Dear readers of the vgbe energy journal,

The transformation of electricity generation poses a significant challenge to European energy suppliers, and this will continue to be the case. Renewable energies, such as wind and solar power, now form the backbone of many generation portfolios. This transition is accompanied by a growing emphasis on flexible and reliable power generation, as well as on energy storage technologies designed to ensure security of supply.

For energy suppliers such as RWE, the impending phase-out of coal-fired power generation means that retrofitting coal-fired power stations with CO2 capture systems is no longer necessary. Whether new gas-fired power stations (combined cycle plants) will be made fit for the future in the medium term through CO2 capture or the use of hydrogen depends on utilisation rates, regulatory frameworks, and price developments for natural gas, hydrogen, and CO2. Current regulations also offer no incentives to capture, utilise or store CO2 from biogenic sources such as biomass, sewage sludge or waste-to-energy plants – ‘Bio-Energy Carbon Capture Utilisation & Storage’ (BECCUS) is not mandatory!

However, as part of the phase-out of conventional base-load electricity generation from nuclear power and coal, energy suppliers still possess valuable assets: brownfield sites suitable for conversion; experienced operational staff; excellent infrastructure with rail and waterway links; grid connections; and fully functional supply and disposal facilities. Many sites also have access to biogenic CO2 point sources from biomass, sewage sludge or waste-to-energy plants. Due to their proximity to the planned hydrogen core network, they also have access to green hydrogen. The energy companies’ strategy departments are currently analysing in depth what will ultimately become of these sites and whether they will even retain a firm place in the energy system of the future.

One thing is clear: The situation described above creates new incentives for the energy sector to look beyond its own horizons. Why not use BECCUS to contribute to decarbonisation and thus help other industrial sectors achieve their climate protection targets? For example, BECCUS could supply green feedstock to the chemical and petrochemical industries, or increase resilience by reducing dependence on imports from abroad, provided the technical, regulatory and economic conditions allow for this.

The chemical industry, fuel producers, building materials companies and the manufacturing sector are expected to increasingly rely on carbon from sustainable sources or negative CO2 credits, both of which BECCUS can provide. Green CO2 from biogenic sources, alongside CO2 recovered from product recycling, can represent an alternative carbon source. Through the capture and storage of CO2, negative emissions can be generated to offset unavoidable emissions. The anticipated resource shortage creates new business opportunities for energy suppliers and waste and sewage sludge disposal companies beyond their core activities.

However, we are not quite there yet! Key regulatory decisions are still lacking for investments in CCU or CCS projects. In the case of CO2 utilisation, reliable, long-term customer commitments (off-take agreements) is also needed. Project decisions must be made in the context of the entire value chain. At which point in the chain should one become active, and with which technologies and products? In which regions should production take place, and which transport and logistics solutions are suitable? How should CCU and CCS be assessed in terms of effort, risks, and opportunities? How should they be strategically positioned for an energy supplier? Which long-term, cross-sector partnerships are sensible or necessary for this? After all, such partnerships are an essential prerequisite for successful implementation.

Current regulatory frameworks in Germany, the EU and worldwide are still evolving. Whilst Germany’s CCS Act sends important signals, comprehensive technological openness, long-term investment security and the inclusion of biogenic CO2sources are still in their infancy. Across the EU, the Green Deal instruments and new industrial legislation are setting a positive tone. However, detailed regulations on the promotion of negative emissions or cross-border CO2 logistics are often lacking. Conversely, there is always the risk of over-regulating this technological field at a time when the first demonstration projects are just starting up, when no infrastructure yet exists, and when industrial application is still in its infancy. Finally, flaws in the existing regulatory framework must also be addressed. For example, the amount of electricity used is deducted from the calculation of negative emissions by the emission factor, even though electricity generation is covered by the European Emissions Trading Scheme. Incorrect requirements regarding the quality of negative emissions make them significantly more expensive without contributing to climate protection. Ultimately, securing long-term legal certainty, fair market access and, as a starting point, a high degree of reliability regarding suitable funding instruments for BECCUS projects is of the utmost importance for the energy sector and potential investors.

The emerging market is still at its beginning and could become complex due to the origin (grey or green) and varying quality of the CO2. Clearly, CO2 will need to be stored permanently to achieve negative emissions. At the same time, industrialised countries such as Germany must increasingly view biogenic CO2 as an urgently needed commodity for the chemical industry, for example in the synthesis of e-fuels or as a raw material for products.

Energy suppliers have the potential to expand beyond their core energy portfolio to engage in the BECCUS technology sector, for example by acting as producers and suppliers of raw materials and intermediates for eFuels and eChemicals, or by participating in CO2 transport and trading networks.

The coming years will be crucial in determining whether a functioning cross-sectoral carbon economy can be established in Europe and worldwide. Energy suppliers could play an essential role in this process by helping to alleviate the shortage of ‘green carbon’ in an increasingly decarbonised industrial landscape. The energy sector’s expertise in transforming its core business is invaluable and can be utilised by other sectors through strong partnerships as they transition to climate-friendly processes. Resolving regulatory uncertainties, sending clear market signals and forging partnerships between electricity generation, the chemical industry and off-takers could make BECCUS a genuine driver of innovation for sustainability, climate protection and regional development.