On 6 February 2024, the European Commission published its Industrial Carbon Management Strategy, a crucial document in the continued development of a regulatory framework supporting the European Union’s decarbonisation efforts, ramping up the EU’s carbon market and aligning it with existing legislative structure, including the Fitfor55 package, REPowerEU, and Net Zero Industry Act.

The communication’s ambitious approach regarding increasing CO2 capture targets, from an annual 280 MtCo2 by 2040 to 450 MtCO2 by 2050 is commendable. Further, the proposal for approximately 200 MtCO2 captured by 2050 to be channelled towards utilisation purposes is most welcome. Still, it is necessary to determine a realistic and consistent approach towards the cost competitiveness of carbon management technologies.

The communication rightly points out the future needs for sustainable CO2 sources towards the EU’s transport and mobility sectors, including e-fuels. It recognises the importance of an efficient carbon network and infrastructure, and of taking a holistic approach to the energy sector. In this respect, the communication rightly brings together the electricity, gas, and hydrogen sectors to develop suitable network planning.

Although regulatory clarity on carbon management has progressed in the past years, not least with the introduction of the European Green Deal, the framework still requires regulatory certainty and policy cohesion in addition to incentives for investments into carbon capture and utilisation:

1. CO2 pipelines: On the one hand, the Commission’s strategy rightly recognises that a pipeline network is the preferred transport option in most cases, further driven by the fact that emitters capturing CO2 and storage site operators need to be able to rely on a cross-border, open access CO2 transport network. On the other, however, currently only CO2 pipelines transporting CO2 for permanent storage are EU taxonomy aligned.1 CO2 pipelines developed for the purpose of CCU, such as (on their own right taxonomy aligned) e-fuels production need to be recognised under the taxonomy to foster private sector investment.
2. Emissions accounting for e-fuels production: The Commission also rightly acknowledged the need to avoid double counting and to address the lack of clarity regarding the point of accounting of CO2 in non-permanent CCU products, such as e-fuels. However, tackling this in the 2026 ETS review, as the communication proposed, may be too late as this issue is already causing regulatory uncertainty. To incentivise decarbonisation in the fuel sector and establish a strong e-fuels market, the point of accounting must happen when the CO2 is initially captured (upstream accounting).

It is important to note that the communication explicitly recognises direct air capture and storage, and biological CCS as carbon removal pathways, in line with the existing legislation governing the production of renewable hydrogen-based fuels. Yet, waste-to-hydrogen technologies, which convert waste biomass to hydrogen and solid carbon (biochar), thereby having a similar effect as permanent CO2 removal, are yet to also be recognised.

The availability of sustainable CO2 sources is limited either because of their origin (biological process) or their cost (direct air capture), therefore, Hydrogen Europe calls on the the European Union to prioritise carbon management solutions in sectors where decarbonisation based on fuel switch, such as renewable hydrogen or direct electrification-based solutions, are not feasible. A clear example is efuels for aviation and maritime sectors.

The Communication is a welcome step in recognising that a holistic, European approach is needed to establish a Single Market for industrial carbon management, which is an essential building block towards carbon neutrality by 2050.

For more information:

European Commission: Questions and Answers on the EU Industrial Carbon Management Strategy