Mr Gӧß, why is it sometimes a challenge for industrial companies to establish an appropriate carbon strategy?
“Simply because there are so many angles to consider. For example, do they need to comply to certain laws or directives? What about the voluntary market? Then there’s the need to align with overall climate strategies. Other factors to take into consideration include mechanisms such as CBAM – the Carbon Border Adjustment Mechanism – as well as the EU’s Emissions Trading System. Also, the physical management of carbon dioxide needs consideration. We help them to pull all the threads together to achieve their climate targets.”
Where and how did you acquire your insights?
By profession, I first studied to be a renewable energy engineer. On graduation I entered the energy markets and later became a power and energy market analyst. This gave me first-hand experience of the increasing role of compliance carbon markets plus an appreciation of how rising prices associated with carbon affected many companies. I decided to put my professional knowledge and experiences to good use, helping companies find the best way forward. My business partner and I therefore launched carboneer – a play on the words carbon and engineering – at the start of 2023.
You are based in Germany, so do you just concentrate on the German situation?
No, an international focus is essential for us and our clients. Companies in Germany and the EU have to be informed about the European Emission Trading System, for example, whilst the Carbon Border Adjustment Mechanism (CBAM) and Carbon Management policies can affect companies importing or exporting commodities such as steel, aluminium, hydrogen, etc, to or from the European Union. Hence early projects we delivered included a report on the carbon management situation in Germany for the Canadian Embassy and we are currently implementing a customized training programme to Turkish companies wishing to understand the CBAM and the legal obligations coming with it.
The EU has set a legally binding target for climate neutrality by 2050 whilst the German government has gone a step further, aiming for climate neutrality by 2045. What does that mean for industries known to be major emitters of carbon dioxide?
Firstly, 2045 may sound far away but to all parties I stress that the time for action is now. Otherwise there simply won’t be sufficient opportunity to develop appropriate infrastructures and make changes to the large-scale industries and energy systems we have in Germany and indeed elsewhere in the EU. Second point that springs to mind is the necessity of ramping up investments in renewable energy – that’s a given. But to focus on the carbon angles, I believe our government does need to set clear parameters in terms of carbon management. That will enable companies to make sensible decisions about carbon capture and storage, as investments are going to be expensive. Also, the government needs to reflect on where that carbon dioxide could be stored – right now in Germany we do not have a single large scale sequestration facility. Signing up to the London Protocol would facilitate the export of carbon dioxide to say Norway, the UK or the Netherlands for use or sequestration.”
Speaking about sequestration, I understand that a decade ago CCS received widespread criticism from the German press and public. What is the position now?
“CCS was seen almost as greenwashing; a way for coal-fired power plants to continue to operate without addressing the problem of harmful emissions at its core. Now, large numbers of people and even the environmental NGOs are aligning with the idea that we will need CCS in order to drive down carbon dioxide levels at least in hard-to-abate industries.”
Sectors such as power generation but also steel, cement, pulp and paper etc are known to be large emitters. Will they all be affected equally by the drive for climate neutrality?
Not necessarily. Cement companies are often located in rural areas, hence there is a much lower probability they would be able to connect a carbon capture system to a pipeline. Steel mills, chemicals plants, etc, are often clustered in industrial parks making a common pipeline a more viable proposition. Therefore, policy makers do need to provide clarity in such cases and companies should plan for contingencies.
Are there any other challenges facing governments?
Countries like Germany which are a densely populated and hugely industrialized have a vast infrastructure of roads, railways, pipelines, powerlines, etc. This will make the creation of a new carbon dioxide network a major challenge with an expensive price tag. To be successful, such a massive transformation will most certainly require the support of the populace.
What are your thoughts on the EU’s Emissions Trading System?
I believe that the trading system works well. The number of allowances decreases each year, pushing up the cost per allowance. This acts as a stimulus for large emitters to take action. At the same time, import tariffs such as CBAM are implemented to create a level playing field and reduce carbon leakage to other regions. It is also heartening to see that the income generated thought the sale of allowances is being ploughed back into innovations and initiatives to promote carbon capture, hydrogen, renewable energy, etc. But emissions trading is a fluid system, made all the more so thanks to the EU’s latest revisions. Hence the ETS is a complex subject matter and companies may not appreciate all the implications.
Finally, are you also tracking carbon capture technology?
Certainly. For example, I am encouraged by reports and projects of how captured carbon dioxide could be used to produce genuinely useful products such as precast concrete blocks. It is wonderful to see people using their creativity in developing solutions to climate change.
For more of carboneer’s insights into topics such as:
Carbon Management and the role of CCUS
Carbon Removal and negative emission technologies
Emission trading rules in the EU and CBAM