German industry leans on Berlin for swift carbon storage plan

By Riham Alkousaa

BERLIN (Reuters) - Leading German companies have urged Berlin to make public its strategy to enable carbon capture and storage by the end of this year, as they seek to capitalise on weakened opposition to the technology and prevent any political delay.

Carbon capture and storage, or CCS, removes from the atmosphere carbon dioxide produced by industrial processes or captures it at the point of emission and stores it underground.

Across the world, it has drawn criticism that it can serve to prolong the use of fossil fuel and is not commercially viable. In Germany, its use has been restricted under a law passed in 2012 that gave federal states power to veto its use.

But as Europe's largest economy and largest CO2 polluter is likely to miss its goal to produce net zero emissions by 2045, Chancellor Olaf Scholz's government has reconsidered CCS.

Companies such as cement giant Heidelberg Materials, which face high costs to pollute under the European Union's Emissions Trading System (ETS) and could get financial support for investment in CCS, stand to benefit.

Others see the opportunity in making Germany a major carbon storage hub.

"What we are currently seeing is a CCS renaissance in Germany," said Felix Schenuit, a carbon management researcher at the German Institute for International and Security Affairs.

The government has promised dialogue with stakeholders before it passes a law change to allow CCS. That could mean the economy ministry misses a deadline to publish its carbon management strategy this year, a source involved in the talks said, asking not to be named.

In a response to queries by Reuters, the economy ministry declined to say when it would publish its strategy but said talks were progressing as planned.

Previous governments have been wary of CCS as citizens resisted having a pollutant stored on their doorstep through technology untested in Germany.

Even this year, Germany was a signatory to a statement that CCS should not be used a substitute for cutting fossil fuel emissions.

But attitudes have shifted as extreme weather has made the threat of global warming more urgent.

A joint 2015 study by the Fraunhofer and Wuppertal institutes suggested the biggest share of respondents did not want CCS storage in any form.

But a separate survey in May by the pollster Civey showed almost half of Germans would accept a CCS project near to their homes and just 30% were against it.

Recent converts include Robert Habeck, Scholz's Economy Minister from the Greens party, who campaigned against CCS as a young politician in the northern state of Schleswig-Holstein in 2009, but spoke out in support this year.

There could still be disagreement in parliament on how to change the law, Lukas Koehler, a lawmaker from the pro-business Free Democratic Party (FDP) in Scholz's coalition, said.

"Of course, there's tension because the topic is hot, because a lot of people are still quite afraid," he told Reuters.


The economy ministry in December last year discussed the benefits of CCS in a report, estimating that Germany needs to capture between 34 million and 73 million tonnes per year by 2045.

The ministry started stakeholder workshops in March, bringing on board the views of industry, sector experts, lawmakers and environmental organisations.

"We are counting on the Federal Government to adopt a carbon management strategy this year," a spokesperson for Heidelberg Materials told Reuters.

The company was among the representatives of carbon intensive industries selected in July for European Union innovation funding to build large-scale CCS projects in Germany.

Some 700,000 tonnes of CO2 would be captured annually at the company's Geseke plant in North Rhine-Westphalia from 2029. The captured CO2 would be transported via rail and then through a pipeline to the port of Wilhelmshaven in north Germany.

German oil and gas producer Wintershall Dea is leading the efforts to build a CO2 collection hub and export terminal in the deep water port.

The collected CO2 would be shipped or piped to storage sites in Norwegian waters in the North Sea.

Wintershall Dea aims to initially handle about one million CO2 tonnes per year from 2026.

But before exporting CO2 abroad, Berlin needs to ratify a clause in the international treaty the London Protocol on cross border waste export, which was amended by contracting parties in 2009, to allow transportation of CO2 for sub-seabed storage.

The environment ministry said it would not comment on the government's ongoing consultation on the issue.

The possibility of storing CO2 domestically should be also explored and included in the new government strategy, said Martin Volmer, a senior manager at Rheinkalk, Germany's largest industrial lime producer.

"I have great hope that maybe Germany will also be brought into play," he said, citing lower transportation costs and easier logistics. The company has received EU funding approval to build a large-scale CCS project in western Germany.

Geologically, Germany has around 1.5 billion to 8.3 billion tonnes of CO2 storage capacity under its North Sea and could deposit up to 20 million tonnes annually, said Klaus Wallmann, a researcher at the GEOMAR Helmholtz Centre for Ocean Research in Kiel.

Simon Goess, the head of carboneer, a Berlin-based carbon markets and management consultancy, does not expect a draft law in parliament before the middle of next year even if the ministry published its strategy by the year-end.

"Whether it's electricity lines or wind turbines, people have no problems as long as it's intangible, but as soon as it gets close to where they live, then it can be a problem, especially for a new technology such as CCS," Goess said.

(Editing by Matthias Williams and Barbara Lewis)