A Critical Turning Point for Underground CO₂ Storage Development in the European Union
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. 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.
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. 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. 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.
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. 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.
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. 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.
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.
Modern Diplomacy - Energy - January 11, 2026
Authors: Yannis Bassias & Evangelos Flitris