By Carbon Balance Initiative (CB), Clean Air Task Force (CATF) and Bellona Europa 

As reported by Euractiv, at least 15 oil and gas producers have launched legal challenges against the European Commission to contest the CO₂ injection capacity obligation under the Net Zero Industry Act (NZIA). The Article23Watch partners – CB, CATF and Bellona Europa – are disappointed, though not surprised by this development. According to Lina Strandvåg Nagell, Deputy Director at Bellona Europa, “Following decades of publicly promising to deliver large volumes of storage for CO₂, these oil and gas producers are showing that they are more focused on creating delays than the much-needed injection capacity for CO₂”.   

Under the NZIA, 44 oil and gas producers operating in the EU are required to collectively deliver 50 million tonnes of CO₂ injection capacity by 2030, which is allocated pro-rata based on their production between 2020 and 2023. While this is no small feat, it is possible. “While we recognise that there are challenges to achieve the target of the NZIA in a timely manner, the obligated entities should focus their efforts on addressing any identified barriers. These lawsuits suggest a lack of willingness to even try” said Ingrid Udd Sundvor, Executive Director and Co-founder of the Carbon Balance Initiative.  

Is the 50 million tonne target achievable?  

Despite claims from the suing entities, the data shows that the obligation is ambitious and achievable:  

“The technology is ready, suitable geology is available and project timelines workable. The legislation has been in place for 21 months already and several storage projects are already well underway” said Codie Rossi, Europe Policy Manager at Clean Air Task Force. 

Europe has extensive, well-characterised storage potential. Demonstration projects have proven the safety and viability of injection at commercial scale, and several large-scale projects are already advancing. While CCS projects are indeed complex, oil and gas producers have the necessary technical expertise and financial bandwidth that makes them well-placed to take on the role of kick-starting the storage market by fulfilling the obligation.¹ 

“The claims of the oil and gas producers that it is not feasible to be compliant with the NZIA obligation in a timely manner fails to recognise that the compliance framework is flexible” said Lina Strandvåg Nagell. The NZIA obligation requires market-ready injection capacity, not physical storage of CO₂ by 2030. Obligated entities can also meet their targets through third-party storage providers and joint investment ventures – a so far under-utilised option.  

A claim the Article 23 project partners have seen develop over the last 21 months is that there is a lack of CO₂ supply to match the injection capacity developed, with oil and gas producers arguing that they must look for “hypothetical emitters”. A recent research paper clearly states that this could not be further from the truth. “There is in fact a strong and growing demand for CO₂ storage, with projections from announced CO₂ capture projects reaching more than 60 Mt per year by 2030” said Toby Lockwood, co-author of the paper and Director of Carbon Management at Clean Air Task Force.² However, projected EU storage supply is only around 37 Mt per year by 2030, with less than 3 Mt under construction.³ Europe is short on storage capacity, not demand. “This is why we urgently need producers to act on their obligations sooner rather than later. We have no time for further delays that will result from these targeted attacks on the regulation”, said Codie Rossi.  

Several obligated oil and gas producers are already well positioned to meet their pro-rata allocations based on existing project timelines. The barrier to completion is not feasibility or the NZIA legislation, but consistent underinvestment by certain obligated entities which are now realising they will be held accountable. This is just the beginning of climate accountability for the sector, and proving that it can be enforced is crucial. 

For years, oil and gas producers have prioritised high-return fossil fuel projects while delaying investment in storage infrastructure for CO₂. Meanwhile, many of Europe’s struggling heavy industries are depending on access to storage to avoid rising carbon costs and ensure their future viability. Driving the development of CO₂ storage across the EU will help lower the overall cost of decarbonisation, protect industrial jobs, and insulate consumers from rising carbon costs. The NZIA ensures that those who have benefited the most from fossil production contribute proportionately to a much-needed climate solution. 

Failure to fulfil the obligation should come with strong penalties, set by Member States. “We cannot risk obligated entities opting out of developing injection capacity due to low, non-dissuasive or weak penalties” said Ingrid Udd Sundvor. Exemptions from the penalties should only be granted where a best-effort approach can be proved on the side of the obligated entities. Suing the Commission based on the arguments easily debunked in this press release is not in best-effort and only contributes to additional delays in implementation. This cannot be allowed to be used to justify applications for penalty exemptions in the future. “This is a stalling tactic, the worst of its kind, and has very real consequences for European industry, community and society as a whole, as Europe works to decarbonise in an effective manner”, said Lina Strandvåg Nagell.  

We urge all obligated entities to build and deliver, not block, the injection capacity obligation that is an essential mechanism for progress towards Europe’s climate neutrality goals and long-term competitiveness of its industries.  

• Press Release (pdf)