Germany passes draft carbon management strategy

  • Market: Emissions, Hydrogen, Natural gas
  • 26/02/24

Germany's economy and climate ministry today proposed legal changes that will enable the deployment of carbon capture and storage or use (CCS/CCU) and the transport and offshore storage of carbon in the country, along with the possibility of applying carbon capture to gas-fired power plants.

Federal minister of economic affairs and climate action Robert Habeck presented draft "key points" for a future carbon management strategy, along with a draft amendment to the country's carbon storage law. Habeck stressed that public support for CCS/CCU will be "focused" on emissions that are difficult or impossible to avoid.

Germany's government will also ratify the amendment to the London Protocol, enabling the export of CO2, Habeck said.

Storing carbon will be permitted in Germany's offshore zone with the exception of protected areas. This will enable Germany to "catch up" with its European neighbours, such as Norway. "In this way, we face the responsibility instead of shifting it to others," Habeck said. But permanent carbon storage onshore will remain banned.

The application of CCS to gas-fired power plants was already mentioned as a possibility in the government's draft power plant strategy, to the surprise of observers.

Environmental group Germanwatch today slammed the move as having been carried out "evidently at the instigation of the [pro-business government coalition partner] FDP", adding that it might "destroy acceptance for any kind of CCS in Germany".

CCS for coal-fired power generation will not be allowed. CCS for gas-fired plants will be permitted but not financially supported, the ministry said.

Habeck called the decisions "pragmatic" and "responsible". Without CCS and CCU, Germany's climate targets will be "impossible to reach", he said, adding that "many industrialised countries are already making great strides in developing the technology".

And CCS will be needed for the technical carbon sinks that will be necessary to achieve sufficient negative emissions. Natural sinks will not suffice, Habeck said. The ministry is working on a strategy for negative emissions that will be "a kind of sister strategy to the carbon management strategy".

The draft carbon storage law will provide a legal framework for future CO2 pipeline infrastructure that is expected to be privately sponsored but within a state regulatory framework.

The drafts will now be sent to other ministries, and hearings for the federal states and associations will follow.

Germany plans to reach greenhouse gas neutrality in 2045. Recent documents from the European Commission detail a substantial role for carbon management for the EU to reach its climate targets.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
17/05/24

Brazil's Rio Grande do Sul reallocates gas supply

Brazil's Rio Grande do Sul reallocates gas supply

Sao Paulo, 17 May (Argus) — Natural gas supply in Brazil's Rio Grande do Sul had to be redistributed because of the historic floods in the state, with diesel potentially making its way back as an power plant fuel to leave more gas available for LPG production. Gasbol, the natural gas transportation pipeline that supplies Brazil's south, does not have capacity to meet demand from the 201,000 b/d Alberto Pasqualini refinery (Refap), state-controlled Petrobras' Canoas thermal power plant and natural gas distributors in the region, according to Petrobras' then-chief executive Jean Paul Prates said earlier this week. The Santa Catarina state gas distributor has adjusted its own local network to meet peak demand in neighboring Rio Grande do Sul via the pipeline transportation network. The Canoas thermal plant is running at its minimum generation at 150GW, with 61pc coming from its gas turbine. The plant was brought on line to reinstate proper power supply after transmission lines in the south were affected by the floods. Petrobras plans to use a diesel engine to increase power generation. The current approved fuel cost (CVU) for diesel in the Canoas plant is of R1,115.29/MWh. Petrobras is also operating Refap at 59pc of its maximum installed capacity, at 119,506 b/d. Heavy showers in Rio Grande do Sul since 29 April brought unprecedented flooding to the state, causing a humanitarian crisis and infrastructure damage. The extreme weather has left 154 people dead, 98 missing and over 540,000 people displaced, according to the state's civil defense. By Rebecca Gompertz Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Clean hydrogen industry still upbeat but more realistic


