was at the centre of potential mitigation pathways and CCUS applications were considered risky especially with regards to cost and safety criteria. Giving in to the general scepticism, the KSpG only allowed for applications with storage capacities below 1.3 million tons of CO2, and most states prohibited underground CO2 storage. No single storage project had been developed by the legal deadline for project submissions by the end of 2016. Currently it is therefore not possible to store CO2 underground in Germany and only a limited amount of capture and utilisation projects are operative.
Carbon management has re-emerged in the political arena in Germany only recently. The northwestern industrial state of North Rhine-Westphalia published its Carbon Management Strategy in 2021 and the National Carbon Management Strategy is currently being developed by the Federal Ministry for Economic Affairs and Climate Action (BMWK). We covered the national German Carbon Management Strategy in detail in this article.
Carbon Management is a central component of climate neutrality
With tightening climate targets at the EU and German level, it is becoming increasingly clear that climate neutrality by mid-century or even 2045 will not be achieved without large-scale capture, utilisation and long-term storage of CO2.
While CCUS experienced a slow uptake in German policymaking, academic research unanimously concludes that carbon management, including carbon capture, utilisation and storage, as well as atmospheric carbon removal are necessary to reach climate targets. Since the electricity sector can be largely decarbonised through the expansion of renewables, the focus of carbon management in Germany lies on the industrial sector. Especially process-related emissions are hard to abate and might only be reduced through carbon capture solutions. Figure 2 shows the projections of five research projects on the sources of the CO2 that will be captured in 2045, at the time when Germany seeks to achieve climate neutrality.
Building up the capacity to capture between 35 and 70 Mt of CO2 from different industries, or 5-10% of current German GHG emissions, requires targeted and substantial investments over the coming two decades. Investments will only materialise if determined policy making creates an enabling investment environment and delivers clear rules and guidelines on topics such as:
Incentive mechanisms for capture, utilisation and storage
While we will take a deep dive into the different industrial sector’s CCUS conditions and dynamics in upcoming articles of this series, we already want to draw your attention to some insights from our latest analysis. The technical potential across German industries predestined for CCS applications (steel, cement, lime, chemicals, waste incineration) amounts to 40-50 Mt CO2. Here we consider process-related emissions only, as other emission can and must be decarbonised through other solutions, such as renewable energy, electrification, or green hydrogen.
On the other side, the demand for carbon in the chemical industry in Germany in 2045 is estimated to be approximately 50 Mt CO2. This already points to a new paradigm and an industrial ecosystem, where CO2 will not necessarily be sequestered and stored underground in northern Germany, under the North Sea or even being exported to Norway, Denmark, or the Netherlands. Quite the opposite, CO2 might become a scarce a raw material in the industrial carbon cycle pushing the demand for CCU applications. Furthermore, the updated regulation on the EU Emission Trading System allows regulated entities to use CCUS instead of surrendering emission allowances. Undoubtedly, this option further increases the demand for CCUS applications.
Further analysis needed
Consideration of policy interactions and emerging new industrial paradigms are crucial for successful carbon management at the national and EU level. Topics that require further analysis are, amongst others:
• Necessary CO2 transport capacity within Germany and Europe
• Ultimate storage capacities needed across Europe
• Quality criteria of CO2 for transport and utilisation
• Build-up of capture, transport and storage capacities in synch
• Development of industrial carbon management clusters
The next article in this series on carbon management in Germany will deal with the current industrial emissions, the CCS potential in those industries and cost estimates for capture, transport, and storage. In the meantime, feel free to reach out with feedback and questions, which we are happy to discuss.
This article is based on a study by carboneer for the Trade Commissioner Service of the Canadian Embassy to Germany.