27/09/2023 (published in Tagesspiegel Background Energie & Klima, in German)

In the coming weeks and months, a familiar yet new topic will come to the forefront of climate policy in Germany: carbon management. Not only is the German Federal Ministry for Economic Affairs and Climate Action’s carbon management strategy due to be published shortly, but a number of other political initiatives have also been announced at international, EU and state level. In these processes, carbon management serves as an umbrella term for the capture and underground storage of CO2 (Carbon Capture and Storage, CCS), the capture and use of CO₂ as a resource (Carbon Capture and Utilisation, CCU) as well as methods to remove CO₂ from the atmosphere based on CCS or CCU (Carbon Dioxide Removal, CDR). The distinction between these approaches is crucial, as each plays a different strategic role in climate policy.

The policy landscape

In particular, CCS and CCU, which are designed to help reduce or delay unavoidable industrial emissions, have received a great deal of attention from industry and the Economics and Climate Ministry against the backdrop of fears of deindustrialisation in Germany. This rapid renaissance of CCS has been strongly criticised by some environmental groups. Others, however, are working on conditions under which they could consider its use – a position that is now also being discussed in the Green Party. But even in industry, positions are not unanimous. While there is unanimous support for an active carbon management policy, there are divergent views on the scope of CCS and CCU, their prioritisation and the design of the policy framework.

Strategically linking climate and industrial policy

In this constellation, the forthcoming initiatives offer the opportunity to strategically combine climate and industrial policy objectives. On the one hand, carbon management is an important component of a proactive economic development policy for a long-term greenhouse gas-neutral industry. The creation of effective support instruments in industrial clusters and the connection to CO₂ infrastructures are important steps in this direction. On the other hand, there is an opportunity to establish clear criteria and prioritise technologies. A distinction should be made between carbon management approaches that enable the transition to a GHG-neutral industry in the first place, e.g. by capturing process emissions that are difficult to avoid, and CCS and CCU applications that tend to hinder ambitious emission reductions, e.g. by slowing down the reduction of avoidable emissions in industry.

A European approach to carbon management

The goal should be a European carbon management policy. There are many reasons for this: climate policy is already strongly anchored in European legislation, and the industrial policy dimension is rapidly gaining importance in the context of the Green Deal. A European position is also desirable for cooperation with third countries. This applies both to new cooperation to create synergies and to setting quality standards for carbon management and its role in climate change mitigation. For example, the use of CCS and CCU as a means of maintaining fossil fuel business models is being discussed in international negotiations under the heading of ‘unabated fossil fuels’. An EU-wide carbon management policy would allow Germany to play a more influential role in these discussions than it could on its own.

A net-zero compatible carbon management policy

At the European level, three points of intervention are emerging where carbon management can be decisively shaped:

In the Net-Zero Industry Act (NZIA), the Commission proposes to classify CO₂ capture and storage as a strategically important technology. In addition to shortened authorisation procedures, it also proposes a target of 50 megatonnes of CO₂ storage capacity per year from 2030. The dossier is currently with the European Parliament and the Member States. They have the opportunity to make the conditions for strategic technology status clearer. For example, they could add a condition that the injected CO₂ must come from emissions that are difficult to avoid. This need for clarification also applies to the Strategic Technologies for Europe (STEP) platform proposed by the Commission, which also identifies CO₂ capture as a priority technology.

A second process is the European Union’s Carbon Management Communication, a strategy due to be published in November, ahead of the international climate negotiations. Billed as a strategy to address the capture, transport and storage of fossil, biogenic and atmospheric CO₂, it sets an important course for the upcoming reforms of the climate governance architecture. It provides a platform for identifying potential for cooperation and conflict at an early stage, clearly identifying risks, prioritising net-zero compatible carbon management approaches and developing incentive structures.

Finally, the debate on the 2040 target provides an opportunity to shape carbon management policy. In addition to the general level of ambition, the concrete design of the target will also be debated following an initial proposal by the Commission in the first quarter of 2024. The focus will be on the extent to which CO2 removals can contribute to achieving the target. Whether and in what form a limitation of CO₂ removal to achieve the target will be pursued is an open question – but one that is all the more urgent in view of CCS-based CO₂ removal technologies such as Biomass + CCS (BECCS) or Direct Air Carbon Capture and Storage (DACCS).

A European internal market for carbon management

To ensure that carbon management in these processes is not established as a delaying tactic in climate policy, but is compatible with ambitious climate targets, the following three principles should guide action. First, political priority should be given to emission reduction measures that do not require carbon management approaches. Second, standards for the storage and transport of CO₂ and the transparent documentation of emissions along the entire process chain should be further developed. Thirdly, the development of a taxonomy that categorises and prioritises different areas of application should be advanced in order to create planning certainty in the sectors and transparent governance structures.

For carbon management within these guard rails, the long-term goal of an EU-wide internal market should be pursued. This can create synergies between Member States, establish non-discriminatory access to CO₂ transport and storage infrastructures and at the same time set transparent criteria for quality and safety standards. This goal could create an interface between climate and industrial policy in the EU that is internally integrative – i.e. does not fuel further conflicts at the already politicised interface – and thus enables a pioneering role in the international debate on carbon management.