Geostrategic Media Political Commentary, Analysis, Security, Defense
Yannis Bassias and Evangelos Flitris*
Europe finds itself at a moment where industrial competitiveness, energy security, and climate ambition must be reconciled. The slow rollout of CO₂ storage capacity, especially when compared with the United States, has become a defining strategic concern. Through the Net Zero Industry Act (NZIA), the EU has set a binding objective of 50 million tons of annual CO₂ storage capacity by 2030, assigning a substantial portion of this responsibility to licensed oil and gas operators. This article explores the technical, economic, and regulatory hurdles associated with this mandate, the legal challenges initiated by industry players, and the potential contribution of CO₂ Enhanced Oil Recovery (CO₂‑EOR) to accelerating large‑scale storage deployment. The analysis underscores the widening gap between political ambition and project‑level realities, highlighting the need for a pragmatic recalibration of EU policy.
A New Regulatory Landscape and an Industry in Open Resistance
The EU’s decision to impose legally binding CO₂ storage obligations on oil and gas companies marks a decisive shift in Europe’s decarbonization architecture. For the first time, the Union is not simply encouraging CCS development but requiring hydrocarbon producers to deliver storage capacity proportional to their historical production, although production is very low compared to the imported volumes of hydrocarbons. Only a few EU companies still produce some volumes inside the EU: less than 0.3% of world oil supply and 0.9% of total world gas supply. In May 2025, the European Commission identified forty‑four companies whose combined output represented nearly the entirety of EU hydrocarbon production during 2020–2023. These companies are now legally responsible for contributing to the development of fifty million tons of annual CO₂ storage capacity by 2030.
The rationale behind this obligation is straightforward. Oil and gas companies possess the subsurface expertise, engineering capability, and financial strength required to deliver such infrastructure. The industry has not aligned behind the directive. Instead, fifteen companies have initiated legal action seeking annulment of the obligation. They argue that the target is technically unattainable within the prescribed timeframe and economically disproportionate, especially when non‑EU competitors face no equivalent requirements.
The litigation has created a climate of uncertainty that has effectively frozen investment decisions. No operator is willing to commit billions of euros to infrastructure that may later be deemed outside its legal obligations or that could place it at a structural competitive disadvantage. A ruling in favor of the companies would not only lift the storage obligation but could also redirect capital back toward exploration and production, particularly in underexplored European basins. The outcome of the legal process may therefore shape both the trajectory of CCS deployment and the future of Europe’s upstream sector.
The legal challenge was formally submitted in early 2025, shortly after the European Commission issued the implementing guidelines for Article 23 of the NZIA. The timing was not accidental. The Commission had just reaffirmed its intention to enforce the 2030 storage target without transitional flexibility, a decision that intensified industry concerns and triggered coordinated action among several major operators. The litigation therefore emerged at a moment of heightened regulatory activity, coinciding with broader Commission initiatives on industrial decarbonization, cross‑border CO₂ transport networks, and the revision of the EU Emissions Trading System. This convergence of policy decisions created a sense of urgency within the sector, prompting companies to seek judicial clarification before committing to long‑term capital expenditures.
Hard‑to‑abate industries add further pressure to the system. By 2030, the cement, steel, refining, and chemical sectors are expected to generate well over two hundred million tons of process‑related CO₂ annually within the EU emissions that cannot be eliminated through electrification or fuel switching alone. These sectors are already signaling that they will require large‑scale access to permanent geological storage to meet their decarbonization commitments under the EU ETS and the Industrial Emissions Directive. Yet the projected availability of only forty to fifty million tons of storage capacity by 2030 reveals a structural mismatch between industrial demand and the infrastructure currently under development. This imbalance underscores the urgency of accelerating storage deployment, as the absence of sufficient capacity risks slowing industrial decarbonization, increasing compliance costs, and undermining the competitiveness of Europe’s manufacturing base.
The Cost of Reality
A central point of contention is the true cost of developing CO₂ storage capacity. Early political assumptions were based on optimistic cost curves and rapid deployment scenarios. Industry assessments, however, reveal a far more demanding financial landscape. Offshore storage hubs require extensive geological characterization, complex engineering, long permitting cycles, and costly transport infrastructure. Supply chain constraints and inflationary pressures further elevate costs.
Indicative industry estimates place the levelized cost for the integrated CCS value chain (capture, transport, and storage) to range from 130 to 230 €/ton of CO₂ depending on the particularities of the project (from mature offshore fields to two hundred fifty euros per ton for greenfield sites). Compared with recent prices for EU emission allowances, which in 2025 ranged from €65 to over €80 per ton of CO₂, it becomes obvious that additional funding and/or de-risking mechanisms are needed to underpin investment decisions. A typical offshore hub capable of storing five to ten million tons per year may require two to four billion euros in investment. Offshore CO₂ pipelines for large‑capacity transport systems can reach investment levels of several hundred million euros per hundred kilometers, while the cost of a new injection well may range from tens of millions up to around one hundred million euros, depending on depth, geology, and required completion standards in large‑diameter, high‑capacity offshore systems.
