Carbon Management for a Climate-Neutral Industry

With the revision of the Federal Climate Protection Act (2021), Germany has committed to becoming climate-neutral by 2045. This means that all greenhouse gas emissions must be reduced as much as possible through targeted CO₂ avoidance strategies (e.g., using climate-neutral energy carriers). Additionally, unavoidable CO₂ emissions must be offset by natural and technical CO₂ sinks.

What is Carbon Management?

Carbon Management encompasses all measures required to ensure a sustainable approach to managing unavoidable CO₂ emissions. While the primary focus must be on avoiding greenhouse gases, Carbon Management is also a crucial component in achieving the goal of climate neutrality by 2045.

Carbon Management is a broad term that generally includes the following:

CO₂ Capture, Transport, and Storage (CCS)
CO₂ Capture, Transport, and Utilisation (CCU)
CO₂ Removal from the Atmosphere (CDR)

Handling Residual Emissions

Even with a complete phase-out of fossil energy carriers, there will still be CO₂ emissions from certain industrial processes, such as cement, lime, steel, and glass production. Other greenhouse gas emissions, such as methane (CH₄) or nitrous oxide (N₂O), will persist, particularly from agriculture. These residual emissions must be offset through CO₂ removal combined with the use of natural and technical sinks.

In the dena (German Energy Agency) study "Aufbruch Klimaneutralität" (Starting Climate Neutrality), the magnitude of these residual emissions for the year 2045 was estimated to be around 60 million tonnes of carbon dioxide, which will need to be offset by technical sinks. The Federal Ministry for Economic Affairs and Climate Action is currently investigating the quantitative magnitude of these hard-to-avoid emissions through an ongoing study. The results are expected to be available by autumn 2023 at the latest.

Moving Towards a CO2 Circular Economy

For many basic materials industries in Germany, carbon is an essential raw material. In the production of synthetic fuels or within the chemical industry, CO₂ serves as a crucial carbon source.

Carbon Capture and Utilisation (CCU) can help replace traditional carbon sources in industrial processes, thereby reducing the demand for fossil carbon sources within the economic cycle. CCU is therefore a core element of a CO₂ circular economy.

Necessity of Carbon Management

The need for technical CO₂ removal is highlighted in all major studies addressing Germany's climate neutrality goals, such as the dena study "Aufbruch Klimaneutralität," the BDI study "Klimapfade 2.0 – Ein Wirtschaftsprogramm für Klima und Zukunft," and the Agora Energiewende study "Klimaneutrales Deutschland 2045."

Technical CO₂ removal refers to all methods that capture CO₂ from point sources or the atmosphere. Point sources include large industrial facilities like cement plants or thermal waste treatment plants.

The Intergovernmental Panel on Climate Change (IPCC) also emphasizes the need for technical CO₂ removal in its Sixth Assessment Report published in spring 2022. The report indicates that all global pathways to limit warming to 1.5°C (or well below 2°C) require significant and rapid reductions in greenhouse gas emissions, including CO₂ removal from the atmosphere and from point sources.

The IPCC report models strategies that rely on both natural and technical CO₂ removal to offset remaining greenhouse gas emissions. It also notes that CO₂ absorption rates by land systems and oceans will decline in the latter half of the 21st century, highlighting the increasing importance of technical CO₂ removal as a complement to emission reduction efforts to achieve climate neutrality and limit global warming to the target of 1.5°C (or well below 2°C).

Status report IPCC

Creating Legal Frameworks: Carbon Management Strategy for Germany

The German government's carbon management strategy focuses on the decarbonization of industrial processes where emissions are difficult to avoid, such as in the cement, lime and waste management industries. Carbon Capture and Storage (CCS) and Carbon Capture and Utilization (CCU) are seen as key components for reducing greenhouse gas emissions.

Important Actions

Offshore storage: The exploration and use of CO₂ storage facilities in the German Exclusive Economic Zone (EEZ) is planned. However, restrictions are to be placed on storage under marine protected areas. Onshore storage remains excluded, with the possibility of an “opt-in” by individual federal states.
CO₂ infrastructure: A privately operated CO₂ pipeline infrastructure is to be developed. Legal uncertainties in the Carbon Dioxide Storage Act (KSpG) are to be eliminated. As part of this, the Federal Government has already submitted a draft amendment to the KSpG for consultation.
No funding for fossil fuels: The coal phase-out is to remain in place and there are no plans to fund CCS/CCU for fossil-fuel power plants. However, the use of gaseous energy sources or biomass will be permitted in the sense of a technology-open transition. Funding will also focus on emissions that are difficult or impossible to avoid. The “Federal Funding for Industry and Climate Protection” funding guideline provides for targeted support for projects in industry and waste management.
European cooperation: Germany is aiming for closer cooperation with countries such as Denmark, Norway and the Netherlands, as they have already developed advanced storage projects
Long-term decarbonization strategy: The carbon management strategy is supplemented by a long-term strategy for negative emissions, which relies on technologies such as Direct Air Capture and Storage (DACCS) and Bioenergy with Carbon Capture and Storage (BECCS). Both technologies are intended to help offset unavoidable emissions.

