Why CO₂ storage has become central to decarbonisation strategies in fossil‑fuel‑producing countries

Geological storage has become a piece of infrastructure, not just a technology. In Europe this change in status is explicit: the Net-Zero Industry Act (NZIA) entered into force on 29 June 2024 and sets an EU target of 50 Mt/year of CO₂ injection capacity by 2030. The message is clear: without available injection capacity, many industrial strategies remain on paper. Source: European Commission, legislative framework on industrial carbon management. <

Oil & gas countries are pushing CCS/GCS because it solves two problems at once. On the one hand it helps decarbonise hard-to-abate sectors such as cement, chemicals, steel. On the other it reduces the emissions intensity of activities already present in their industrial systems: gas processing, “blue” hydrogen (SMR + CCS), refineries, and also power generation with capture. The push is not only climate-driven: it also involves social licence, industrial continuity, and regulatory risk management. Source: IEA, global CCUS milestones. <

The global “momentum” is real, but it needs to be read carefully. The Global CCS Institute reports that the capture capacity of projects in development has reached 361 Mtpa in its recent status report. That is a signal of a rush of pipelines and announcements, not automatically of operational capacity that is ready to run. Source: Global CCS Institute, Status Report. <

Credibility increases when a country plans around hubs & clusters. A credible hub combines transport (pipelines and/or terminals) and storage sites offshore/onshore, serving multiple emitters (chemicals, fertilisers, cement plants) with shared infrastructure. Here unit costs fall and bankability rises, because the “storage” asset behaves like a utility. This also connects to EU language on the emerging “CO₂ storage services market”. Source: European Commission, industrial carbon management. <

For an industrial buyer, CO₂ storage changes very concrete decisions. It matters for site selection (proximity to a hub), for offtake contracts for transport and storage, for the CapEx risk premium, and for access to incentives and policy tools (for example contracts for difference or similar schemes, where available). The question here is not “does CCS exist?”, but “is there a T&S service that can be purchased and defended in an audit?”.

The credibility problem: what is often missing from plans (targets, sites, pipelines, responsibilities and timelines)

Targets in Mt/year are not enough if deliverables are missing. Many national plans state future capacity, but do not say which geological formations, which volumes have actually been appraised (capacity appraisal), how far along exploration licences and permits are, and above all they do not show a credible timeline: FEED → FID → construction → start of injection.

The most common gap is “storage without transport”. Without CO₂ pipelines/corridors, compression and terminals, subsurface capacity remains theoretical. As a proxy for the problem, the Global CCS Institute notes growth in the number of projects in the pipeline, but in practice transport + storage are often the bottleneck in the value chain. Source: summary on the Global Status of CCS Report. <

Governance is often incomplete, and that kills bankability. A credible plan clarifies who the storage operator is, who the competent authority/regulator is, and how MRV, public reporting, enforcement (penalties, permit suspension) work. This is consistent with what the Global CCS Institute highlighted about 2023 policy support reaching record levels: more policy does not automatically mean more executable projects, but it is a prerequisite. Source: Global CCS Institute, Status Report. <

Long-term liability is a point that plans often handle poorly or avoid. In Europe, rules on who pays in the event of leakage or remediation and when any transfer of responsibility to the state can occur after a minimum period are central. This detail is an element of bankability, because it affects insurance, guarantees and T&S contracts. Source: report on Denmark as a European CO₂ hub (references to the EU framework). <

Permitting timelines are the risk that turns a plan into marketing. Without permits for wells and injection, “2030 capacity” is just a slide. A useful analogy comes from the US: historically the number of Class VI permits issued has been very low relative to applications, making the risk of permitting congestion clear in other contexts as well. Source: analysis on primacy and Class VI. <

Practical indicators to distinguish solid commitments from promises: policy, CAPEX, permits, MRV and liability

Binding policies matter more than strategies. In the EU, the strong signal is the NZIA target of 50 Mt/year by 2030 and the mechanism that assigns contributions to O&G producers to “provide new CO₂ storage solutions”. When an obligation or an allocation mechanism exists, it creates more “regulated” demand and supply, and this increases executability. Source: European Commission, 2030 carbon storage target. <

CapEx becomes credible when a project reaches FID, not when an MoU is signed. The practical metric is simple: how many projects are at FID or under construction, versus those in early stage. The IEA notes that in 2024 some projects reached FID, useful as a maturity benchmark: FID means perceived risk has fallen enough to unlock capital and contracts. Source: IEA, CCUS milestones. <

Permitting track record is a “hard” indicator. In the US, the EPA issued 4 Class VI permits in California (late 2024) with stringent requirements, including continuous monitoring and measures for abandoned wells (plugging). When you see a permit with detailed technical conditions, you are much closer to a real project than to an announcement. Source: EPA, press release on permits in California. <

MRV and data transparency are the difference between “stored” and “demonstrable”. The question to ask is whether there are monitoring plans, leakage detection, public reporting, a geological baseline and independent audits. A practical reference is the continuous monitoring logic cited in US regulatory practice, which can be seen as a replicable best practice. Source: EPA, Class VI permits and requirements. <

Liability and financial security are the building blocks of bankability. Solid indicators include financial guarantees, post-closure funds and clear rules on transferring responsibility to the state. In the EU, the CCS Directive is often the reference for structuring contractual clauses in T&S agreements and for setting up insurance and the security package. Source: report on Denmark as a European CO₂ hub (EU framework). <

The full value chain shows up in contracts, not press releases. Look for evidence of CO₂ transport & storage agreements, per-tonne tariffs, capacity booking and ship-or-pay type clauses. If terms such as CO₂ transport network, open access, hub storage, injection capacity, storage permit, front-end engineering design (FEED) appear, then there is probably a project moving into the “executable” phase.

