Five things we learned from the EU’s third CCUS forum
Over 450 delegates headed to Aalborg in Denmark for the EU’s third CCUS Forum, organised by the European Commission and the Danish Ministry of Climate Energy and Utilities on November 27-28. The host country has marked itself out as a front-runner in developing carbon capture and storage (CCS) to achieve its climate goals, having implemented a comprehensive strategy and supportive policies over the past two years. Aalborg itself is home to Denmark’s largest single source of fossil CO2 emissions – the Aalborg Portland cement plant – which will depend on CCS to decarbonise.
It has been a year of huge progress for carbon capture, both politically and on the ground, with the EU’s first ever commercial projects taking final investment decisions; CATF has highlighted project progress in this roundup of developments in 2023. The EU’s Net Zero Industry Act, which stipulates a target of 50 million tonnes of annual CO2 injection by 2050, is currently passing through the EU’s legislative process, and an Industrial Carbon Management Strategy – first announced at the last Forum – is expected early next year. As the Danish Climate and Energy Minister put it, “we have taken the conversation from yes or no to how much and how fast. A feasible road towards climate neutrality includes CCUS.”
What were we able to learn from the Commission’s flagship event on this vital climate technology?
1. A glimpse at the EU’s Industrial Carbon Management Strategy
EU Commissioner for Energy, Kadri Simson, gave a keynote address which reaffirmed the EU’s commitment to scaling up CCS: as the Commission finalises modelling to set the EU’s 2040 climate targets, it has become even clearer that “we will have to scale up CCS under all scenarios.“ This new perspective and ambition for 2040 will feed into the forthcoming Strategy, of which the Commissioner offered some sneak peaks. A knowledge sharing network will be created to help transfer expertise and learnings from successful large-scale CCS projects to new ones. The value of inter-project knowledge transfer was repeatedly highlighted at the event, particularly by Heidelberg Materials, which is nearing completion of full-scale capture from its Brevik cement plant and has used the site as an internal policy and technology learning platform for the company’s planned fleet of follow-on projects. The Strategy will also establish a ‘CCS observatory’ pilot project that will monitor, report and verify the CO2 captured by cement and waste-to-energy plants, with potential to extend the concept to the whole CO2 value chain.
2. Growing momentum at the national level
The Commission’s recognition of CCS in its climate strategy is matched by a growing chorus of Member State governments, embodied by the ‘Aalborg Declaration’ to mark the occasion. Signed by energy ministers from Denmark, France, Germany, Sweden and the Netherlands, this joint commitment affirms a need for CCUS and CO2 removal as climate tools, and calls for the creation of a cross-border CO2 network and unified European market for these technologies. France has seen particularly rapid progress on CCS in the past year, with the Minister announcing the launch of its own CCUS strategy for early next year, which is expected to feature significant financial support for industrial decarbonisation projects across a series of priority clusters. We also heard from representatives of governments such as Austria, Romania, and Switzerland, all of which are planning a role for the technology in meeting their climate goals. This is particularly notable for Austria, currently one of several EU Member States where CO2 storage is banned. As Jürgen Schneider, Director General of the Austrian Federal Ministry for Climate Protection, Environment, Energy, Mobility, Innovation and Technology explained, “We clearly realised that if you do not talk about carbon management strategy, that brings your industry a competitive disadvantage.” Italy’s recently released draft National Energy and Climate Plan (NECP) sets out a new ambition to store up to 40 million tonnes of CO2 annually by 2050. The message is clear that more and more countries are running the numbers on their net zero goals and identifying a gap that must be met with CCS. However, at a CATF-hosted side-event ‘Making CCS happen – country by country’ we highlighted the ongoing disparity in Member State progress, with 13 countries having failed to adequately address the Commission’s request to include greater clarity on CCS plans in their NECPs.
