CO2 capture & storage as an important net-zero technology: An overview of the current legal framework

The Net Zero Industry Act (NZIA Regulation EU 2024/1735), which came into force on 25 April 2024, is intended to significantly strengthen the competitiveness of EU industry. 

By increasing the production capacity for clean technologies, at least 40% of the annual demand for clean technologies is to be produced in the EU by 2030. To achieve this, the regulatory framework - more specifically the approval procedures - will be simplified and market access for clean technologies will be improved. This can also strengthen the investment environment. In addition, the expansion of certain net-zero technologies will be promoted. In addition to hydrogen technologies see here), these include CO2 capture, storage and use. 

Carbon capture and storage (CCS) must be distinguished from carbon capture and utilization (CCU). In both cases, CO2 is first captured from industrial or energy-related emissions and then either stored underground on land or in the seabed (CCS) or utilized further (CCU). 

Developments in the EU

The NZIA Regulation contains the basic provisions but is to be further elaborated through delegated acts. A preliminary draft of a delegated regulation for the NZIA Regulation has been in the feedback phase since 19 March 2025. Until 16 April 2025, anyone who has a legitimate interest in the proposed legislation or could potentially be affected by it can submit feedback to the European Commission. This will be followed by an evaluation, as well as a revision of the original draft, an internal vote and finally the publication of the final regulation. 

The preliminary draft is based on Article 23 of the NZIA Regulation. According to this, every oil and gas producer that holds a permit for the prospection, exploration or production of hydrocarbons must make an individual contribution to the Union-wide target for CO2 injection capacity. CO2 injection capacity refers to the amount of CO2 that can be transported to underground geological storage sites and stored there permanently.

The aim of the delegated act is to supplement regulations for oil and gas producers. Article 2 of the preliminary draft contains a regulation for the identification of obligated producers. The identified producers must contribute to achieving the EU target for available CO2 storage capacity by 2030 and submit annual progress reports, the content of which will be specified in more detail (Article 5). Article 4 defines a calculation method (formula) for determining the individual contributions. In addition, a specific threshold is set, whereby producers below this threshold are exempt from the obligation to contribute (Article 3 (1)). 

The provisions of the final regulation may still differ significantly from those of the preliminary draft regulation. Affected oil and gas producers should therefore use the current feedback phase to influence the final version of the delegated regulation. 

Developments in Germany

The former German government also recognized - after a long period of reluctance - the great importance of CCS/CCU technologies for achieving climate neutrality by 2045 and drafted a key issues paper for a carbon management strategy as early as February 2024 (BT-Drs. 20/11585). This proposed the promotion of CCS/CCU to reduce emissions that are difficult to avoid, primarily emission-intensive industries such as the cement and lime industries or waste incineration. A transport infrastructure for CO2 should also be established and a comprehensive regulatory framework created.

On 26 February 2024, a draft bill to amend the Carbon Dioxide Storage Act (Kohlendioxid-Speicherungsgesetz, KSpG) was also presented by the Federal Ministry of Economic Affairs and Climate Action. This draft aimed to enable the permanent storage of CO2 for commercial purposes on an industrial scale. In addition, legal uncertainties regarding the approval of CO2 pipelines are to be eliminated.  The expansion of a pipeline network is planned for transportation, partly through the construction of new pipelines and partly through the rededication of existing gas pipelines. In connection with the planned storage, the exploration of offshore storage areas in the continental shelf and in the exclusive economic zone (EEZ) is to be promoted in particular. The draft bill also provides for the introduction of a special approval procedure for certain storage facilities in underground rock strata. The question of whether and to what extent underground onshore storage should be possible in the near future is not addressed. 

The draft bill was discussed in the Bundestag at a first reading on 27 September 2024 and referred to the committees, but then fell victim to the early elections. It remains to be seen when and in what form the issue will be taken up by the new federal government.

Conclusion

There is currently no comprehensive legal framework for the expansion of CCS/CCU technologies. The previous German legal framework essentially aimed to prevent the use of CO2 storage in Germany. However, rapid expansion would be helpful in achieving the existing climate targets. At European level, the next step will be taken by the Delegated Regulation, which is expected in the coming months. At national level, it is still unclear what the new federal government is planning due to the change of government. A simplification and acceleration of the approval procedures for pipeline construction in accordance with the KSpG would be helpful for the rapid expansion of a Germany-wide and European pipeline network. With the appropriate political will, it should be possible to identify underground storage options and manage conceivable risks.