Unlocking a new era? Germany’s new legal framework for commercial-scale CCS and CCU

On 28 November 2025, the Carbon Dioxide Storage and Transport Act (Kohlendioxid-Speicherungs- und Transportgesetz, KSpTG) entered into force, launching a new phase for climate technology in Germany. For the first time, carbon capture, utilisation, and storage (CCS/CCU) will be permitted on a commercial scale. This could mark a shift in Germany’s approach to industrial decarbonisation.

The KSpTG introduces several key elements:

• Offshore storage of carbon dioxide is permitted.

• Federal states (Bundesländer) can allow onshore storage of carbon dioxide (CO₂) within their territories through an opt-in provision.

• A national regulatory framework for carbon dioxide transport infrastructure is established, including transport for the purpose of CCS/CCU.

This legislation deserves closer examination with regard to its principal beneficiaries and provisions, as well as its likely role in shaping Germany’s future climate strategy and infrastructure development.

Who will benefit from CCS/CCU in Germany?

The principal beneficiaries of the KSpTG will be those industries whose emissions are difficult to avoid, and which face increasing cost pressure as certificate prices rise under the European Union Emissions Trading System. These industries include, for example, the cement and lime sectors, the chemical industry, and operators of waste incineration facilities. The KSpTG offers these sectors a pathway towards climate-neutral operations and a more sustainable future for business in Germany. Notably, gas-fired power plants – whose inclusion within the scope of the KSpTG remained under discussion until the final stages – may also store their carbon dioxide emissions using CCS/CCU technologies. The only specific exclusion applies to carbon dioxide generated from coal-fired power plants.

Background

For over a decade, Germany’s legal framework for CCS has been governed by the Carbon Dioxide Storage Act (Kohlendioxid-Speicherungsgesetz – KSpG), enacted in 2012. While the law was intended to enable research, testing and demonstration of CCS technologies, it effectively imposed a de facto ban on commercial-scale deployment. Applications for storage projects had to be submitted by the end of 2016 and were subject to strict volume limits. In addition, federal states were granted the right to opt out of hosting CCS sites within their territories.

The topic regained political momentum with the German Federal Government’s decision to develop a Carbon Management Strategy, for which key points (Eckpunkte) were published in 2024. This strategy aims to support the development of CO₂ infrastructure and to establish a sustainable carbon circular economy.

Now, with the adoption of the revised and renamed KSpTG, Germany is laying the groundwork for a commercial-scale CO₂ infrastructure. The revised law marks a significant shift: it opens the door to permanent offshore CO₂ storage and provides clarifications on the unified permitting regime for CO₂ pipeline networks.

The revised legal framework also implements some requirements of the EU’s Net Zero Industry Act (Regulation (EU) 2024/1735 – NZIA). This regulation creates an EU-wide legal framework to promote CCS/CCU technologies as ‘net zero technologies’ and sets binding targets for Member States’ CO₂ injection capacities by 2030.

Overview of key changes  

The reform introduces a modernised framework for the development of CO₂ transport and storage infrastructure in Germany. The following key changes are particularly relevant for project developers, investors and industrial emitters:

• Broadened scope of application for CO₂ storage

The revised KSpTG lifts Germany’s previous de facto ban on CCS projects. Whereas the former KSpG restricted permitting to storage projects for research, testing, and demonstration of feasibility, the updated law allows CCS deployment at industrial scale. The primary focus of the regulation is on offshore storage – specifically within Germany’s Exclusive Economic Zone (EEZ) and continental shelf (Festlandsockel). The injection of CO₂ in coastal waters remains explicitly prohibited.

Onshore storage continues to be banned at the federal level, but federal states can permit it within their territories through an opt-in provision. Each federal state may choose to allow permanent geological storage in whole or in part on its land. If onshore CO₂ storage is permitted by the federal states, the authorisation and operation of CO₂ storage facilities are governed by the KSpTG. 

Importantly, the law expressly excludes CCS and CCU for emissions generated from coal-fired power plants from connecting to CO₂ pipeline networks or accessing CO₂ storage sites.

• National regulatory framework for CO₂ transport infrastructure

A central objective of the law is to establish a clear legal foundation for developing a national CO₂ transport infrastructure. The law aims to resolve existing legal ambiguities and support a consistent, streamlined approach to approvals. To this end, it introduces a comprehensive planning approval process (Planfeststellungsverfahren) for CO₂ pipelines. This procedure covers both specialised pipelines designed exclusively for CCS, and multi-purpose pipelines (gemischt-genutzte Leitungen), which can be used, for example, both for CCS and CCU. 

