KSpTG: Legislators pave the way for industrial CO₂ infrastructure

At the end of 2025, the legislature fundamentally reformed the Carbon Dioxide Storage Act and developed it further into the Act on the Permanent Storage and Transport of Carbon Dioxide (Carbon Dioxide Storage and Transport Act – KSpTG). The amended KSpTG marks the transition from a restrictive to an enabling legal framework for carbon management technologies and, for the first time, creates the conditions for the development of industrial CO₂ infrastructure in Germany.

Background: From climate strategy to legislation

The revision of the legal framework for CO₂ storage is based on the Carbon Management Strategy (CMS) developed by the Federal Government in early 2024, which we have previously reported on (insert: The Federal Government’s Carbon Management Strategy). The strategy builds on the national climate protection target set out in Section 3(2), first sentence, of the Climate Protection Act (KSG), which is to achieve net greenhouse gas neutrality by 2045.

The CMS focuses in particular on emissions that, given the current state of the art, cannot be avoided or can only be avoided at considerable cost. Unavoidable emissions are those that cannot be technically ruled out even through the use of alternative energy sources such as hydrogen or through electrification. In contrast, emissions that are difficult to avoid are those for which reduction options do exist, but which are as yet neither market-ready nor economically viable. Emissions-intensive industrial processes, such as those in the lime and cement industries or in thermal waste treatment, are of particular significance in this regard.

The regulatory basis for the CMS was the previous Carbon Dioxide Storage Act (KSpG). This had already established a basic legal framework for the geological storage of carbon dioxide and thus for carbon capture and storage (CCS) projects. In these projects, CO₂ emissions from industrial processes are captured, transported and permanently stored in suitable geological formations to prevent their release into the atmosphere.

However, due to its restriction to demonstration projects, volume limits, time-limited authorisation options and the possibility of exclusions under state law, the KSpG remained, in practice, of no practical relevance.

In addition to CCS projects, the amendment will in future also take Carbon Capture and Utilisation (CCU) approaches into account. In this case, captured carbon dioxide is not stored permanently but is reused, for example as a raw material in the chemical industry or for the production of synthetic fuels. Whilst CCS aims at the permanent geological storage of CO₂, CCU focuses on its material utilisation. The amendment expands the regulatory framework accordingly and aligns it with the climate policy objectives of the CMS.

Cornerstones of implementation

With this amendment, the legislator aims to move carbon management technologies from the demonstration stage to commercial application. It replaces the previous restrictive legal framework and, for the first time, creates the conditions for the commercial application of CCS technologies on an industrial scale. The aim is to remove existing regulatory barriers and create a robust legal framework for investment in CO₂ management infrastructure.

A key element of the reform lies in the significant expansion of the material scope of application. The KSpTG moves away from the previous restriction to demonstration projects and now, in principle, permits the permanent storage of carbon dioxide in underground rock formations.

Nevertheless, the scope of application remains geographically limited. Under Section 2(3) of the KSpTG, carbon dioxide storage sites may, in principle, only be authorised if they are located largely within the exclusive economic zone (EEZ) and the continental shelf. By contrast, the injection of carbon dioxide into territorial waters is expressly prohibited. On the German mainland, the authorisation of permanent storage requires an explicit decision by the relevant federal state to permit such storage (Section 2(5) of the KSpTG). The amendment thus has a clear offshore focus, without completely ruling out onshore storage.

The KSpTG subjects both the investigation of the subsurface to determine its suitability as a carbon dioxide storage site (Sections 7 et seq. KSpTG) and the construction, operation and substantial modification of carbon dioxide storage sites (Sections 11 et seq. KSpTG) to an official authorisation procedure. In addition, the transport of carbon dioxide is legally recognised as a separate infrastructure asset. For carbon dioxide pipelines, Section 4 of the KSpTG provides for a planning approval procedure, which in many respects follows the regulations for energy infrastructure familiar from energy sector law.

Of particular note is the fact that the authorisation procedures for carbon dioxide pipelines are largely modelled on established provisions of energy transmission law. The KSpTG incorporates numerous instruments from the Energy Industry Act, including provisions on planning approval, project management, preparatory work and the acceleration of procedures. In doing so, the legislator draws on existing experience from the expansion of electricity, gas and hydrogen networks and creates a comparatively familiar regulatory environment for project developers.

The legislator classifies the construction, operation and modification of carbon dioxide pipelines, as well as the construction, operation and substantial modification of carbon dioxide storage facilities, as projects of overriding public interest (Section 4(1), sentence 3, Section 11(1), second sentence, KSpTG). The KSpTG thus forms part of recent legislation that gives priority to infrastructure projects in the field of energy and climate transformation through corresponding statutory assessments. The determination of an overriding public interest is particularly significant in the context of discretionary decisions by public authorities. The Act expressly clarifies that carbon dioxide pipelines serve the purpose of climate protection and contribute to the long-term reduction of CO₂ emissions (Section 4(1), sentence 5, KSpTG). 

The new authorisation regulations are accompanied by further procedural adjustments. These include, in particular, the statutory priority given to planning approval and planning authorisation procedures for carbon dioxide pipelines (Section 4a(5) KSpTG) and the introduction of first-instance jurisdiction for the Higher Administrative Court (Section 39a KSpTG). Furthermore, Section 4a of the KSpTG refers, in the case of carbon dioxide pipelines, to numerous expedited procedures under energy sector law, such as those relating to project management, preparatory work, early commencement of construction and procedural coordination. The legislature is thus deliberately building on already established acceleration models under energy infrastructure law, whilst at the same time streamlining judicial protection.

Conclusion

With the amendment to the KSpTG, the legislature is taking a significant step towards a workable legal framework for carbon management technologies. The opening up of the market to commercial CCS applications, the independent regulatory framework for CO₂ transport and the introduction of procedural acceleration mechanisms create, for the first time, the legal conditions for the development of industrial CO₂ infrastructure in Germany.

At the same time, the CMS and its statutory implementation in the KSpTG are not without controversy. Critics point in particular to technological and environmental risks, such as possible leaks from CO₂ storage sites, potential impacts on groundwater and drinking water resources, or seismic effects. The legislature addresses these concerns through a spatially restrictive design of the legal framework, in particular by concentrating commercial storage at offshore sites, as well as through comprehensive licensing, monitoring and safety requirements.

Nevertheless, the KSpTG as a whole adopts a deliberately cautious regulatory approach. Whilst the amendment establishes the necessary regulatory conditions for CCS and CCU projects, key economic framework conditions remain unresolved. This concerns, in particular, the long-term development of the European Emissions Trading Scheme, the design of the Carbon Border Adjustment Mechanism (CBAM), potential funding instruments, and the question of the extent to which the market is prepared to bear the additional costs of climate-neutral industrial products.

For emission-intensive industries in particular – such as the cement, lime and waste management sectors – investment decisions therefore depend not only on legal feasibility but also, to a significant extent, on the economic viability of the relevant business models. Initial feedback from industry suggests that investment decisions are currently failing not so much due to regulatory hurdles as to economic uncertainties. Uncertainties regarding the future development of emissions trading, the design of the CBAM or the willingness to pay for climate-neutral raw materials have a direct impact on the willingness to invest and are, in some cases, already leading to the postponement of planned CCS projects.

The KSpTG thus provides an important regulatory building block for the development of a low-carbon economy in Germany. However, whether the amendment will lead to a broad market ramp-up of CCS and CCU projects in the short term will depend less on the new permitting options than on the economic and political framework conditions. Practical implementation is therefore likely to be characterised initially by individual pilot and pioneering projects.

Taken as a whole, the KSpTG thus establishes a necessary and long-overdue legal framework for carbon management technologies. Whether the amendment triggers the hoped-for surge in investment and implementation will depend largely on whether it proves possible to reduce the remaining regulatory and economic uncertainties and to translate the new legal opportunities into viable business models.