Germany is taking a decisive step towards climate neutrality by 2045. The Federal Government has adopted a draft bill to overhaul the existing Carbon Dioxide Storage Act, now renamed the Carbon Dioxide Storage and Transport Act (KSpTG). This legislation paves the way for commercial-scale carbon capture and storage (CCS) and carbon capture and utilization (CCU), introducing a new regulatory framework for CO₂ pipeline infrastructure. The bill now proceeds to Parliament for debate and vote.

Expanding Scope of CCS and Pipeline Infrastructure

For the first time, CCS will be permitted beyond research purposes, allowing large-scale commercial deployment. Offshore storage will be authorized in Germany's continental shelf and exclusive economic zone, while individual federal states can choose to allow onshore storage. However, environmental safeguards will prohibit CCS operations in marine protected areas and surrounding buffer zones, and projects must not disrupt offshore wind or hydrogen infrastructure.

To support rapid infrastructure development, CO₂ pipelines will be designated as assets of overriding public interest. The bill introduces a uniform national permitting procedure modeled on existing energy regulations. It also allows repurposing of natural gas and hydrogen pipelines for CO₂ transport without requiring a new planning process.

Strategic Exclusions and EU Alignment

Notably, the bill excludes carbon dioxide emissions from coal-fired power plants from CCS eligibility. Emissions from natural gas-fired power generation remain within scope. This decision reflects Germany’s energy transition goals and efforts to reduce coal dependence.

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The legislation also implements the EU’s Net Zero Industry Act (NZIA), including obligations for former hydrocarbon permit holders to share geological and economic data on abandoned production sites. The government may introduce specific financial contributions and penalties for authorized oil and gas producers who fail to meet their CCS capacity obligations.

Industry Reactions and Political Debate

The proposed changes have sparked debate across sectors. Environmental groups have criticized the bill, citing concerns over environmental integrity and long-term safety, particularly for onshore storage. In contrast, major industrial sectors including steel, cement, chemicals, and waste management have called for clearer CCS policies to meet decarbonization targets. Offshore storage has gained broader support, while onshore plans face skepticism due to water safety concerns.

If passed, the bill would provide greater legal certainty and accelerate permitting for CCS projects. The designation of CO₂ pipelines and storage as nationally significant infrastructure could streamline investment decisions and project execution.

Competition Law and Early Projects

Germany’s Federal Cartel Office has already reviewed early CCS infrastructure proposals, including pipeline cooperation among gas transmission operators such as Open Grid Europe. The agency concluded that competition in this space is not a near-term concern and signaled willingness to approve long-term contracts to support investment and ramp-up costs.

A Turning Point for Hard-to-Abate Sectors

Industries with unavoidable emissions such as steel, cement, chemicals, limestone, and waste incineration are expected to benefit significantly. The legislation creates the conditions for investment in CCS technologies that can help these sectors maintain global competitiveness while contributing to national climate goals.

What Comes Next?

Project developers, utilities, industrial emitters, and investors should closely monitor legislative developments and evolving technology standards. While CCS has faced public resistance in Germany, changing political sentiment and successful international models like Norway’s Longship project may help shift perceptions.

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Authorized oil and gas producers, as defined by recent EU Commission decisions, must also prepare for compliance with upcoming EU and national contribution and reporting obligations under the NZIA.

Germany’s move could mark a turning point in scaling carbon management infrastructure across Europe. The new law, if adopted, may help unlock billions in investment and accelerate decarbonization in sectors where emissions are hardest to avoid.

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