• Recognition of overriding public interest    

Pipelines and storage facilities serving as CCS/CCU or DACC (Direct Air Carbon Capture) infrastructure are designated as being in the “overriding public interest” (überragendes öffentliches Interesse). This classification strengthens the legal position of such projects in planning and permitting procedures, facilitating faster approvals and prioritisation over competing land uses (this instrument has recently also been introduced for various other types of projects, where it has already proven effective). Exceptions apply in protected marine zones (Meeresschutzgebiete), where the assumption of an overriding public interest in the construction, operation, or substantial amendment of CO₂ pipelines and storage facilities is expressly excluded.

• Legal basis for expropriation

Construction and operation of CO₂ pipelines for CCU/CCS or DACC are explicitly recognised as serving the ‘public good’ (Wohl der Allgemeinheit), provided the project contributes to reducing CO₂ emissions in Germany by capturing emissions or by facilitating the use of CO₂ as a feedstock for industrial processes.

Furthermore, the scope of expropriation has been broadened. Previously, expropriations were permitted only for CO₂ pipelines leading directly to CO₂ storage facilities. Reflecting its expanded approach to CO₂ pipelines, the KSpTG now allows expropriation for all CO₂ pipelines.

• Simplified conversion of existing infrastructure

Existing gas, hydrogen and product pipelines may be converted for CO₂ transport through a simplified notification procedure. No new planning approval is required, provided technical safety standards are met.

• Streamlining the system of legal remedies

The procedural options for challenging approval or refusal decisions regarding CO₂ pipelines and storage facilities have been limited.

Under the KSpTG, all related disputes go directly to the Higher Administrative Courts (Oberverwaltungsgerichte), bypassing lower courts. Only one appeal – to the Federal Administrative Court (Bundesverwaltungsgericht) – is permitted, limiting proceedings to two instances and expediting dispute resolution. This approach aims to avoid fragmented jurisdiction and provide investment certainty in nationwide CO₂ infrastructure projects. The KSpTG also imposes stricter deadlines and procedural requirements for legal challenges, such as set time limits for statements of claim (Klagebegründungsfristen).

• Implementation of NZIA-provisions

To implement the requirements of the NZIA, the KSpTG introduces disclosure obligations regarding geological and related data. These obligations are intended to support and accelerate the identification of suitable sites for a national CO₂ storage infrastructure. In particular, operators of decommissioned hydrocarbon production sites are subject to these disclosure requirements.

Furthermore, the NZIA introduces for the first time a mandatory obligation for companies holding a permit under Article 1(3) of Directive 94/22/EC (Hydrocarbons Directive) to contribute to the creation of CO₂ storage capacity. The obligated companies must make CO₂ injection capacity available on the market by 2030 in a storage site authorised under the CCS Directive (2009/31/EC), thereby contributing to the Union-wide capacity target of 50 million tonnes of CO₂ annually. The individual contribution amount is calculated based on each company's share of EU-wide crude oil and natural gas production during the reference period from 1 January 2020 to 31 December 2023. In implementation of the NZIA, the KSpTG empowers the Federal Government to establish a sanctions mechanism by statutory instrument (Rechtsverordnung) in the event of non-compliance with these contribution obligations.

• Non-discriminatory network access

To facilitate competition and ensure a fair market for CCS/CCU technologies, the KSpTG maintains the statutory obligation for operators of CO₂ pipeline networks and storage facilities to grant third parties non-discriminatory access and connection rights on equal technical and economic terms. Operators may refuse access only if they can demonstrate that a connection or transport is technically impossible or economically unreasonable. 

In addition, a new explicit requirement obliges operators of CO₂ pipeline networks and storage facilities to refuse connection to, and access by, companies if the CO₂ to be injected originates from coal-fired power generation.

Financing of CCS/CCU projects

Alongside the new regulatory framework, financing instruments at both EU and national level play a crucial role in enabling CCS and CCU projects. 

At European level, most notably, the EU Emissions Trading System (ETS) already incentivises carbon capture by exempting permanently stored or used CO₂ from certificate obligations, while the EU Innovation Fund provides substantial grants for breakthrough technologies, covering up to 60% of eligible costs and, in some cases, 100% under competitive bidding. 

