Can the proposed revision of EU Emissions Trading System unlock carbon capture and storage investment in Poland?
This article was originally published in Magazyn Biomasa.
Poland is not going to stop making cement, lime and fertiliser. Much of the carbon dioxide emissions from these industries come from the chemistry itself rather than the fuel, so clean electricity alone cannot solve the problem. Carbon capture and storage (CCS) – a technology which permanently stores CO2 deep underground – is a vital means of addressing these challenging emissions.
Carbon capture and storage projects in Poland have yet to establish a viable commercial case. Despite a growing number of proposed CCS projects and substantial domestic CO₂ storage potential, Poland has not yet deployed a single large-scale CCS facility. High costs, uncertain access to CO₂ transport and storage infrastructure, and weak investment signals continue to hold back final investment decisions.
The Commission’s proposed revision of the EU Emissions Trading System (ETS) Directive, published on 17 July, aims to unlock more investment in industrial decarbonisation. At its centre is a new Industrial Decarbonisation Bank (IDB), alongside an extended Modernisation Fund and new requirements for the use of ETS revenues. With Parliament and Council aiming for agreement in early 2027, the question is whether these mechanisms will be designed to make CCS projects genuinely investable.
The IDB would operate in two phases, with different implications for CCS. From 2028, the Investment Booster would offer a fixed premium for each tonne of CO₂ avoided. While that could provide valuable support, its first-come, first-served allocation may favour projects that are already advanced and have access to transport and storage infrastructure.
From 2031, the IDB would shift to carbon contracts for difference (CCfD), which adjust the level of support in line with variation in the ETS carbon price. Given that CCS projects often carry relatively high abatement costs relative to current ETS prices, a fixed premium may struggle to close the gap. A CCfD may be a more effective way of using available decarbonisation funds for these projects, as support can be more frontloaded and then decline as the ETS carbon price rises. For the many energy-intensive industries which are making decarbonisation plans today, however, 2031 may be too late. Allowing CCfDs to run in parallel with the Investment Booster would give CCS projects earlier access to an instrument better matched to their economics.
The solidarity safeguard is also weaker in the second phase. The Investment Booster reserves part of its funding for lower-income Member States such as Poland, while the CCfD phase relies instead on a general aim of geographical coverage. Polish projects could therefore face greater competition from projects in countries where CO₂ transport and storage infrastructure is already more developed.
That infrastructure gap is itself a major barrier to investment. The IDB is designed around individual projects, while CCS depends on shared CO₂ transport and storage networks. A network cannot reach a final investment decision without a credible base of users, while capture projects will not commit without confidence that the network will be available. Without coordinated support, this interdependence can delay investment across the CCS value chain.
The proposed extension of the Modernisation Fund could help address that problem. From 2031 to 2040, its scope would broaden to a wider set of investments, including industrial decarbonisation, with CO₂ infrastructure and CCS among the newly eligible categories. For Poland, the Modernisation Fund’s largest beneficiary, this creates an important route to finance infrastructure that individual projects cannot deliver alone.
The details will matter. The proposal names CO₂ infrastructure and carbon capture, but it is less clear whether the Fund could support standalone CO₂ storage development rather than only storage linked to individual capture projects. For Poland, where storage capacity still needs to be developed alongside capture projects, the Modernisation Fund should be able to support the full transport and storage chain.
The proposal could also strengthen support at national level. Member States could be required to direct at least half of their national ETS revenues towards priority areas including industrial decarbonisation. For Polish projects, that creates an opportunity to complement EU support with national measures, for example through creating national CCfDs.
That support will need to be backed by a national framework capable of moving projects forward. Poland’s forthcoming CCS strategy should set out a clear roadmap for deployment, linking priority industrial clusters with the transport and storage infrastructure they will depend on, clarifying responsibilities across government and addressing remaining regulatory gaps across the CO₂ value chain.
Sequencing will matter as much as ambition. The immediate priority should be to get one or two integrated CCS value chains to a final investment decision, with revenue support, infrastructure and permitting moving in parallel. As these value chains become operational, policy should shift towards expanding shared infrastructure and creating the conditions for wider commercial investment.
The EU ETS revision can help provide essential funding and revenue support. Still, CCS deployment in Poland will depend on whether the wider enabling framework is in place in time for projects seeking investment this decade.
