Germany is moving forward in allowing industrial carbon capture and long-term underground CO2 storage (CCS).

CCS can contribute to reaching carbon neutrality as part of a wider mix of decarbonisation technologies. However, a successful and significant ramp-up of CCS will require that key hurdles are addressed first.

Frontier Economics prepared a short study for Equinor Deutschland that our team presented at a parliamentary breakfast with policymakers and industry representatives in Berlin. Based on a case study analysis covering six international pioneer CCS projects – including Northern Lights (Norway), Porthos (Netherlands), Greensand (Denmark), East Coast Cluster (UK), Pycasso (France) and Quest (Canada) - we identified success factors and showstoppers for the ramp-up of CCS. 
Building on these insights, we derived five policy recommendations to kickstart the creation of CCS value chains in Germany:

1. Make CCS a strategic industrial priority.
   CCS needs to be anchored as a contributing pillar of Germany’s climate and industrial policy. Social acceptance and trust in the technology is key and needs to be won.
2. Ensure legal certainty and efficient coordination.
   The KSpTG and related regulations should be implemented quickly. A central CCS coordination body could streamline approval procedures and connect stakeholders along the value chain.
3. Allow integrated business models.
   In the ramp-up phase, “one-stop-shop” models where one company covers several steps of the value chain may reduce risks in coordination and utilisation. Taking a flexible approach of ex-post regulation could safeguard competition while not discouraging investment.
4. Develop CCS clusters and connect internationally.
   Pooling emitters in industrial hubs and linking them to cross-border CO₂ transport and storage routes, such as those in the North Sea, is essential and requires close collaboration with international partner countries.
5. Bridge financing gaps and share risks.
   A mix of investment grants, contracts for difference and state guarantees can help close initial funding gaps and make first-mover projects viable. Support should be transparent, competitive and time-limited.

Click here to read the full report (in German): Success factors for the ramp-up of CCS value chains in Germany