In a Nutshell

The European Commission’s strategy on Industrial Carbon Management (ICMS) lays out what role industrial carbon management technologies, including certain carbon dioxide removal methods referred to as ‘industrial carbon removal’ (BECCS, DACCS and biogenic carbon), can play in decarbonising the EU’s economy. It also introduces measures needed to develop and scale up these technologies. As a Commission communication, the content of the ICMS is not legally binding but introduces an outline and a guide for future EU policy initiatives.

Given the current lack of a comprehensive policy framework around industrial carbon management, the ICMS is a crucial first step in creating the right conditions for the development and deployment of industrial CDR and CCS technologies. The ICMS is closely linked with the European Commission’s 2040 climate target communication, which sets out a 90% net greenhouse gas (GHG) emission reduction target by 2040, as well as twin targets for emission reductions and carbon removal.

The ICMS contains separate sections covering which measures are needed to scale CCS, CCU, industrial CDR, and CO2 transport and storage infrastructure. The measures relevant to CDR include considerations on developing a separate carbon removal trading scheme, introducing Important Projects of Common European Interest (ICPEIs) for CO2 transport and storage infrastructure, and boosting research, innovation and early-of-a-kind demonstration for novel industrial technologies for carbon removal.

The strategy also provides a dedicated section on public awareness, which appears to signal that the Commission recognises the importance of involving and engaging stakeholders and the public in the scale-up of industrial carbon management technologies.

However, the strategy does not clearly distinguish between CDR, CCS, and CCU, and fails to set dedicated targets for each of these. It narrowly focuses on types of CDR considered ‘industrial CDR’, namely direct air carbon capture and storage (DACCS), bioenergy with carbon capture and storage (BECCS) and biogenic carbon.

What's on the Horizon?

In the ICMS, the Commission foresees several actions, laid out over an indicative timeline.

While no clear timeline is provided for industrial CDR (iCDR), the Commission needs to assess by 2026 if and how CDR could be accounted for in the EU Emission Trading System (ETS), or a potential removal trading system. In parallel, it also raises the need to boost dedicated funding under the EU RD&I under Horizon Europe and the Innovation Fund.

For CO2 transport and storage infrastructure, the strategy mentions that, as of 2024, the Commission:

  • should initiate preparatory work in view of a proposal for a possible future CO2 transport regulatory package, as well as working towards proposing an EU-wide CO2 transport infrastructure planning mechanism;
  • will work with member states on exploring a possible Important Project of Common European Interest (IPCEI) for CO2 transport and storage infrastructure.

Carbon Gap will unveil its CDR Strategy for Europe in March 2024, and present key recommendations that are intended to complement the actions foreseen in the ICM strategy to scale CDR.

Deep Dive

The origins of the ICM strategy

The EU Green Deal and the latest version of the EU Climate Law, in which the ambition of the Union’s climate targets for 2030 has been raised, both stress the importance of carbon dioxide removal and carbon capture and storage technologies in EU climate action. The Commission’s communication on Sustainable Carbon Cycles published in 2021 further underscored the importance of industrial carbon management. The communication included an aspirational target of 5MtCO2 of industrial carbon removal per year by 2030. To deliver on this target, it set out key actions to support industrial carbon management and CDR more broadly, foreseeing the need for a certification framework for carbon removal, and calling for the creation of an annually recurring CCUS Forum. Since its establishment in 2021, the CCUS Forum has informed the work on the ICMS, including through several reports from working groups focusing on CO2 infrastructure and standards, industrial partnership for CCUS, and public perception.

 

Scaling up industrial CDR

The ICM strategy acknowledges the key role CDR will play in reaching climate neutrality by indicating that it will be needed to compensate for approximately 400MtCO2e of residual emissions by 2050. This figure comprises both land-based and industrial CDR (iCDR). The ICM also states that around 280MtCO2 and 450MtCO2 would need to be captured by 2040 and 2050, respectively, without clearly specifying which share would be stored and used, and which share would be CDR.

The strategy identifies key policy gaps holding back the scaling up of iCDR, including a lack of incentives, the lack of recognition of iCDR in the current EU legislative framework and the high costs associated with various iCDR methods. The Commission presents three main actions to address these gaps:

  • Assess overall objectives for CDR in line with the 2040 targets and the goal of climate neutrality by 2050, and negative emissions thereafter.
  • Develop policy options and support mechanisms for industrial carbon removals, including if and how to account for them in the EU ETS.
  • In parallel, boost EU RD&I and early-of-a-kind demonstration for novel iCDR under Horizon Europe and the Innovation Fund.

