Insights and Commentaries
CCS in Europe: A Regional Overview
2024 CCS Policy, Legal, and Regulatory Review
17th December 2024
The European commitment to Carbon Capture and Storage (CCS) is gaining momentum, driven by the urgency to meet climate neutrality by 2050 and achieve a 55% reduction in emissions by 2030 compared to 1990 levels. With 191 commercial-scale CCS projects in development as of mid-2024, Europe is witnessing a surge in policy, legal, and regulatory initiatives at both EU and national levels. These efforts are creating the conditions necessary for scaling up CCS technologies across the continent.
European governments and the European Commission are driving CCS through three main mechanisms:
- Direct policy requirements and financial incentives: Measures such as regulations, tax incentives, and carbon contracts for difference directly encourage investment in CCS.
- Supportive policies and programs: These include strategic statements, direct funding, grants, and loan programs that provide indirect support to CCS projects.
- Legal and regulatory governance structures: Frameworks addressing CO₂ transport, storage, permitting, and monitoring ensure regulatory clarity and compliance.
European CCS policy relies on a multi-layered approach combining direct financial incentives, supportive programs, and robust legal frameworks. Unlike North America's focus on tax credits for CO₂ storage, Europe’s strategies leverage the interplay between EU and national governance, as seen in the implementation of the EU CCS Directive. To further incentivise CCS development at the national level, European governments that support CCS have also introduced policies and programmes including direct funding and grants.
Key Trends
Enhancing the EU’s regulatory framework for CCS
In 2024, the EU made significant progress in CCS regulation. The Net-Zero Industry Act (NZIA) set an EU-wide target of 50 Mtpa of CO₂ injection capacity by 2030. The revised Gas Directive introduced rules for renewable and low-carbon hydrogen, including hydrogen derived from natural gas with CCS. In February, the EU released its Industrial Carbon Management (ICM) Strategy to accelerate CCS deployment. Although the Carbon Removal Certification Framework (CRCF) is pending, it is expected to strengthen carbon dioxide removal (CDR) initiatives.
Reconsideration of CO₂ storage restrictions at national level
Countries with prior restrictions on CO₂ storage are revisiting these policies. Germany’s federal cabinet approved amendments to its Carbon Dioxide Storage Act in May 2024, following February’s release of key considerations on CCUS. Austria’s July 2024 CCUS strategy recommended lifting restrictions on geological CO₂ storage for emissions from hard-to-abate industries. These shifts highlight growing recognition of the importance of expanding CO₂ storage options across Europe.
Expansion of carbon contracts for difference (CCfD) schemes
European governments are scaling up CCfD schemes to mitigate financial risks and costs for CCS projects. In 2024, Germany launched its first CCfD pilot program, while France sought stakeholder input for its forthcoming scheme. Meanwhile, the Netherlands’ SDE++ program continues to fund CCS, with a new round of support planned for September 2024.
Supportive Policies and Programs
Wave of industrial carbon management strategies and roadmaps
More European countries are unveiling industrial carbon management strategies and CCS roadmaps. By mid-2024, the European Commission and six countries—Austria, Denmark, France, Norway, Switzerland, and the UK—had launched their plans, with Germany, Poland, and Sweden preparing strategies for release by year-end. These initiatives establish the economic and regulatory conditions for scaling CCS technology.
Continued use of direct grants and subsidies
Direct funding remains a cornerstone of CCS advancement in Europe. The EU supports projects through programs like the Innovation Fund and Connecting Europe Facility for Energy, with new calls for proposals in 2024. National governments, including the UK, have also expanded grant programs, with the UK increasing CCS funding in its 2024 Spring Budget.
Increased focus on bioenergy with CCS (BECCS)
Investments in BECCS are growing in 2024 to enhance negative emissions capabilities. The UK updated its ‘Power BECCS’ business model in December 2023 to encourage low-carbon electricity and negative emissions. Denmark’s April 2024 NECCS pool awarded contracts to three companies for biogenic CO₂ capture and storage. Additionally, the European Commission approved a €3 billion Swedish BECCS aid scheme in July, with the first auction scheduled by year-end.
Legal and Regulatory Governance Structure
Enhanced international cooperation on cross-border CO₂ transport
Cross-border CO₂ transport for geological storage has gained prominence in 2024. Several European countries are advancing toward ratification of the 2009 amendment to the London Protocol. Switzerland ratified the amendment in November 2023, and France and Germany are pursuing similar action. Bilateral agreements between North Sea-bordering nations, such as those between Norway and Belgium, Denmark, the Netherlands, and Sweden, are facilitating cross-border CO₂ transport ahead of the full implementation of the amendment.