CCS is rapidly emerging as a cornerstone of industrial decarbonisation, and nowhere is this more evident than in Germany and the UK, two nations at the forefront of global CCS innovation. Germany’s recent legislative amendment enables a pivotal move from restrictive demonstration projects to a comprehensive framework that enables commercial-scale CCS and CO₂ transport, positioning the country for rapid infrastructure development and market formation.
Meanwhile, the UK has established itself as a global leader, with a mature policy and investment environment that has already delivered financial close on major CCS clusters and aims to capture a significant share of global capacity by 2035.
Germany’s regulatory framework
Until recently, Germany’s 2012 CCS law supported only research, testing and tightly circumscribed storage pilots, effectively preventing a commercial CCS market from forming. In 2025, the newly elected federal government secured a comprehensive reform: the statute was amended to explicitly govern both permanent storage and CO₂ transport—removing time and scale limits on storage and aligning CO₂ pipeline permitting with familiar energy network procedures. This makes commercial CCS and pipeline-based CO₂ transport legally possible for the first time at a national scale. It marks a milestone for German CCS development, in particular because CCS has been facing scepticism from environmentalist and green policymakers.
The reform prioritises offshore storage, with clear environmental safeguards (most prominently regarding the harbour porpoise), exclusion zones around protected marine areas, stringent baseline studies and continuous monitoring. Onshore storage remains politically sensitive; a new opt-in mechanism allows individual German federal states (each a ‘Land’ and collectively the ‘Länder’) to authorise commercial onshore sites, but there is no national presumption for doing so.
To opt in, a Land must adopt a state law establishing permitted areas and coordinate cross-border onshore storage complexes with neighbouring Länder (including the option of a state treaty where a storage complex spans multiple Länder). Practically, this means near-term deployment will cluster around coastal emitters and offshore geology, while inland projects will depend on either long trunk pipelines to the coast or future state-level opt-ins that reduce transport cost.
The long-standing question of competition with existing legislation in the case of suitable natural caverns that could be considered for both CCS and the final storage of nuclear waste was addressed: after a maximum of four months without a contrary decision by the Federal Office for the Safety of Nuclear Waste Management, an agreement on the use for CCS is to be deemed to have been reached.
The law borrows acceleration tools from energy infrastructure permitting (already used in the Energy Act), designates CCS/CCU infrastructure as in the overriding public interest, and consolidates consultation processes to increase predictability. It sets a strict operator liability regime during operations and a tightly conditioned pathway to public stewardship after closure, requiring robust financial guarantees and multi-decade monitoring. A national register and agency-led '“potentials and constraints” studies are designed to enhance planning transparency, particularly offshore.
Legal permission, however, is not market design. Germany still needs durable tariff frameworks, third-party access rules and clarity on the role of network operators. Early movers also face financing gaps for capture equipment, which remains capital-intensive. To bridge this, Germany is including CCS in a €6b ($7b) industrial decarbonisation programme that will deploy carbon contracts for difference (CfD) with 15-year tenors, expected to be auctioned from 2026. Competition for rights-of-way between hydrogen and CO₂ corridors, public acceptance challenges for onshore siting and the need for international alignment on cross-border CO₂ movements remain practical constraints. Near-term market formation is therefore most likely in offshore-aligned coastal clusters, with inland viability hinging on transport economics, state-level choices and supportive funding.
In sum, Germany has moved decisively from prohibition and demonstration towards permission and pathway building. The reform provides the legal scaffolding and sends a strong policy signal, but project delivery will still require layered solutions on finance, market rules, cross-border arrangements and sustained political consensus.
The UK’s strategic framework for CCUS
The UK’s objective is to capture 20–30mt/yr of CO₂ by 2030 as part of achieving the overarching 2050 net-zero target. The country’s carbon capture strategy has matured over the last two decades, from pilot programmes to a national programme centred on industrial clusters with shared transport and storage networks. The Energy Act 2023 created a new legal framework for energy production and security, with Ofgem regulating the networks used to transport and store carbon dioxide. The Great British Energy Act 2025 established Great British Energy for the purpose of producing, distributing, storing and supplying clean energy. This recent legal framework is complemented by contract-based revenue support business models and large-scale public funding commitments, which places the UK among global leaders in CCUS deployment.