In Germany, the Federal Government complements these measures with its own programmes: the specialised Fund for Industry and Climate Action (Bundesförderung Industrie und Klimaschutz – BIK), which offers targeted funding for CCS/CCU investments and research, and support through Carbon Contracts for Difference (CO₂-Differenzverträge/Klimaschutzverträge), aimed at hedging price risks and accelerating the market uptake of low‑carbon technologies. These instruments collectively aim to reduce investment risks and foster the rapid deployment of CO₂ transport and storage infrastructure essential for achieving climate neutrality. 

Evaluation and outlook

The KSpTG represents an ambitious step forward in Germany’s approach to climate action and infrastructure development. By allowing the offshore storage of CO₂ in the EEZ and on the continental shelf, the new legislation could pave the way for commercial-scale CCS/CCU projects in Germany.

The law also places a legislative focus on developing a nationwide CO₂ pipeline network, recognising this infrastructure as fundamental to scaling up CCS, CCU, and direct air carbon capture technologies. The political momentum behind these reforms is clear—not only in the comprehensive scope of the legal changes, but also in the transparent streamlining of approval procedures.

To accelerate infrastructure deployment, the KSpTG integrates established instruments from energy planning law and introduces new mechanisms to increase procedural flexibility. Project developers benefit from options such as simplified plan approval, prioritised processing by authorities, and access to data. The law also enables the relatively simple repurposing of existing gas and hydrogen pipelines for CO₂ transport through a notification procedure, avoiding the need for time-consuming full re-approval.

Although the legal foundations for scaling up CO₂ infrastructure have been largely established through the KSpTG, it remains to be seen whether this expansion will actually take place in the near future. Much will depend on the volume of storage capacity that can realistically be developed - and when it will become available.

Early studies in Germany indicate that the geologically suitable formations within the German EEZ in the North Sea alone are unlikely to be sufficient to permanently store all the industrial emissions currently considered for CCS. It also remains to be seen if, and to what extent, the German federal states will make use of the opt-in mechanism for onshore storage. So far, most states have been cautious, though Bavaria and Baden-Württemberg have not entirely ruled out local solutions.

Regardless, developing and constructing of such storage facilities is a complex process that may take many years. Furthermore, exporting CO₂ to storage sites abroad, such as in Scandinavia or the Netherlands, requires additional legal steps. Most notably, Germany must notify the International Maritime Organisation (IMO) that it will provisionally apply a specific amendment to Article 6 of the London Protocol. The London Protocol generally prohibits the export of waste for disposal or incineration at sea under Article 6. Although an amendment agreed in 2009 makes it possible to export CO₂ for the purpose of CCS, this amendment will only take full effect when ratified by two thirds of the protocol’s parties and notified to the IMO - a milestone that has not yet been reached, as only a handful of states have completed ratification. To bridge this gap, parties to the protocol decided in 2019 to permit provisional application of the amendment, as a temporary solution. For Germany, this means the provisional application must be formally ratified and reported to the IMO. As of October 2025, a draft law enabling this is progressing through Germany’s parliamentary process.

The High Seas Disposal Act (Hohe-See-Einbringungsgesetz) is closely linked to the London Protocol. In its current form, it prohibits the introduction of carbon into the sea and must therefore be amended accordingly. A draft amendment to this Act, which would allow for the introduction of carbon into the sea, is currently being considered by parliament.

Financing will continue to be a critical factor in successfully scaling up CCS and CCU projects. Alongside ongoing regulatory improvements, mechanisms such as grants from the European Union Innovation Fund and German Carbon Contracts for Difference are particularly important to mitigate investment risks and provide long-term certainty. Companies that make early use of these subsidy programmes can substantially reduce their upfront costs and gain a competitive advantage in this emerging market. 

At the European level, the EU Commission has announced a legislative proposal for Q3 2026 under the “Energy Union package for the decade ahead”, aimed at developing CO₂ transportation infrastructure and markets. This initiative complements the NZIA, which already sets binding targets for CO₂ injection capacity and promotes strategic CCS/CCU projects across Member States.

Germany’s KSpTG and the NZIA together lay the groundwork for a coherent legal framework for CCS/CCU in Germany. However, further steps need to be taken to ensure a scale up of CO₂ infrastructure in Germany and companies should monitor the regulatory developments closely, including the upcoming EU-level initiatives, to position themselves for emerging opportunities in carbon management.