These figures imply that achieving the EU’s fifty‑million‑ton target could require twenty‑five to thirty‑five billion euros in capital expenditure, two to four times higher than the assumptions underpinning the NZIA. This cost gap is a major driver of the industry’s resistance and a central issue in the ongoing litigation.
A Tightening Timeline and Structural Constraints
The technical feasibility of the EU’s target is equally contested. According to IOGP Europe, twenty‑three CO₂ storage projects have been announced across ten EU member states, but only sixteen have defined operational start dates. Their combined capacity is projected at forty‑one million tons per year by 2030, already below the EU’s target, and this assumes that all projects proceed without delay.
The development cycle for underground CO₂ storage typically ranges from five to thirteen years, encompassing geological surveys, permitting, engineering, and construction. Even if new projects were announced today, they would not become operational before 2030. The risk of delays or cancellations remains high, given the complexity of permitting procedures, public‑acceptance challenges, and geological uncertainties.
Geology itself is a limiting factor. The EU’s projected storage capacity is comparable to that of Norway and the United Kingdom, both of which benefit from mature offshore basins and extensive hydrocarbon infrastructure. Within the EU, the Netherlands and Denmark lead in project development, followed by Italy and Greece. Countries such as Croatia, Bulgaria, and Slovakia remain at early stages, largely because they lack suitable depleted offshore fields.
Is CO₂‑EOR a Missing Accelerator?
CO₂‑enhanced oil recovery offers a technically mature and economically attractive pathway to accelerate CO₂ storage deployment. Injecting CO₂ into depleted reservoirs can increase hydrocarbon recovery by up to fifteen percent, while roughly forty percent of the injected CO₂ remains permanently trapped. Globally, around 160 CO₂‑EOR projects are in operation, including one hundred thirty‑nine in the United States. In the EU, only a single project exists, located in Croatia.
Despite its proven storage potential, the NZIA explicitly excludes CO₂‑EOR from qualifying as a Net‑Zero Strategic Project. Revising this exclusion could unlock faster deployment of storage capacity by leveraging existing wells, pipelines, and surface facilities. It would reduce capital expenditure, shorten permitting timelines, and strengthen domestic hydrocarbon production at a moment when energy security is increasingly important. CO₂‑EOR could therefore serve as a bridge technology, enabling the rapid scaling of the European CCUS value chain.
Policy Implications and the Need for Recalibration
The EU’s current approach demonstrates strong political determination but remains insufficiently aligned with the technical and economic constraints facing the sector. To safeguard the credibility of its decarbonization pathway, the Union may need to revisit the 2030 target, streamline permitting processes, reinforce cross‑border CO₂ transport infrastructure, and offer regulatory stability capable of unlocking private investment. Reconsidering the exclusion of CO₂‑EOR would likewise provide a pragmatic lever for accelerating deployment. Such a recalibration would not dilute Europe’s climate ambitions; rather, it would reinforce the foundations required for sustained long‑term decarbonization.
Europe is at a decisive juncture. Geological CO₂ storage is essential for reducing emissions from hard‑to‑abate industries, yet the current regulatory framework risks outstripping the sector’s technical and economic capacity. Integrating CO₂‑EOR into the NZIA and adopting a more realistic deployment trajectory could accelerate progress, bolster energy security, and support the emergence of a competitive European CCUS ecosystem.
If the ongoing litigation leads to a modification or partial relaxation of the storage obligation, the consequences will extend beyond CCS policy. A change in the regulatory burden would not only reshape the pace and structure of CO₂‑storage deployment but could also redirect capital flows within the sector. Companies currently holding back investment may choose to reallocate resources toward exploration and production activities, particularly in underexplored European basins, at a moment when strategic autonomy and domestic energy resilience are becoming increasingly important.
About authors:
Evangelos Flitris is a Petroleum Engineer / Energy Consultant.
Yannis Bassias served as President and CEO of the Hellenic Hydrocarbons Management State Company from 2016 to 2020. He was a member of the Committee of the National Energy and Climate Plan (NECP) from 2018 to 2020 and collaborated with municipalities in Western Macedonia on the development of energy and mineral resources. He has extensive experience in the international hydrocarbon industry and energy mix issues. He regularly writes and analyzes energy topics related to European energy policy in both Greek and international press.
