CCSA Warns EU-UK CCS Legal Gap Is Blocking Carbon Capture Investment
Cross-border CO2 transport and storage projects between the EU and UK are stalling for want of legal recognition, the Carbon Capture and Storage Association said in early June.
Cross-border carbon capture and storage investment between the European Union and the United Kingdom is losing momentum as unresolved legal gaps around CO2 transport and storage recognition leave project developers without the certainty needed to secure financing, the Carbon Capture and Storage Association said in a briefing published on 3 June (2026-06-03).3
The CCSA called on policymakers in both jurisdictions to establish clear legal frameworks governing who bears liability for stored CO2 volumes that cross borders, how monitoring obligations transfer between jurisdictions, and which regulatory body holds authority in the event of leakage. Without those answers, project finance for cross-border CO2 pipelines and storage hubs remains out of reach.3
The warning arrived as the EU's carbon market was already under pressure from a separate but related source of regulatory uncertainty. Italy's government formally urged the European Commission in May (2026-05-21) to shelve a planned revision to ETS benchmarks that govern the allocation of free carbon allowances to industry, arguing that tighter benchmarks would raise compliance costs for energy-intensive sectors at a moment when European producers are already squeezed by elevated input costs.1
Italian industrial group Confindustria sharpened that position in June (2026-06-10), presenting 10 specific proposals to the Commission ahead of ETS review discussions. The proposals were aimed at curbing carbon costs and preserving competitiveness relative to producers in regions not subject to emissions pricing.4
The pushback carried into the formal legislative process. Energy-intensive industry groups remained strongly opposed to the Commission's benchmark update proposals as a member state vote approached on Monday 15 June (2026-06-15), Montel reported. European carbon allowances, which set the cost floor for compliance under the ETS, have already seen analysts cut their forward price estimates. Reuters reported in late April (2026-04-30) that forecast prices for EU ETS allowances had been significantly reduced for the next two years, driven by uncertainty over policy direction and future supply levels. ICE EUA December was last indicated at €79.85 as of Friday's (2026-07-04) close.5,7
Italy's government has been negotiating its specific reform proposal directly with Brussels. A government source told Montel that the discussions had involved near-daily exchanges, and that the Cisaf framework appeared to allow for case-by-case assessment. Analysts cautioned, however, that Italy's approach may clash with the EU's updated state aid rules.2
The two issues — the CCSA's call for legal clarity on cross-border CO2 infrastructure, and Italy's drive to limit ETS compliance costs for industry — share a common root. Both reflect the difficulty of mobilising decarbonisation investment in a market where the regulatory framework is still being negotiated. CCS project developers need contract certainty before committing capital to infrastructure that will take years to build. Uncertainty about whether benchmark revisions will be accelerated, softened, or held back altogether feeds the same hesitation.
Private capital has not stopped moving into European energy infrastructure entirely. In late June (2026-06-24), NatPower and Tesla signed a multi-year agreement to deploy more than 25 gigawatt-hours of battery energy storage across Italy and the United Kingdom, with aggregate construction value estimated at $4-5 billion and projected project revenues exceeding $15 billion over 20 years, NatPower said. Battery storage, unlike CCS, does not require cross-border CO2 pipeline law to proceed.6
The member state vote on ETS benchmark revisions — pending as of 15 June (2026-06-15) — will be one indicator of how much further Italy's lobbying has shifted the Commission's position. How that vote resolved, and whether it produced any sector-specific carve-outs, will determine the compliance cost trajectory for EU heavy industry through the end of this decade. The EU-UK carbon pricing relationship remains undefined, with no confirmed timeline for alignment or mutual recognition on CO2 transport law. Those two unresolved tracks — allowance allocation methodology and cross-border CCS legality — are what the CCSA and Italian industry are, in different ways, pushing to clarify before the investment window for this decade's decarbonisation projects closes.3,5