Germany Approves Major Shift Toward Underground CO₂ Storage, Ends Gas Storage Levy

Germany’s Bundestag has passed a landmark law enabling large-scale underground carbon storage, declaring CO₂ storage sites and pipelines as being of “overriding public interest” to accelerate planning and approvals. The move is central to Germany’s goal of achieving climate neutrality by 2045, particularly for hard-to-abate sectors such as cement, lime and waste incineration.

The legislation permits carbon capture and storage (CCS) at gas-fired power plants but continues to ban it at coal-fired plants. While onshore storage remains broadly prohibited, individual federal states may opt in by adopting their own laws. Until now, underground CO₂ storage in Germany was allowed only for research purposes.

Industry groups welcomed the reform as a long-awaited step but stressed that federal financial support will be essential to build the CO₂ transport networks needed to scale CCS solutions. Environmental campaigners warned that expanded CCS deployment could weaken incentives to reduce emissions directly at source.

In a separate decision on Thursday, the Bundestag abolished the gas storage levy, a charge introduced after Russia’s 2022 invasion of Ukraine to help fund the strategic filling of gas storage facilities. The German government will now cover remaining costs of up to €3.4 billion through its Climate and Transformation Fund until the end of 2025. The levy had been added to consumer and business gas bills, effectively passing the burden of emergency gas purchases onto end users.

Germany's CCS greenlight signals to hard-to-abate industries across Europe that carbon storage is finally moving from research pilot to commercial-scale infrastructure, particularly for cement, lime and waste-to-energy. Our climate-action and responsible-investment teams help clients evaluate whether CCS fits into a credible net-zero pathway or risks becoming stranded investment as direct-abatement economics improve.