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CARBON | POLICY

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EC to develop single EU market for CO2 usage, storage

(Montel) The European Commission wants to develop a single EU market for transporting, storing and using carbon as a key element to enable the bloc to reach net-zero emissions by 2050, it said on Tuesday.

It will start working this year on possible future EU regulation for CO2 transport to “optimise its development and provide more certainty to investors”, the EC said in its EU industrial carbon management strategy.

This would cover market and cost structure, cross-border integration and planning, technical harmonisation and investment incentives for new infrastructure, third-party access, competent regulatory authorities, tariff regulation and ownership models.

Any such regulatory framework would also have to consider interactions with the electricity, gas and hydrogen sectors to ensure an integrated, flexible and resilient EU energy system, said the EC.

The EU will need to massively scale up carbon capture and storage (CCS) and usage to achieve the 90% net reduction in greenhouse gas emissions from 1990 levels by 2040 recommended by the EC in a separate policy paper earlier today.

To support this scale-up, the EC plans to develop guidance for project permitting processes and a map of potential storage sites. It will also work with national governments on mechanisms to aggregate and match CO2 suppliers with transport operators and end-users.

It already proposed in the draft Net Zero Industry Act that the EU should have the CO2 transport and infrastructure needed to store at least 50m tonnes/year underground by 2030.

That is equivalent to Sweden’s total CO2 emissions in 2022.

Achieving the net 90% cut could see the EU needing to capture 280m tonnes of CO2 by 2040, and around 450m tonnes by 2050, based on EC modelling.

Carbon pricing key
The EC said that industry stakeholders expected that “a commercially viable” CO2 market would appear after 2030.

Carbon pricing in the EU Emissions Trading System (ETS) would be key to making a business case for CCS projects, as the costs of capturing, transporting and storing a unit of CO2 could be directly compared with the cost of emitting it, it added.

“By 2040, most regional carbon value chains should become economically viable… and CO2 should become a tradable commodity for storage or use within the EU’s single market,” said the EC.