It is no secret that the oil and gas sector has talked big on carbon capture and storage (CCS) for years. The International Association of Oil and Gas Producers (IOGP) has demanded action, calling on the EU to set a European ambition for CO₂ storage capacity of 0.5–1 billion tonnes per year by 2050. Now is the time to make it walk the talk: the recently proposed EU Net Zero Industry Act (NZIA) is a perfect opportunity to make the oil and gas industry deliver on CCS – but will it happen?

Delivering CO₂ storage capacity at this scale is critical if Europe is to meet its climate goals. All the leading scientific assessments, most recently from the European Scientific Advisory Board on Climate Change, conclude that CCS is critical to reaching net zero.

However, making CCS a reality will mean overcoming significant hurdles. As the European Commission made clear in its proposal for the NZIA in March, “a key bottleneck [to scaling CCS] is the availability of operating CO₂ storage sites in Europe”.

To solve this issue, the NZIA sets an EU target of 50 million tonnes of CO₂ storage capacity per year by 2030. There are currently no operational CCS projects in the EU, but dozens of projects are under way, amounting to more than 80 million tonnes of potential CO₂ capture by 2030. That captured CO₂ will need to be stored.

There are proposals such as the draft opinion of the European Parliament’s Environment Committee to expand the 50-million-tonne target beyond the EU to the European Economic Area (EEA), or the EU27 plus Iceland, Liechtenstein and Norway. However, without a proportionate increase, this would water down the target’s impact. It would also raise doubts as to the EU’s mandate ahead of EEA implementation, potentially enabling free-riding by relying on storage capacity in the EEA to meet the target set in the NZIA. This would result in EU dependency on CO₂ storage capacity in countries like Norway. It would not accelerate industrial decarbonisation in the EU; instead, it would in all likelihood create uncertainty that could lead to significant delays.

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Yet, just as the EU has decided to act on CCS, the oil and gas sector looks to shirk its responsibility, claiming only 35 million tonnes of CO₂ storage capacity could be reached by 2030. This is not a workable figure. The Danish Government alone intends to provide this much storage. In addition, a reduced intermediate target will make scaling up for 2050 far more difficult as industry has committed itself to more than ten times this amount of CO₂ storage by 2050. The gap between rhetoric and action puts climate ambitions and industrial competitiveness at risk, particularly for regions far from the North Sea.

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By GlobalData

For all its big talk, the oil and gas sector has done little to put its money where its mouth is on CCS in the EU. The Northern Lights project, due to start operations next year, will initially offer 1.5 million tonnes of annual storage capacity and is mostly funded by the Norwegian Government. Led by Equinor, Shell and TotalEnergies, Northern Lights signals important support for CCS but also shows the industry’s too-low level of ambition.

As the Clean Air Task Force (CATF) highlighted in a recent report, CO₂ storage developments outside the North Sea region are lagging behind, leaving industrial emitters, particularly those in inland regions, facing an existential threat. More broadly, developing CO₂ storage across all of Europe, rather than only in the few areas currently planned, could cut CCS costs in Europe by up to 300% and ensure a just transition, the CATF found. Developing storage infrastructure across all of Europe is essential for a well-functioning single market.

Unlocking the CO₂ storage barrier is an urgent matter that European policymakers need to address. The NZIA proposes various measures including making member states provide transparent data on their potential to develop storage sites, as well as accelerating the delivery of storage permits.

Assigning responsibility to oil and gas producers in the EU by linking to their share of production is a key measure to force the industry to act. Article 18 of the NZIA will make companies stop simply talking about CCS and get them to invest in storage capacity instead, based on a pro rata share of the fossil fuels they produced between 2020 and 2023.

On the back of record profits in 2022, the sector has the expertise, assets and more than enough resources to provide sufficient CO₂ storage capacity in Europe. According to the Commission, the potential economic value of the future CO₂ value chain in the EU is €45bn–100bn. The sector could make a significant amount of revenue for decades by putting carbon back in the ground – and make a meaningful contribution to our climate goals.

The oil and gas sector holds the keys to unlocking the development of CO₂ storage sites in Europe. It has long talked up the potential of CCS. Now it is time the EU ensures it delivers.