Scientific and Political Context

The German government's carbon management strategy is based on the latest scientific findings, including the report of the Intergovernmental Panel on Climate Change (IPCC), which considers CCS/CCU to be necessary to limit global warming to 1.5 degrees Celsius. The technologies are being dynamically expanded internationally and Germany wants to act on an equal footing with leading countries such as Norway and the USA in terms of both technology and regulation.

There are three fundamental categories in the capture, utilisation, and storage of CO₂:

CDR: Carbon Dioxide Removal

The term CDR (Carbon Dioxide Removal) refers to technologies and natural processes that remove CO₂ from the atmosphere (ambient air and biomass) and sequester it in geological storage sites, terrestrial or oceanic carbon sinks, or long-lived products for climate-relevant periods.

CDR methods vary based on the capture process, the time frame for carbon storage, technological maturity, CO₂ reduction potential, costs, indirect climate impact, energy and greenhouse gas balances, and governance requirements.

CCS: Carbon Capture and Storage

CCS (Carbon Capture and Storage) describes the process of capturing CO₂ and then permanently storing it in suitable geological formations. This involves capturing CO₂ from the atmosphere, biogenic or industrial point sources, processing, compressing, transporting it to a storage site, and then isolating and storing it permanently in the geological subsurface.

The CO₂ balance is determined by the origin of the CO₂ (fossil, biogenic, atmospheric), additional greenhouse gas emissions in the process chain, and the permanence of the storage.

CCU: Carbon Capture and Utilisation

CCU (Carbon Capture and Utilisation) refers to the process where CO₂ captured from the atmosphere, biogenic, industrial, or energy-related point sources is processed, compressed, transported, and then used either directly or after conversion to produce a new product.

The CO2 balance of CCU is determined by the CO₂ source, the potential scale of application, the lifespan of the product, the CO₂ emissions of the process chain, and the product being replaced.

What is the Carbon Footprint?

A carbon footprint is the total amount of carbon dioxide emissions generated either directly or indirectly along the entire process chain of an activity or product. In some cases, a carbon footprint also includes all other greenhouse gas emissions and is expressed in tonnes of CO₂ equivalent.

Negative Emissions through Carbon Management

Technical methods for achieving negative emissions include Bioenergy with Carbon Capture and Storage (BECCS) and Direct Air Carbon Capture and Storage (DACCS). BECCS is used in facilities that utilise bioenergy sources. DACCS refers to processes that capture CO₂ directly from the atmosphere. In both methods, the captured CO₂ is processed, transported, and stored in a geological storage site.

Regulatory Framework for Carbon Management

In Europe, the regulatory framework for Carbon Capture and Utilisation and Storage (CCU/S) is defined through various legal acts at both national and EU levels. Different regulations apply to CCU/S across individual EU and EEA member states, as well as at the EU level.

The primary regulation for Carbon Capture and Storage (CCS) in the EU is the "Directive on the Geological Storage of Carbon Dioxide" (EU-CCS Directive) of 2009. This directive includes provisions for the operation, monitoring, and post-closure obligations of storage sites. The implementation of the CCS Directive has led to amendments in other directives to comprehensively address CCS aspects. For example, the Environmental Liability Directive (2004/35/EC) was revised to cover liability for environmental damage caused by CCS, and the Water Framework Directive (2000/60/EC) was updated to permit CO₂ injection into saline aquifers for geological storage.

Other relevant EU-level regulations include the Trans-European Networks for Energy (TEN-E) Regulation, the EU Emissions Trading System (ETS), the Renewable Energy Directive (RED), the EU Taxonomy for Sustainable Finance, and the Guidelines on State Aid for Environmental Protection and Energy (CEEAG).

In Germany, the implementation of the EU-CCS Directive is governed by the "Act on the Demonstration of the Permanent Storage of Carbon Dioxide" (Carbon Dioxide Storage Act – KSpG). Currently, this law applies only to the testing and demonstration of permanent CO₂ storage in underground geological formations and is not yet geared towards large-scale industrial use of CCU/S.

Recent EU legislative initiatives include plans for sustainable carbon cycles. A proposed EU regulatory framework aims to establish certification for CO₂ removal. The draft Net Zero Industry Act (NZIA) seeks to create a simplified framework for investments in sustainable energy infrastructure, recognising CCS as a "Net-Zero Technology." This act is intended to improve access to funding and streamline permitting processes for CCS technologies and facilities, as well as to set fixed targets for CO₂ storage in Europe.

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