IOGP Europe key principles on a future regulatory framework for CO2 transport infrastructure

For CCS to reach commercial scale, it is crucial to develop a reliable infrastructure, both onshore and offshore, to ensure the transport of captured emissions from the source to storage. To facilitate this, risks and rewards between entities operating along the value chain need to be properly allocated, including through long-term contractual arrangements. In addition, dedicated funding and de-risking mechanisms will be needed at least during the industry build-up phase to complement incentives from the EU ETS. (Please see also IOGP Europe’s policy brief ‘Creating a sustainable business case for CCS value chains – the needed funding and de-risking mechanisms’).

The Communication Industrial Carbon Management (ICM) recognises the crucial role of CCS in reaching climate neutrality and includes a list of actions to ensure its deployment at scale. In particular with regard to CO2 transport infrastructure, the Communication indicates that the Commission plans to start already in 2024 working on a possible future CO2 transport regulatory package.

In this context, we recommend the Commission to take a balanced approach when developing such a regulatory framework: some investments may benefit from regulation, while others may be hampered or even not done at all because of unfit-for purpose-regulation.

It is important to keep in mind that there are key differences between the regulation of the natural gas and electricity infrastructure (which largely existed when it was regulated) and regulating a yet to be established CO2 infrastructure. CCS value chains are complex and involve many entities, including emitters who capture the CO2, multiple transportation companies, temporary storage service providers, CO2 hubs, shipping companies, CO2 processing companies, and storage service providers. In a nascent market, such as for CCS, negotiated tailor-made commercial solutions between parties along the value chain may balance risks/uncertainties and rewards more effectively than regulation may be able to. There is a risk that the time it takes to develop and effectively implement an EU regulation can delay or even deter the needed investments into CO2 infrastructure rather than supporting them.

If nevertheless a regulatory framework will be put in place already at an early stage of CCS development, it must be clear and stable for the duration of the amortization period of investments and geared towards incentivizing investments into CO2 infrastructure.