17/05/24
News
17/05/24

Clean hydrogen industry still upbeat but more realistic

London, 17 May (Argus) — The clean hydrogen sector still lacks tangible progress and final investment decisions (FIDs) for projects remain far and few between, but it is reaching a moment of reckoning essential for market maturity, delegates at the World Hydrogen Summit in Rotterdam said. When asked whether they were more or less positive than a year ago, industry participants gave diverging answers, but there was widespread agreement that progress on clean hydrogen has been slower than expected. This has been "the year of doldrums", the Dutch port of Rotterdam's hydrogen supply chain programme manager Martijn Coopman said. Increasing material and financing costs, the unstable geopolitical situation and a lack of clarity on regulatory frameworks are just some of the challenges developers have faced. This is a "grim environment if you were expecting the Swiss army knife approach" to work, industry body the Australia Hydrogen Council's chief executive Fiona Simon said, alluding to the — misguided — expectation that hydrogen could be used across all sectors to help decarbonise. "We are coming to terms" on the real use and appropriate applications of hydrogen, Simon said, pointing to green steel production. "We are converging on the same concepts and same policies". The industry has reached the point where the wheat is separated from the chaff and it is becoming a lot clearer which projects will actually materialise.There is now a greater sense of "realism" underpinning discussions according to Dutch gas company Gasunie chief executive Willemien Terpstra. And this is why market participants are more optimistic than a year ago. Demanding as ever Still, delegates widely urged more policy action, especially on the demand side, which has been a recurrent theme. Spurring on demand will be key to get to more FIDs, Spanish utility Iberdrola's hydrogen development director Jorge Palomar Herrero, said. "We can have great intentions and great projects but without the demand, they are not going to happen". Even in Europe, which has pushed ahead with efforts to stimulate demand, these have not been enough to spur offtake, Herrero said. Demand-side incentives alone will likely not be enough and eventually there will have to be consumption obligations too, some said. Incentives may help to reduce project costs and kickstart production, but the amount of "carrots" needed is "phenomenal", so "sticks" will be key, the port of Rotterdam's Coopman said. Consumption mandates could help accelerate momentum in emerging markets and developing countries that have big ambitions for exports to future demand centres, the World Bank's private sector arm IFC energy chief investment officer Ignacio de Calonje said. Governments are now ready to act on these requests, according to industry body the Hydrogen Council's director for policy and partnerships Daria Nochevnik. "The penny has dropped," Nochevnik told Argus , noting that the need for demand-side action was the number one priority outcome of a ministerial-executive roundtable held in Rotterdam this week. Red and blue Governments must also remove red tape to speed things up, conference delegates said. European developers in particular are increasingly frustrated with paperwork involved in funding applications, according to German utility Uniper's vice-president for hydrogen business development Christian Stuckmann. Shortening lengthy permitting and funding processes is also high on governments' lists, Nochevnik noted. Some delegates renewed calls for a wider acceptance of "blue" low-carbon hydrogen made from natural gas with carbon capture and storage to address concerns that, if it is up to renewable hydrogen alone, things will start too late — or not at all. There appeared to be widespread consensus that this low-carbon hydrogen will have a key role to play, especially in a transitional period, as it can already deliver significant emissions reductions. But there is still a "stigma" in Europe, according to industrial gas firm Linde's vice-president for clean energy David Burns. This could hamper its adoption, which many delegates argued the world cannot afford. By Pamela Machado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japanese bank Mizuho boosts support for H2, ammonia


