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EU’s Net-Zero Industry Act proposal defines role for oil and gas companies in CCS
Net-Zero Industry Act (NZIA) proposal from the European Commission represents a breakthrough moment for carbon capture and storage technologies, but questions about the broader climate technology deployment agenda in the EU remain unanswered.
“Europe needs an options-based strategy to achieve climate neutrality while achieving long-term energy security and economic growth. A well-designed Net-Zero Industry Act can be a conduit for this in many ways,” said Lee Beck, Clean Air Task Force’s Senior Director, Europe. “It remains to be seen how the EU and member states will address the big and vital remaining questions around funding for clean tech commercialisation and deployment, along with planning for cross-border infrastructure, all while taking into account a timeframe beyond 2030.”
The carbon capture and storage portion of the proposal contains several important breakthroughs. The 50 million tonne of CO2 per year EU-wide storage target for 2030 is the first of its kind and can help stimulate crucial cross-border industrial decarbonisation planning. This target is backed up by specifics for actors across the value chain.
As part of this 2030 target, oil and gas producers in the bloc would also fall under rules to ensure the development of CO2 storage sites based on the amounts they emit in the EU between 2020-2023. In addition, Member States are given clear obligations to show how they will store CO2 and meet the overall EU target.
“Putting the responsibility to deal with emissions on the biggest emitters is a fantastic step,” said Eadbhard Pernot, CATF’s Policy Manager, Carbon Capture. “Oil and gas producers have the technology and resources to put CO2 back in the ground permanently. It’s time for them to step up and take responsibility to enable access to CO2 storage in Europe.”
The NZIA proposal follows the confirmation of plans by Commission President Ursula von der Leyen to produce a carbon capture, use and storage strategy this year. This follows CATF’s repeated calls for such a strategy, particularly in its report A Policy Framework for Carbon Capture and Storage in Europe. The measures proposed by the Commission plan to tackle bottlenecks in the development of CO2 storage in particular, which CATF also outlined in a report last year, and which is particularly important to ensure cost reductions for emitters.
The NZIA proposal nods towards an option-based climate strategy, but still focuses heavily on a narrow selection of technologies, and should go further to support innovative solutions such as superhot rock energy, nuclear fusion, and carbon dioxide removal (CDR).
“While the inclusion of advanced nuclear is a welcome recognition of the renewed interest in nuclear fleets within the EU, especially in Central and Eastern Europe, it should be explicitly designated a strategic net-zero technology”, said Carlos Leipner, Global Director for Nuclear, Clean Air Task Force. “Member state interest goes beyond the supply of electricity – we’re also seeing interest in broader applications like hydrogen production and district heating. The Commission should recognize the technology for what it is, a crucial option for an economically strong and energy secure Europe.”
CATF has also previously identified infrastructure planning procedures and access to funding as two major blockers to deployment of clean technology in Europe, so attempts to address those via the concept of Net-Zero Resilience Projects are welcome. A concern is whether the criteria for which technologies can be included in NZRPs are too restrictive. Given successful deployment of these net-zero manufactured products requires connective and enabling infrastructure, in the form of electricity transmission, fueling stations, CO2 and hydrogen pipelines, some of these projects themselves could be considered Net-Zero Strategic Projects.
The concept of “one-stop shops” at the Member State level to simplify and streamline the permitting process is welcome but could go further, and will hinge on amenable Member State political economies to support such a concept. If these one-stop-shops were extended to the regional level, it would help streamline the cross-border projects that will be critical to the net-zero industrial transition.
One of the key objectives of the Net-Zero Industry Platform, which is intended to coordinate skills and funding, should be to provide clarity of funding across the European Union and member state level, including a fit-for-purpose inventory of deployment funding available.
While CATF welcomes the Commission’s general reference to the national energy and climate plans (NECPs), it expects further guidance from the Commission on how NECPs will be harmonised with the impacts of the NZIA in the coming months. Only through NECPs that are “fit-for-purpose” will Member States support the needed EU-wide industrial transformation by coordinating short-, medium-, and long-term planning, providing investor confidence in key technologies, and breaking down barriers to successful cleantech deployment.
The NZIA proposal comes at a crucial time for climate and energy policy in Europe. The EU is not on track to hit 2030 emissions reduction targets and, despite the on-paper ambition of the European Green Deal and Fit For 55 packages, it is a long way behind on building the clean energy infrastructure needed to decarbonise the entire economy.
“A well designed and implemented NZIA would support transition of all sectors of the economy, but hinges on additional funding mechanisms for the full lifecycle of projects and large-scale deployment and commercialisation of technologies, as well as efficient planning, that goes well beyond 2030,” said Beck. “Hopefully, this proposal is the first step towards a shift away from incremental progress and towards a comprehensive strategy fit for the long term.” [email protected]