The UK has focussed development of CCUS on clusters across the country; cluster sequencing involves selecting geographies with dense emissions and accessible storage to maximise utilisation and reduce cost. The first two clusters as part of ‘Track 1’—East Coast Cluster, in Teesside, and HyNet in Merseyside, northwest England—have advanced to financial close on their transport and storage systems, with construction underway and startup expected in 2028. The Acorn project, the Scottish Cluster and the Viking project in Humberside have been selected to move forward as part of Track 2.
The UK has built differentiated business models across the value chain to attempt to mitigate risk and cost challenges and encourage the industry to invest into carbon capture. Building on existing policy levers, such as the CfD mechanism—which is already known and trusted by investors in the energy industry—has proved critical for setting the scene to gain the trust of stakeholders to move forward. The UK business models in this sector include:
- The industrial carbon-capture model, which connects CCUS to their industrial processes, and includes covering the cost of building and operating the capture plan in addition to the storage and transmission fees, as well as providing revenue support to ensure the venture is profitable;
- The hydrogen production business model, which supports the production of low-carbon hydrogen;
- The CCUS dispatchable power agreement, which is a bespoke CfD;
- The greenhouse gas removals business model, which focuses on removing greenhouse gases from the atmosphere to encourage negative emissions; and
- The power BECCS business model, which supports power generation using residual biomass to generate electricity and hand-in-hand, capturing the emissions.
With the first projects moving, the UK is now considering how economic regulation should evolve as the market scales. A government call for evidence in August 2025 explores whether the Regulated Asset Base style approach for CCUS is the most appropriate model as the market matures; this signals a planned transition from state-led early markets to a more commercial ecosystem by the mid-2030s. Ofgem is expected to provide a summary of responses to the call for evidence in circa early 2026. Parallel consultations are addressing access, non-pipeline transport and broader market design to accommodate growth beyond the initial clusters.
The UK still faces delivery risks: the tempo of regulatory processes needs to match commercial readiness, bankability hinges on disciplined risk allocation, a trusted long-term revenue generating pathway is critical, and insurance for long-term liabilities remains complex.
Co-creation between the government and industry is paramount, alongside the communication of a clear funding allocation and deployment plan. Capture projects need to know when and what the next opportunity is in the sector, without the weight of uncertainty that policy may change.
The UK’s comparative advantages—massive storage capacity, mature offshore engineering, cross-party policy stability and repurposable infrastructure—underpin the country’s potential. The UK has made significant moves in the creation of a CCUS framework, and this reinforces the UK’s credibility as a global leader in CCUS technology and deployment.
Conclusion
Germany and the UK are setting the pace for CCUS market development in Europe, each leveraging their unique strengths to unlock new commercial opportunities. The UK, being a first mover, is focused on swifter, state-backed cluster deployment, while Germany is methodically building a considered legal framework for its industrial base.
The UK’s deployment of industrial clusters has attracted significant capital, and it positions the country as a global benchmark for CCUS delivery. Germany’s comprehensive regulatory reform opens the door for large-scale market formation, offering substantial potential for infrastructure investment and industrial partnerships.
Both governments have demonstrated clear commitment to CCUS as a strategic lever for decarbonisation and industrial competitiveness. The UK’s advanced project pipeline and Germany’s vast storage capacity create a compelling landscape for investors, technology providers and industrial players seeking growth in the low-carbon economy.
As these markets mature, businesses stand to benefit from new revenue streams, cross-border collaborations and first-mover advantages in emerging CCUS value chains. The momentum in both countries signals a strong outlook: proactive engagement now will position companies to capitalise on the expanding opportunities in Europe’s evolving carbon management sector.
Matt Hardwick is partner, Dr. Peter Stainer is senior associate and Antonia Wood is associate at King & Spalding. This article is taken from our Outlook 2026 report. To read Outlook in full, click here.
Comments