News

Comments of BACI and CEMBUREAU on the texts of the Net Zero Industry Act (NZIA)

by

Spanish Presidency compromise text on NZIA dated 5th September – BACI and CEMBUREAU analysis & comments

  • CO2 Transport is put on the same level than storage – the Spanish Presidency suggests putting CO2 transport at the same level of storage in recital 14 (“The EU needs to develop a forward-looking supply of permanent geological CO2 storage sites permitted in accordance with Directive 2009/31/EU17 as well as transport infrastructure“) as well as in other key places in the text (recital 22, articles 10,16, 17). The need for a value chain approach is also highlighted in recital 15. All these changes are most welcomed as the issue of CO2 transport is crucial. However, it is important that besides CO2 transport and CO2 storage, capturing installations (e.g. the installation of carbon capture on a cement plant) can also be covered by the provisions of the NZIA.
  • Open access provisions on CCS: The change suggested by the Spanish Presidency in recital 13a is welcomed, in particular the sentence “it is recognized that full and individual CCS value chains including capture, transport and storage need to be established by 2030 with appropriate regulations guaranteeing competition and open access“. It is critical that third party access and fair market conditions apply to CO2 storage sites.
  • CCU should be considered as strategic net zero technology: CCU is crucial for the many EU cement plants that are landlocked and will not have access to CO2 storage site. It is therefore very important that CCUS (i.e. both CCS and CCU) are recognised as strategic net zero technology in article 3b.
  • Other CCUS changes:
    • It is positive that saline aquifers are now included in the text (article 17).
    • The change in article 17 is most welcomed “Should the report referred to in paragraph 2 show that no CO2 storage projects are in progress on their territory, Member States shall report on their plans to facilitate the decarbonisation of industrial sectors and develop cross-border transport of CO2“. It would be positive to also add CO2 utilisation projects, in addition to ‘develop cross-border transport of CO2‘.
    • It is also positive to lay the ground for a 2040 CO2 storage target in article 35: “No later than 31 December 2026, the Commission may propose an amendment to this Regulation to introduce a new Union-level objective for CO2 injection capacity by 2040. The Commission shall justify its choice to the European Parliament and the Council if it decides not to propose to introduce an objective for 2040“.
  • Additional comments
    • The provisions on funding could be further strengthened, for instance by including a requirement that a certain amount of domestic ETS revenues should be used by Member States to support net zero technology projects in industrial sectors (e.g., deployment of carbon capture at an industrial site).
    • The provisions on permitting should be improved to clarify that the shorter permitting procedures will apply “from receipt of the project application” (and not “from the acknowledgment of the validity of the application“) – articles 3f and article 6.6.

