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Statutory obligation

Carbon takeback obligations (CTBO)

The Carbon Takeback Obligation (CTBO) is a proposed mandate-led policy that would require fossil fuel producers and/or importers to permanently store a rising share of the CO2 associated with their operations .

Overview

StatusEmerging idea
CategoryStatutory obligation
Sector
Oil and gas importers/tradersOil and gas producers
Geographical ScopeInternational
RegionEurope

Description

The Carbon Takeback Obligation (CTBO) is a proposed mandate-led policy that would require fossil fuel producers and/or importers to permanently store a rising share of the CO2 associated with their operations and products, reaching 100% by around mid-century. The underlying logic is similar to Extended Producer Responsibility (EPR) schemes, which place the cost of managing a product's end-of-life impact — such as packaging waste or electronics disposal — on the producer rather than the consumer or the state. The CTBO applies the same principle to carbon: producers take the responsibility for the eventual disposal of the CO2 their product will generate.

Key Design Features

Primary Objective

To scale CO2 injection capacity in the EU to 50 MtCO₂/yr by 2030, placing a responsibility on oil and gas producers to develop geological storage infrastructure.

Obligated Entity

Domestic oil and gas producers.

Storage Method

Geological CO2 storage (sub-surface injection into saline aquifers or depleted hydrocarbon fields).

Target & Timeline

50 MtCO2/yr aggregate injection capacity by 2030.

Compliance Criteria

Obligated entities need to secure a CO2 storage permit covering the relevant injection capacity and demonstrate that the capacity is available to the market, for example through a storage service agreement with at least one emitter. Obligated entities may fulfil requirements independently or through collaboration with other obligated entities or third-party storage operators.

Enforcement

Member states must establish penalties for non-compliance by 30 June 2026 and support permitting processes administratively.

Current Developments

The concept of a CTBO continues to gain traction as an alternative to carbon pricing. The idea has a longer history in UK policy debate than in other countries, but it has yet to be adopted into law. It was proposed as an amendment to the UK's 2015 Energy Bill, where it was rejected due to opposition from lobby groups, and resurfaced as an amendment in the 2023 Energy Act, which was withdrawn without a vote. The underlying principle was reflected in Chris Skidmore's independent 2023 'Mission Zero' net zero review. The idea also gained traction in the EU: the Dutch government reviewed the CTBO in 2023, and the EU's post-COP30 submission to the Brazilian COP Presidency's roadmap process identified extended producer responsibility frameworks as a tool to be considered for transitioning away from fossil fuels.

Looking Forward

The CTBO remains in the research and consideration phase rather than active policy development. In recent years, a growing number of civil society organisations, industry groups, and academic institutions have come out in favour of the policy, but a binding government commitment remains unlikely in the near term. The CTBO is likely to remain a reference point for potential future policy introduction and industry discourse, rather than one poised for immediate adoption.

Policy Instruments:
Carbon takeback obligation (CTBO)Extended producer responsibility (EPR)
Topics:
CCS infrastructure and transportCertificate tradingExtended producer responsibilityLicensing frameworksStorage permanence and durabilityStorage units

Related Resources

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Annual report: The first year of Article 23

This report presents the first annual independent assessment of Article 23 of the EU's Net Zero Industry Act.

Markets and Mandates: Policy Scenarios for UK CCS Deployment & Exploring the Role of a Carbon Takeback Obligation

This report assesses long-term UK policy options for accelerating carbon capture and storage (CCS) investment.