The Case for a European CCS Bank

To accelerate Carbon Capture and Storage (CCS) project deployment in the EU, the International Association of Oil & Gas Producers Europe (IOGP Europe) calls for the establishment of a “European CCS Bank”, a competitive Carbon Contracts for Difference (CCfD) auctioning mechanism under the Innovation Fund as of 2025.

While CCS is now widely recognized as a key technology for industrial decarbonization, project deployment is still too slow. Although a 50 Mt CO₂ annual storage injection capacity target is set for 2030 under the Net Zero Industry Act (NZIA), the disparity between the cost of CO₂ capture and carbon allowance prices under the EU ETS makes capture investments economically unviable for emitters, therefore preventing the conclusion of commercial agreements along the CCUS value chain.

Without a sustainable business case, delayed investments and project deployment prevent the EU from decarbonizing its industry while preserving competitiveness. The Industrial Carbon Management Strategy (ICMS) provides the needed framework for CCUS; it is now time to deliver the tools stemming from it, starting with financial incentives.

The European CCS Bank, a competitive CCfD auctioning mechanism, offers 4 key benefits:

1. A transparent market-based instrument that rewards cost-efficiency
2. De-risking capture projects by improving financial viability and predictability
3. Price discovery and market formation
4. Reduced administrative burden.

“If we do not incentivize CO₂ capture for strategic industries, we won’t decarbonize, we will deindustrialize the EU. Contracts for Difference have helped scale up renewables and are now used for hydrogen projects. The European CCS Bank can create the value chain reaction needed to accelerate CCS deployment as of 2025” said François-Régis Mouton, Managing Director, IOGP Europe.

The European CCS Bank would operate through a competitive auction mechanism, similar to the existing European Hydrogen Bank, where project developers submit bids for CCfDs, specifying the financial support needed to bridge the gap between the cost of CCS and carbon market prices. Payments would be tied to verified CO₂ capture and storage, ensuring accountability and incentivizing cost-efficient projects.

Relevant Resources

Podcast

• CCS Bank: a game changer for Europe? Interview with Klaas Verwer (Spotify, Youtube)

Publications

• The Case for a European CCS Bank – IOGP Europe
• Map of European CO2 storage projects - IOGP Europe
• Creating a sustainable business case for CCS Value Chains – IOGP Europe
• EU Net Zero Industry Act – European Commission
• EU Industrial Carbon Management Strategy – European Commission

About IOGP Europe

The International Association of Oil & Gas Producers (IOGP) Europe is the Brussels-based advocacy arm of IOGP.

Its 90+ Members account for 90% of Europe’s oil and gas production and over 40% globally.

IOGP Europe supports the EU’s objective to reach climate neutrality in Europe and calls for an inclusive policy framework to help reach it.

Contact

Nareg Terzian
Head of Strategy and Communications
Email: gro.p1734426503goi@z1734426503tn1734426503

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