FAQs

The Net Zero Industry Act (NZIA) is an EU regulation adopted in 2024 to strengthen Europe’s capacity to manufacture and deploy key net-zero technologies required to achieve climate neutrality. It combines measures to accelerate permitting, provide regulatory certainty, stimulate demand, and support industrial development through strategic projects, clusters, and skills initiatives.

Together, these measures aim to position Europe as a competitive location for clean technology deployment while supporting industrial transformation and emissions reduction.

A broad body of climate science and mitigation modelling indicates that achieving climate neutrality requires not only deep emissions reductions, but also the capture and permanent storage of CO₂ from industrial processes and residual fossil fuel use.

Carbon capture and storage (CCS) is particularly relevant for hard-to-abate sectors, such as cement, chemicals, and certain refining processes, where emissions cannot be fully eliminated through electrification or renewable energy alone. Reflecting this, the European Commission has identified CCS as a necessary component of EU decarbonisation pathways, including in the Industrial Carbon Management Strategy, and has designated it as a key net-zero technology under the NZIA.

The NZIA introduces several measures to support CCS deployment. Most notably, it establishes a binding target of 50 MtCO₂ per year of injection capacity by 2030, with oil and gas producers required to contribute proportionally based on their historical production. In addition, CO₂ storage projects may be designated as Net-Zero Strategic Projects, granting them priority status, streamlined permitting procedures, and recognition as projects of public interest. Member States are also required to support deployment through measures such as publishing geological data, facilitating transport infrastructure, and reporting progress to the European Commission.

The Regulation assigns the obligation to oil and gas producers based on practical and economic considerations. These companies typically possess the relevant subsurface expertise, geological data, and technical capabilities required to develop CO₂ storage sites. They are also among the actors with the financial capacity to undertake large-scale infrastructure investments in an emerging market.

The allocation methodology, based on historical production between 2020-2023, reflects a production-based responsibility approach, which has parallels in other EU environmental policy frameworks. As highlighted in the report, stakeholders broadly recognise the logic of this approach, although views differ on aspects of its design and implementation.

The NZIA limits the obligation to the largest 95% of EU oil and gas producers, excluding smaller producers. This reflects an assessment that smaller actors may lack the financial and technical capacity to develop CO₂ storage projects, and that including them could create a disproportionate administrative burden for both regulators and companies. Focusing on larger producers simplifies implementation and concentrates the obligation on actors most capable of delivering large-scale storage capacity.

The NZIA specifies that only CO₂ injection capacity developed within EU territory, covering land, territorial waters, exclusive economic zones, and continental shelves, counts towards the obligation. This reflects the Regulation’s broader objective of supporting the development of a European CCS market and infrastructure base. While obligated entities are not required to develop storage in their country of registration, the framework encourages investment within the EU to support industrial decarbonisation. Injection capacity may also be extended to European Economic Area (EEA) countries if equivalent rules are adopted. In such cases, the overall storage target may be adjusted accordingly.

Member States play both an enabling and enforcement role.

On the enabling side, they are responsible for ensuring that regulatory frameworks, permitting systems, and administrative structures support storage development. This includes publishing geological data, facilitating infrastructure development, and establishing coordination mechanisms such as single points of contact.

On the enforcement side, Member States must introduce effective, proportionate, and dissuasive penalties for non-compliance and report regularly on progress. As highlighted in Article 23 Watch’s Annual Report 2026, implementation varies significantly across Member States, and progress on penalty regimes remains limited in many jurisdictions.

If an obligated entity fails to meet its contribution to the injection capacity target, Member States are required to enforce compliance through national penalty regimes. These penalties must be effective, proportionate, and dissuasive, and are intended to remove any economic advantage of non-compliance. Member States are required to have such regimes in place by June 2026. Obligated entities must also submit delivery plans and annual progress reports, enabling both Member States and the European Commission to monitor compliance and overall progress towards the 2030 target.

The NZIA requires that 50 MtCO₂ per year of injection capacity is developed by 2030. However, the Regulation does not fully specify what constitutes compliance in operational terms. Further clarity is forthcoming from the European Commission, as it could be understood as by end of the year 2030.

The NZIA requires that 50 MtCO₂ per year of injection capacity is developed by 2030. However, the Regulation does not fully specify how compliance is assessed in operational terms. Based on public communication from the European Commission, compliance is not currently interpreted as requiring fully operational injection capacity by 2030. Instead, it has been framed in terms of securing permitted storage capacity, supported by evidence of project advancement, such as final investment decisions (FIDs) or agreements with emitters to utilise that capacity.

This interpretation suggests that compliance may be assessed based on whether projects have reached a sufficiently advanced stage of development, rather than requiring actual CO₂ injection to be taking place by 2030. Further clarification in formal guidance is expected to be important for legal certainty.

The obligation under Article 23 of NZIA focuses on the delivery of a specified level of injection capacity by 2030, rather than an ongoing requirement to inject a fixed volume of CO₂ each year. Injection capacity refers to the infrastructure available to inject CO₂, rather than actual annual injection volumes. The Regulation does not explicitly define post-2030 obligations.

CO₂ injection capacity refers to the rate or volume of CO₂ that can be injected into underground formations each year. It is expressed in million tonnes per year and is the metric used in the NZIA target. CO₂ storage, by contrast, refers to the total available volume in geological formations that can permanently hold CO₂ over time. In short, a storage site may have significant total capacity, but injection capacity depends on the infrastructure and operations required to inject CO₂ at scale.

Permitting under the EU’s CO₂ Storage Directive ensures that storage sites are safe, well-characterised, and properly regulated. Under the Directive:

• Sites must be selected based on detailed geological assessments demonstrating a low risk of leakage
• Operators are required to monitor, report, and manage sites throughout their lifecycle
• Financial guarantees must be in place to cover long-term monitoring, closure, and any remedial measures

These requirements are designed to ensure environmental integrity and minimise risks to human health and ecosystems.