 

Role of CCS and CCU

The ICMS lacks concrete targets for CCS and CCU beyond the 50MtCO2 yearly injection capacity target by 2030 set in the Net-Zero Industry Act (NZIA). Some projections are included, but these do not clearly show how much CO2 would be used for storage, and how much would come from CCS as distinct from CDR. Furthermore, these projections are not presented as actual targets for CO2 storage.

Regarding CCS, the ICM strategy presents an extensive package of policy actions it plans to undertake, including the development of a platform for demand assessment and aggregation for CO2 transport and storage services. The strategy also calls on member states to take several measures, such as the inclusion in their national energy and climate plans (NECPs) of an assessment of their CCS needs and identified actions to support the deployment of a CCS value chain.

Regarding CCU, the ICM mentions that over time, biogenic and atmospheric CO2 will be increasingly used for CCU. It also lays out broad policy actions, such as the creation of a knowledge-sharing platform for industrial CCUS projects.

 

CO2 infrastructure as a key enabler

The Commission highlights the need to develop non-discriminatory, open-access, cross-border CO2 transport and storage infrastructure. The strategy proposes a comprehensive plan, with the ambition to develop a single market for CO2 in Europe.

From 2024, the Commission will initiate preparatory work in view of a proposal for a possible future CO2 transport regulatory package. It will also work towards proposing an EU-wide CO2 transport infrastructure planning mechanism.

Finally, the possibility of creating an Important Project of Common European Interest around CO2 transport and storage infrastructure will be explored with member states throughout 2024.

 

Room for improvement of the Industrial Carbon Management strategy

The definition of industrial CDR should be open to all safe and effective high-durability CDR methods. Currently, the ICMS unnecessarily restricts iCDR to solely DACCS, BECCS and biogenic carbon, failing to consider other promising methods, such as enhanced rock weathering.

Clear and quantifiable targets for the role industrial carbon removal should play to reach the EU 2040 target are necessary for at least two reasons. Firstly, to ensure the EU reaches durable net zero by 2050, namely a state where the remaining hard-to-abate fossil emissions are only compensated by high-durability carbon dioxide removal (CDR). Secondly, to provide visibility and predictability to the industry, considering that CDR must be scaled considerably across Europe. Furthermore, the fluidity and ambiguity between CCS, CCU and CDR should be addressed across the board and in future policy texts, clearly distinguishing each different role and climate benefits.

Clear and targeted support measures for scaling up CDR should be introduced. The current measures outlined for iCDR are a good first step, but they are not enough. Deployment incentives are essential in the scaling up of iCDR, bridging the gap between R&D funding and a potential integration into EU compliance markets.

 

To address these points, the European Commission should produce a strategy solely dedicated to CDR.

Timeline

11 Oct 2021
15 December 2021
27-28 October 2022
30 November 2022
16 March 2023
27-28 November 2023
6 February 2024
11 Oct 2021

First CCUS Forum in Brussels

15 December 2021
27-28 October 2022
30 November 2022

Commission adoption of the CRCF proposal

16 March 2023

Commission adoption of the NZIA proposal

27-28 November 2023

Third CCUS Forum in Aalborg

6 February 2024

Commission adoption of the ICMS and 2040 climate target communications

Further reading

Carbon Gap’s comments on the ICMS public consultation

Carbon Gap’s response to the 2040 target and ICM communications

Official Document

Year

2024

Unofficial Title

ICMS

In a Nutshell

As part of the European Green Deal, the EU has set out legally binding climate objectives to (1) cut domestic net greenhouse gas (GHG) emissions by at least 55% compared to 1990 levels by 2030 and to (2) reach climate neutrality by 2050. The European Climate Law provides the legal framework to support these objectives. The law also requires the European Commission to propose a 2040 climate target for the EU in the first half of 2024, accompanied by an indicative EU GHG budget for the period 2030-2050.

The Commission is at the early stages of this process and has opened a public consultation to guide its assessment of a suitable 2040 climate target, inform the analysis of the sectoral transformations needed to meet this target, and provide input on the possible evolution of climate policy instruments beyond 2030. It will also lay out preferences between establishing separate or joint targets for emissions reductions and carbon removal – the two central components of net zero.

Carbon Gap advocates for the EU to set an explicit 2040 net emission reduction target of 95% compared to 1990, in line with advice by the European Scientific Advisory Board on Climate Change. This target will be the key milestone that the Union commits to reaching on the path to climate neutrality by or before 2050.

Timeline

23 June 2023
6 February 2024
23 June 2023

Deadline to submit feedback to the call for evidence for an impact assessment, which will inform the new Communication on the EU climate target for 2040

6 February 2024

Commission adoption of the Communication, which lays the foundation for a draft law setting the 2040 target