The double burden: How the ETS revision can address cross-chain risks for carbon capture and storage

The policy brief examines the 'cross-chain' risks in the carbon capture and storage (CCS) value chain, where delays in transport or storage infrastructure leave industrial emitters facing a 'double burden': the cost of capture equipment and continued EU ETS payments for uncaptured emissions. It contrasts the EU's current funding gaps with the UK's 'CCS business models' and suggests the EU utilize ETS revenues or the proposed Industrial Decarbonisation Bank to provide financial safeguards during infrastructure outages.

• CCS developers face 'cross-chain' risks because the capture, transport, and storage components are mutually dependent; a failure in one part can eliminate the revenue or cost-avoidance that justifies the project's business case.
• Industrial CO2 emitters experience a 'double burden' or 'double penalty' when they invest in capture equipment but cannot access storage, forcing them to release the CO2 and continue paying EU ETS prices.
• The UK has successfully unlocked commercial finance for CCS by using 'CCS business models' and 'Industrial Carbon Capture Contracts' (a type of carbon contract for difference) that ensure capture projects receive payments to cover fixed costs and capital repayment even if transport and storage networks are delayed or unavailable.
• Current EU funding mechanisms, including the Innovation Fund and carbon contracts for difference in countries like France, Germany, Denmark, and the Netherlands, do not provide similar risk mitigation for cross-chain failures.
• Proposed solutions for the EU include a state-backed fund to cover ETS costs during infrastructure outages, potentially funded by ETS revenues or the €100 billion earmarked for the Industrial Decarbonisation Bank (IDB).

APA

Lockwood, T. (2026). The double burden: How the ETS revision can address cross-chain risks for carbon capture and storage. Clean Air Task Force. https://www.catf.us/2026/09/the-double-burden-how-the-ets-revision-can-address-cross-chain-risks-for-ccs/

Chicago

Lockwood, Toby. The double burden: How the ETS revision can address cross-chain risks for carbon capture and storage. Clean Air Task Force, 2026. https://www.catf.us/2026/09/the-double-burden-how-the-ets-revision-can-address-cross-chain-risks-for-ccs/.

Wikipedia

{{cite report |last1=Lockwood |first1=Toby |title=The double burden: How the ETS revision can address cross-chain risks for carbon capture and storage |publisher=Clean Air Task Force |date=4 September 2026 |url=https://www.catf.us/2026/09/the-double-burden-how-the-ets-revision-can-address-cross-chain-risks-for-ccs/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lockwood2026double, author = {Lockwood, Toby}, title = {{The double burden: How the ETS revision can address cross-chain risks for carbon capture and storage}}, institution = {Clean Air Task Force}, year = {2026}, month = sep, url = {https://www.catf.us/2026/09/the-double-burden-how-the-ets-revision-can-address-cross-chain-risks-for-ccs/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }