Industrial Carbon Management: Europe’s Balancing Act

Europe’s path to net zero must be grounded in economic resilience as well as climate ambition. While renewables and electrification will carry the bulk of the transition, there are sectors and regions where emissions cannot yet be fully eliminated. In this context, Carbon Capture, Utilisation and Storage (CCUS) can serve as a bridge, complementing long-term decarbonisation efforts.

A bridge for Europe’s industrial transition

CCUS is one of the many tools to reach climate neutrality by 2050, with potential primarily in hard-to-abate industrial sectors, such as cement, steel, and certain chemical processes, where process emissions are intrinsic to production and cannot easily be avoided through fuel-switching or electrification. There, CCUS offers a way to keep essential European industries running and competitive while avoiding a shift of emissions-intensive production to third countries.

CCUS can also serve as a transitional support mechanism in regions with heavy industrial clusters that are still dependent on fossil-based heat or waste-to-energy facilities. In these areas, targeted deployment can provide breathing space with emissions reduction without forcing immediate shutdowns or social dislocation.

Done right, this can help maintain social acceptance of the broader green transition.

Keeping CCUS aligned with EU climate and security goals

Yet the technology comes with risks if deployed unwisely. Using CCUS to extend the lifetime of fossil fuels in the power and heat sectors would fundamentally contradict Europe’s climate and energy security objectives. Europe’s geopolitical imperative after 2022 is clear: to cut dependence on imported gas and oil from unstable suppliers. Channelling public or private investment into prolonging fossil infrastructure risks locking in both emissions and vulnerabilities.

 Moreover, CCUS is a capital-intensive technology. Deploying it in sectors where renewables, electrification, or efficiency are already viable adds unnecessary cost and complexity. Every euro spent on capturing emissions that could have been avoided is a euro not invested in renewables, grids, or storage capacity, the backbone of Europe’s future energy system.

There is also a carbon-lock-in risk from large-scale CO₂ transport and storage infrastructure. If designed on the assumption of continued high CO₂ output, such assets could create bad incentives to maintain emissions rather than eliminate them. This risk grows if CCUS projects rely on long-term subsidies or weak carbon pricing mechanisms that undermine the EU Emissions Trading System (ETS).

Designing safeguards for responsible deployment

To ensure CCUS plays a constructive role, Europe needs strong policy safeguards and clear governance principles. No subsidies for fossil power should be granted under the guise of CCUS. Public support must be strictly limited to industrial process emissions that cannot otherwise be avoided. 

Conditionality and transparency are crucial: only projects achieving high capture rates, minimal methane leakage, and demonstrable lifecycle benefits should qualify for public funding or ETS credits.

Sunset clauses and phase-out timelines must be embedded in policy frameworks to ensure CCUS remains a transitional measure rather than a permanent crutch for fossil use.

Integration with the ETS must be carefully calibrated. Over-crediting or overlapping support schemes could depress carbon prices and weaken the market signal needed to drive decarbonisation.

Finally, priority access to public funding should go to solutions with enduring mitigation potential – renewables, storage, electrification, and energy efficiency, which deliver structural emissions reductions without long-term dependency.

Balancing competitiveness and climate integrity

Europe’s credibility in industrial decarbonisation depends on its ability to combine climate integrity with competitiveness. CCUS can support both,but only if treated as a targeted, temporary, and cost-effective tool within a broader industrial strategy. As carbon pricing strengthens and free allocations are phased out, the economic case for CCUS must rest on market signals, not perpetual subsidies.

The real competitiveness challenge is global. Europe cannot compete by subsidising emissions, it must compete by scaling clean industrial solutions faster and more efficiently. Strategically deployed CCUS can help anchor high-value industrial activity in Europe during the transition, particularly in hard-to-abate sectors, but long-term strength will come from lowering energy costs, securing raw materials, and investing in renewables, storage, and electrification.

A forward-looking carbon management strategy should integrate CCUS into a broader competitiveness agenda: aligning infrastructure with emerging CO₂ value chains, fostering public-private partnerships in industrial innovation zones, and directing EU funding instruments, from the Innovation Fund to the Net-Zero Industry Act, toward technologies that deliver both climate impact and export potential.

If Europe can show that industrial carbon management reinforces, rather than weakens, its green competitiveness, it will not only secure its industrial base, it will set a global standard for climate-driven industrial policy.

Europe needs to manage industrial carbon wisely, not indefinitely. CCUS can help bridge short to mid-term gaps and protect jobs in essential industries, but it should not replace the fundamental transformation of the energy system. With the right safeguards, strict conditionality, clear timelines, and firm prioritisation of renewables, Europe can ensure that CCUS strengthens responsibly in its pathway to climate neutrality while helping with Europe’s reindustrialisation.

Used judiciously, CCUS can buy time for innovation and adaptation. Misused, it risks buying complacency. Europe’s industrial carbon management strategy must make the difference clear.