3. Progress towards an interoperable EU-wide network for CO2
Commissioner Simson also signalled the EU’s commitment to building an interoperable cross-border network for CO2, informed by a forthcoming network analysis from the Commission’s Joint Research Centre. A preview of this study shown at the Forum, identified a potential need for over 9000 km of pipelines to connect CO2 sources to sinks across the region, analogous to the planned hydrogen backbone. Parts of this network are already envisaged by the EU’s ‘Projects of Common Interest’ for CO2 networks – as featured in a CATF blog earlier this year – which saw 14 successful applicants announced at the Forum, including pipeline networks in Germany, the Netherlands, and connecting the EU to Norway. These projects benefit from fast-tracked permitting and access to an EU funding pool; however, some of the projects present noted that the scale of this funding will also need to be increased for the status to carry real weight.
The Commissioner indicated that Strategy would provide some clarity on the long-awaited regulatory framework for CO2 transport, which will set the rules for how this cross-border network will operate. Christopher Jones of the Florence School of Regulation outlined a plan for how the EU could balance the interests of projects under development with the needs of a future network, establishing third party access regulations with flexible exemptions for first-mover projects where necessary. There was general agreement that funding and regulation must find a way to incentivise developers to build high-capacity, future-proofed networks designed to achieve economies of scale and meet growing demand: the two transport projects that have taken FID are already booked up.
A common network will also need some standardised specifications for CO2, ensuring national networks are compatible and that CO2 captured from one project can be delivered to a range of storage sites. A panel highlighted the challenging trade-offs between industry – looking to avoid overly costly purification requirements, and infrastructure operators wanting to protect their assets from contaminants. The Commission has begun to work on this task with the EU’s standardisation body.
4. Fears of an ETS crunch for industry
The growing sense of urgency on CCS stems ultimately from the EU’s Emissions Trading System (ETS), which will increasingly see hard-to-abate industries such as steel, cement, and chemicals exposed to high carbon prices. Several speakers warned of a ‘worst-case scenario’ in which heavy industry – without access to decarbonising technologies such as CCS – may simply pay the price, delivering both high costs to consumers and continuing to pour CO2 into the atmosphere. While the phasing out of free allowances is a positive step, it should go hand in hand with providing industries with the necessary technologies to decarbonise. The EU’s Innovation Fund currently goes some way to fixing this financial ‘short circuit’, by funnelling a portion of ETS funds into decarbonising technologies – including up to 14 large-scale CCS projects in the past two years. However, this instrument aimed at first-of-a-kind, innovative projects will not be the solution for replicating successful technologies across Europe’s industries. Such a roll out requires further re-routing of growing ETS income to where it is most needed to cut emissions, along with a broader definition of the innovation value of decarbonising projects.
5. Turning plans into action
Even with such positive political steps, there were few delusions that delivering the scale of carbon capture and storage required by 2030 and beyond will be anything other than a formidable task. Geological storage projects have long development periods of at least six years, so we are unlikely to see many new entrants contributing to the EU’s 2030 target. CATF is now tracking an impressive 110 Mt of potential injection capacity across announced projects in the EEA, and over 60 Mt in the EU targeting operation by 2030 – but nearly all of this is in and around the North Sea. Agnieszka Baran, Director of CCS at Orlen, voiced concerns in Central and Eastern Europe that ‘we are screaming for storage sites here… ship transport of CO2 is very expensive and can be prohibitive.’ The scale of the pipeline network and other transport modes required is also daunting, with Søren Reinhold Poulsen of Danish CCS project Greensand identifying a need for around 100 purpose-built CO2 ships by 2050.
Most planned capture, transport, and storage projects across the EU still lack a viable investment case, face complex contractual alignment of multiple actors, and are now battling inflationary headwinds and the need to start building while policy evolves. Speakers at the Forum called for policies that could better leverage private capital, targeted infrastructure financing from the European Investment Bank, and an early role for government in backing key risks. Faster permitting may be supported by accelerating provisions for strategic energy technologies in the Net Zero Industry Act. Above all, the public needs to be brought on board for projects to succeed, and there was general agreement the EU must have a louder voice in championing the climate need for CCS.
Next steps
By the time the Forum reconvenes in France in 2024, we should have a much better idea of whether CCS is in the EU is getting any closer to being on track to meet our climate goals. Many more projects will need to start putting steel in the ground over the next year, and the EU Strategy must set the ambition and agenda for new legislation and funding that will help mobilise this investment. Through our targeted analysis and advocacy work, CATF will continue working to ensure CCS is developed as an effective tool for climate.
