CCS: How to successfully develop an infrastructure for carbon capture and storage

Achieving climate neutrality requires the capture, transport and safe storage of carbon dioxide (Carbon Capture and Storage, CCS) where there is no alternative means of reducing emissions. However, the expansion of CO₂ storage sites and transport infrastructure is hindered by the lack of crucial financial and regulatory frameworks. Furthermore, the cost of CCS is often underestimated. 

The capture, transport and storage of CO₂ costs between 150 and 300 Euro per tonne. These figures are based on new calculations published by the think tank Agora Industry and Oeko-Institut. According to these calculations, the costs of existing or planned CO₂ storage projects are at least 50 per cent higher than previously forecast. This is the conclusion reached in an analysis of the two organisations’ current project data. Consequently, CCS costs are substantially higher than the current CO₂ price of the European Union’s Emissions Trading System (ETS I), which is approx. 85 Euro per tonne. Given this cost gap, investment in establishing a CCS process chain is currently not economically viable. Furthermore, the project development times are long, with the construction of CO₂ storage sites beneath the seabed taking between 6 and 13 years. As a result, the available capacities can only be increased gradually and will remain limited.

“Early CCS projects show that there is a realistic path to climate neutrality for emissions that are hard to abate. However, CCS is still expensive. For the market ramp-up of CCS in Germany and Europe to succeed, political support must focus above all on closing the cost gap with the CO₂ price and securing the construction of CO₂ infrastructure,” says Dr Julia Metz, Director of Agora Industry. “What is crucial now is targeted support from the German government to enable sectors with no alternative ways of reducing emissions, such as the cement and lime industries and the waste management sector, to become climate-neutral in Germany.”

A wide range of policy measures is needed for the market ramp-up of CCS 

The German government has only recently established the legal framework for the commercial use of CCS in Germany through the amendment to the Carbon Dioxide Storage Act. However, crucial requirements for the market ramp-up are still lacking. According to Agora and Oeko-Institut, these include an industrial policy strategy for the targeted deployment of CCS, a robust CO₂ price, and planning and financial measures to establish a CCS market in Germany and Europe. During the ramp-up phase, funding instruments and government guarantees for the expansion of CCS infrastructure can help companies to bridge the cost gap with the CO₂ price.

Analysis “Deploying carbon capture and storage (CCS) for climate neutrality” by Oeko-Institut and Agora Industry

This analysis is a 72-page slide deck by Agora Industry and Oeko-Institut Consult GmbH. It analyses and classifies the capacities and costs of existing and planned CO₂ storage projects in Europe, as well as the various transport options. It also provides policy recommendations on how to achieve the necessary market ramp-up quickly and efficiently.