The legislative procedure for the KSpTG-E is approaching its end.
We had already reported about the cabinet draft for the amendment of the KSpG on 3 September 2025. On 6 November 2025, the German Federal Parliament (Bundestag) has now adopted the KSpTG-E with the content of the latest draft law of 5 November 2025 (BT-printed matter 21/2594). The Act allows the underground storage of carbon dioxide and its export in the future. It thus paves the way for reducing emissions in the CO2-intensive cement, steel and chemical industries, for example, as well as in waste incineration.
As the KSpTG-E is an act requiring approval, however, it still requires the approval of the German Federal Council (Bundesrat) before it comes into force.
This approval is expected to be granted in the upcoming meeting of the German Federal Council on 21 November 2025, provided that the German Federal Council does not raise any further objections to the draft law. The German Federal Council had previously expressed concerns about the details of the Act on 26 September and referred it back to the German Federal Government. The German Federal Government refused some of the proposals of the German Federal Council. However, some of the German Federal Council's wishes were also fulfilled in the latest draft: For example, the planning approval procedure has been further aligned with the regulations of the German Energy Industry Act and the protection of groundwater with regard to its use as drinking water has been regulated as a prerequisite for planning approval.
The question of the costs of CO2 storage is particularly relevant for potential investors: Additional investment is required for capture, transport and storage, but this may be offset by the generation of a new source of income.
Within the framework of the European emissions trading system, companies are obliged to purchase CO2 certificates for the carbon dioxide they emit. In the past, these certificates were allocated free of charge to particularly energy-intensive companies under certain circumstances. This free allocation is to be phased out over time: From 2026, the allocation of free certificates is to be gradually discontinued or linked to energy efficiency measures. In this way, the emission of CO2 into the atmosphere becomes also more expensive, which creates an incentive for investments into CO2 storage in the long term. However, it is currently impossible to say whether this will remain the case in view of the European Parliament's likely postponement of the start of EU-ETS 2 (European Union Emissions Trading System 2) to 2028.
At the same time, CO2 storage entails technical challenges: An extensive pipeline network is required to transport CO2, as CO2-intensive companies are spread across the entire country in a decentralised manner. So far, such a transport network does not exist in Germany. The use of existing natural gas pipelines would be theoretically conceivable, however, will be excluded as long as they are still needed for the transport of natural gas. The storage and transport of CO2 can only actually begin with developing their own infrastructure.
On the other hand, the opening up of new possibilities with the KSpTG-E also offers opportunities for new business models. This amendment raises the transport and storage of CO2 from a purely research area to an economic level where new markets can emerge.
Whether carbon dioxide may also be stored in Germany, depends on the individual German federal states. The KSpTG-E gives the German federal states the opportunity to permit the storage on their territory by law.
In this respect, the demand for carbon for industry, such as in the production of plastics and synthetic fuels, is also likely to play a role. So far, carbon is generated from fossil raw materials. If fossil raw materials are no longer used in the future, this may open the door for so-called CCU technologies (Carbon Capture and Usage) and may have a positive influence on the cost structure of CO2 storage. At the same time, German companies have a strong market position in the construction of facilities for the capture and purification of CO2 which is further strengthened through the use of their own technologies.
The storage of carbon dioxide offers a lot of potential to reduce emissions of CO2. Especially for companies with unavoidable CO2 emissions, storage represents an opportunity to continue their operations in the future despite strict legal regulations. Promising opportunities are therefore already opening up for the gradual use of new technologies. It would therefore be welcome if the appropriate regulatory course were already to be set this week.
