EU Considers Carbon Removal in Emissions Trading System

The European Commission is poised to propose changes to the EU Emissions Trading System (ETS) that would integrate carbon removal for the first time, aligning the scheme with the EU’s 2040 emissions target. Currently, companies operating within the ETS cannot use carbon credits to meet regulations.

The upcoming proposal will outline which carbon removal methods qualify, the volume of credits allowed, and who can purchase them. The move aims to offset residual emissions from hard-to-decarbonize industries, but faces debate over how to best implement the system.

Proposals range from direct government purchasing of carbon removal to allowing emitters to buy credits as an alternative to allowances. Concerns exist that integrating removals could enable polluters to avoid emissions cuts or prove too expensive to be effective.

The success of this initiative hinges on establishing robust certification for carbon removal technologies, like direct air capture, biomass with carbon capture, and biochar, and determining the scale of government commitment to purchasing removals. Industry experts suggest the EU will need to remove around 100 million metric tons of carbon annually by 2040 to stay on track for net zero.