Impacts on companies and investors: execution risk, fossil lock-in and dependence on future removals

Execution risk is the first driver of value destruction. Typical bottlenecks are permitting, stakeholder opposition, geological uncertainty and supply chain constraints. For investors and lenders, a useful KPI is milestone-based financing: exploration licence → injection permit → FID → first injection. When permitting is congested, the probability of slippage rises, and the Class VI backlog analogy helps explain how severe the “critical path” can be. Source: Federal Register on regulatory aspects linked to the Class VI topic. <

Fossil lock-in risk must be separated case by case. For an industrial buyer, using CCS for abatement in hard-to-abate sectors is different from using it as enablement to extend the life of fossil assets. This is where risk-management keywords come in: asset stranding, transition risk, regulatory risk. If a national plan pushes CCS without a credible trajectory for reducing fossil demand, reputational and regulatory risk increases.

Dependence on future removals is a planning risk, not only a technology risk. Some net-zero plans “promise” a lot by relying on future storage, but the scale required by 2050 is enormous compared with today. The European Commission discusses scenarios with high volumes of CO₂ captured and stored by 2050, making the gap between ambition and currently available capacity clear. Source: European Commission, industrial carbon management. <

The cost of capital tends to rise when MRV and liability are uncertain. If it is not clear who pays what in post-closure, WACC, covenants and guarantee requirements increase. For corporate buyers, the risk is operational: interruption of the T&S service and tariff escalation per tonne, especially if “firm” capacity is scarce.

Partnerships and M&A become riskier when you buy an “early development” pipeline. The Global CCS Institute shows a growing pipeline, but maturity is distributed across operational, under construction and advanced development. Due diligence should weigh projects with permitting and FID much more, and those based on announcements much less. Source: Global CCS Institute, Status Report. <

Link to carbon markets and claims: when storage can generate credits and when it cannot (Article 6, VCM, double counting)

The first distinction is between reduction and removal. There are at least three cases: (1) CCS as a reduction of emissions from a point source, (2) CDR with geological storage (for example DACCS or BECCS), (3) EOR, which remains more controversial. “Creditability” depends on additionality, baseline, permanence and national accounting, not on the fact that CO₂ ends up underground.

With Article 6, the key question is the corresponding adjustment. For international transfers (ITMOs, Art.6.2), the practical rule to avoid double counting is to understand whether the host country will apply the corresponding adjustment or use that reduction toward its own NDC. For a buyer, the operational question is: “will this tonne be mine for a claim, or will it remain with the country?”. Source: Umweltbundesamt, analysis on Article 6 and accounting. <

In the VCM, integrity is a governance issue, not a narrative issue. The Core Carbon Principles of the ICVCM are a useful reference for supply-side due diligence: governance, additionality, MRV, permanence, leakage. Leakage here is not only “geological leakage”, but also system leakage, for example emissions shifting or distorted incentives. Source: ICVCM, Core Carbon Principles. <

Corporate claims are a high-risk area if traceability is missing. You must distinguish offsetting from contribution claims and manage greenwashing risk when storage is counted twice (company and state) or when there is no reconciliation across registries. Useful terms: claims code, high-integrity credits, registry reconciliation. Source: ICVCM, updates on CCP-labelled credits. <

Geological storage “by itself” is not automatically a credit. You need a crediting programme, a methodology, a registry, independent verification and clear rules on ownership of the environmental attribute. The contractual question is simple: who “owns” the tonne—the emitter, the storage operator, or the state?

Checklist for Italian buyers and stakeholders: questions to ask about CCS/GCS projects before partnerships, purchases or ESG communications

The first thing to ask is permitting status, with evidence. Which permits have already been obtained (exploration licence, storage permit, well/injection permits)? What is the critical path and which dates are committed in a milestone schedule? As a severity benchmark, US Class VI permits show requirements such as continuous monitoring and management of legacy wells. Source: EPA, permits in California. <

Capacity must be separated between stated and saleable. Is the capacity (Mt/year) supported by geological characterisation, tests, plume models and pressure management? Is it nameplate capacity or firm capacity that can be contracted? If there is no distinction, the risk is buying theoretical capacity.

Contracts must clarify responsibilities and remedies. Who is responsible for MRV, for any leakage, for remediation? What financial guarantees and insurance are предусмотрed? What is the post-closure liability regime, especially in the EU under the CCS Directive (relevant context for Italy as an EU Member State)? Source: report on Denmark as a European CO₂ hub (EU framework). <

MRV and transparency must be auditable, not “promises”. Is there a monitoring plan with a baseline (for example seismic), observation wells, verification protocols and public reporting? What is the frequency of third-party verification? Are the data accessible for ESG auditors and investors? The keywords to look for are: verification protocol and public disclosure.

If credits or claims are mentioned, accounting comes before marketing. Which methodology and which registry are used? How do they avoid double counting, and if relevant how do they handle Article 6 and the corresponding adjustment? What type of claim is contractually allowed—offset or contribution? Source: Umweltbundesamt, Article 6 and accounting. <

The service economics should be read as procurement, not as a climate story. What is the price structure (€/tCO₂), are there take-or-pay clauses, how does escalation linked to energy and compression work, and who pays for decommissioning? Which sensitivities have been stress-tested: permitting delays, reduced injection rates, interruptions? This is where clauses such as SLA, step-in rights, termination for delay are needed.