17/05/24
News
17/05/24

Japanese bank Mizuho boosts support for H2, ammonia

Tokyo, 17 May (Argus) — Japanese bank Mizuho Financial aims to provide ¥2 trillion ($12.8bn) in financial support for domestic and overseas cleaner fuel projects by 2030 to support Japan's plan to build a hydrogen supply chain. Private-sector Mizuho is offering financing to low-carbon hydrogen, ammonia and e-methane projects related to production, import, distribution and development of hydrogen carriers. Mizuho said it has in the past offered project financing for large-scale overseas low-carbon hydrogen and ammonia manufacturing projects, as well as transition loans. Japan is focusing on cleaner fuel use in the power sector and hard-to-abate industries, as part of its drive to reach net zero CO2 emissions by 2050. Japanese firms are getting involved in overseas hydrogen projects because domestic production is bound to be comparatively small and costly. They are looking to co-fire ammonia at coal-fired power generation plants to cut CO2 emissions and examining use of the fuel as a hydrogen carrier . Japanese companies have also partnered with several overseas firms on e-methane. Mizuho has to date offered $1bn for cleaner fuel projects. The bank has set a goal to accelerate the setting up of a clean fuel supply chain by addressing the financial challenge faced by projects requiring large investments. Mizuho has attempted to help Japan's decarbonisation push by tightening biomass and coal financing policies. Mizuho has also stopped investing in new coal-fired power projects, including existing plant expansions. The bank has a plan to reduce the ¥300bn credit available for coal-fired power development projects by half by the April 2030-March 2031 fiscal year and to zero by 2040-41. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japan’s Jera to handle 35mn t/yr LNG until FY2035-36


17/05/24
News
17/05/24

Japan’s Jera to handle 35mn t/yr LNG until FY2035-36

Osaka, 17 May (Argus) — Japan's largest LNG importer Jera plans to maintain its LNG handling volumes at no less than 35mn t/yr until the April 2035-March 2036 fiscal year. Rising renewable power supplies and the possible return of more nuclear reactors are likely to pressure LNG demand from Japan's power sector. Jera consumed 23mn t of LNG in 2023-24, down by 3pc on the year, although it handled 35mn t through its global operations during the same year. But Jera needs to secure sufficient LNG supplies to adjust for imbalances in electricity supplies and ensure power security, through more flexible operations. It is also looking to further promote LNG along with renewable electricity in Asian countries, while helping to reduce their dependence on coal- and oil-fired power generators. The 2035 target for LNG is part of Jera's three pillars of strategic focus, along with renewables as well as hydrogen and ammonia , which was announced on 16 May to spur decarbonisation towards its 2050 net zero emissions goal. The company plans to invest ¥5 trillion ($32bn) for these three areas over 2024-36. Jera also aims to retire all supercritical or less efficient coal-fired units by 2030-31 . This would help achieve the company's target of cutting CO2 emissions from its domestic business by at least 60pc against 2013-14 levels by 2035-36. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

New Dutch government to cut funds for green H2


16/05/24
News
16/05/24

New Dutch government to cut funds for green H2

Hamburg, 16 May (Argus) — The Netherlands' new government could reduce the budget of the country's climate fund by €1.2bn, primarily through cuts to renewable hydrogen support measures. Four parties announced an agreement to form a coalition government on 16 May and outlined broad policy measures. The agreement includes a "budget supplement" which foresees the climate fund's budget being cut by €300mn in each of the next four years compared with existing plans. This will be achieved by cutting funds available for the development of batteries and renewable hydrogen "in proportion to the current budget", according to the text. The majority of the cuts could be for renewable hydrogen given that the earmarked budget for this was much larger than for battery-related projects. Around €9bn of the fund's €35bn budget was set aside for renewable hydrogen support measures, with the bulk to go towards subsidising production projects . The coalition agreement was reached between the far-right PVV, the centre-right VDD party of outgoing prime minister Mark Rutte, the centre-right NSC, which was formed just shortly before the election last November, and the farmer's citizen movement BBB. The PVV, led by Geert Wilders, won most seats in the election but had to tone down some of the demands and promises from its election manifesto during the negotiations. In its manifesto, the PVV had pledged to abolish the climate fund entirely , saying that climate policies should "go straight through the shredder". The parties have retained a general commitment to support renewable hydrogen through the climate fund and note that low-carbon hydrogen made from natural gas with carbon capture and storage (CCS) can be used as a "transitional step" towards reducing emissions "if necessary". The agreement also says a planned increase in the national CO2 tax will be scrapped and outlines plans to open new nuclear power plants. The four parties have yet to decide on who will become the new prime minister. By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more