ITRE amendments on NZIA – CEMBUREAU analysis & comments

  • Introduction – Status of CCUS investments in the cement sector: Over summer, five additional cement CCUS projects have been selected under the latest ETS innovation funding call (July) – this adds to the other four projects which had been selected in previous calls and is excellent news for the decarbonisation of the sector. Overall, there are about 38 CCUS-related projects in planning/development in the EU cement sector: 8 CCS projects, 16 CCU projects, 14 CCUS projects (looking predominantly at storing CO2 but where CCU is also looked at) – please see CEMBUREAU map of ongoing investments. It is crucial that these investments are supported by and the NZIA is critical in this respect. CEMBUREAU believes that by 2030, the cement sector alone will need to store 12-15 million tons of CO2 per year.
  • CO2 transport and capture projects should be included in the scope of the NZIA: Besides CO2 storage, the development of CO2 transport infrastructure is crucial for CCUS projects. We therefore welcome suggestions from the Rapporteur and different political groups to include CO2 transport in the NZIA (amendments 15, 19, 20, 52, 78, 79, 561, 582, 821, 822, 823, 824, 825, 826, 838, 839, 841, 842, 843, 844, 845, 847, 1079). It is particularly critical that the shorter permitting deadline of the NZIA cover both CO2 storage projects and CO2 transport and CCUS projects on industrial installations.
  • The reporting obligations of Member States on CCS should be strengthened: We welcome the amendments requiring Member States to report in more detailed about CCUS projects on their territory, including on CO2 transport and CCUS projects on industrial sites. Where Member States are unable to develop CO2 storage capacity, they should plan for ways to transport CO2 in storage facilities in neighbouring Member States (1045, 1048, 1050, 1051, 1052, 1053, 1055, 1070, 1071, 1072, 1073, 1091, 1092, 1152).
  • Fair access to CO2 storage infrastructure: It is critical that the CO2 storage infrastructure (both storage and transport) respects the principles of transparency and third-party access, to offer to customers fair market access conditions. We therefore support the amendments from the Rapporteur and different political groups on this issue (73, 1064, 1065, 1078, 1129, 1130).
  • CO2 injection capacity target at a 2040 horizon: Besides the 2030 injection capacity target, it is important to define CO2 injection capacity targets at a 2040 horizon, which should be done as part of the 2040 climate target setting that the Commission initiated. We therefore support the amendments of the Rapporteur and of the different political groups in this respect (74, 1025, 1026, 1027, 1028).
  • Cooperation with third countries on CO2 storage: Some neighbouring countries (for instance the UK and Norway) may offer significant CO2 storage capacity and cooperation with these will be important. We welcome amendment 17 from the Rapporteur on this topic, as well as amendments 1066, 1068, 1069.  
  • Recognising the different types of CO2 storage: it is useful to clarify that saline aquafers can also offer CO2 storage, in addition to depleted oil and gas fields. We therefore support amendments from the Rapporteur and different political groups on this topic (72, 582, 583, 1097, 1098).
  • CCU should be defined as a strategic net zero technology: alongside CCS, CCU is critical to decarbonise cement plants that are landlocked. CCU also supports climate mitigation in critical sectors such as transport or chemicals. We therefore welcome the amendments seeking to include CCU in the annex (1530, 1543, 1544, 1545, 1547, 1548, 1552).
  • Shorter permitting deadlines should apply throughout the entire application process: we welcome the changes suggested by the Rapporteur and different political groups to clarify that the shorter permitting procedures will apply “from receipt of the project application” (and not “from the acknowledgment of the validity of the application“) – amendment 50, 58, 563.
  • Net Zero strategic projects should be financially supported: we welcome the Rapporteur and other MEPs’ suggestions that at least 25% of national ETS revenues should be targeted at achieving the NZIA’s objective (amendment 71, 311). Domestic funding is indeed crucial to support breakthrough technology projects in industrial sectors.

We have just been contacted by the European Commission, who warned us that the specific section of the NZIA putting obligations on oil and gas producers (article 18) is being fiercely opposed by some Member States. Article 18 sets obligation for oil and gas companies to contribute (pro-rata of their share in the Union’s crude oil and natural gas production) to the EU’s 50 million tons CO2 target by effectively making CO2 injection capacity available. These obligations are important to complement the EU-wide CO2 target (article 16) and the transparency obligations on Member States (article 17) and ensure that the 50 million tons target is effectively delivered.

We understand some of the oil and gas producers are currently conducting a significant lobbying effort against article 18, arguing that there are no sufficient guarantees that sufficient CO2 capacity demand will be available in the coming years.

The Commission’s fear is that, with a group of Member States opposing article 18 (Germany, Denmark were specifically mentioned), this specific article would not survive the upcoming negotiation at the Council and then during trilogue. It is therefore important to engage in favour of article 18. The next two weeks will be particularly critical, with the issue expected to be discussed during a forthcoming COREPER meeting.

We kindly ask for support for article 18. We suggest using the following two arguments:

  • We have a significant pipeline of CCUS investments that will require CO2 storage capacity: Four additional cement CCUS projects have been selected under the latest ETS innovation funding call (July) – this adds to the other four projects which had been selected in previous calls. Overall, there are about 38 CCUS-related projects in planning/development in the EU cement sector: 8 CCS projects, 16 CCU projects, 14 CCUS projects (looking predominantly at storing CO2 but where CCU is also looked at). CEMBUREAU believes that by 2030, the cement sector alone will need to store a minimum of 12-15 million tons of CO2 per year.
  • Article 18 is crucial to ensure that the 50 million tons CO2 injection capacity target is delivered: CEMBUREAU fully supports the provisions of article 16 and 17 but it is crucial that these are complemented by an actual legal obligation to deliver the CO2 storage sites and meet the needs of the market, as proposed by the European Commission. Oil and gas entities possess the know-how needed to develop such storage sites and have repeatedly committed to increase the EU’s overall CO2 storage capacity.