We’re in the race to net zero and we need to reduce our emissions to the max and remove the rest. What’s promising is that more and more governments and companies are embedding carbon dioxide removal (CDR) into their climate strategies.
So what’s happening on the regulatory front? Lots! Here’s an overview of the current and future EU policies on CDR and how they can be used to implement carbon removal in your business strategy.
Many governments and businesses are setting sustainability targets and taking drastic emission reduction measures. But we need to do even more, and we need to speed up the pace. We must reduce as much as possible, and tackle the ‘rest’ – hard-to-abate emissions – by capturing and net removing the CO₂ that would otherwise go into the atmosphere.
That’s where carbon dioxide removal (CDR) comes in
Scientists project that we will have to remove around 10 gigatons of CO₂ per year to reach our climate targets by 2050. We are currently removing a mere fraction of that. Bridging this gap calls for a systemic approach comprising technology, policy and investment to create a trusted and effective carbon removal market at high speed and scale.
Big movements in CDR supply, demand and policy
The good news is that a variety of CDR solutions that can help solve this global challenge have already been developed. Next to the fast-growing supply side, we also see increasing market demand and investment – though also here we must multiply speed and scope.
Thirdly, there’s movement on the policy side. The compliance market is developing fast, both on national and EU level, aimed to regulate CO₂ emissions of companies and countries, and the measures taken to counteract them. To establish widespread trust and transparency in this nascent market, regulatory frameworks are being developed.
CO₂ storage plant at a concrete recycling site in Berlin, Germany.
Navigating the evolving landscape of EU climate policy
With so much happening, how to stay up to speed? We’ve got you! The following provides an overview of key European climate policies and their developments, and how they can be used to implement carbon removal in your business strategies.
Policy: 2040 targets
Type: Communication
Status: Published by the EU Commission
Description: The European Commission's 2040 climate target communication, part of the European Green Deal, aims for a 90% net reduction in greenhouse gas emissions compared to 1990 levels. In 2040, the EU’s residual emissions should be less than 850 MtCO₂, and this target can be achieved with the help of a maximum of 400 MtCO₂ of carbon removals through industrial and land-based solutions. It’s connected to the ICMS.
Relevance: An explicit and timely target helps corporations planning their long-term sustainability investments and to identify how much CDR they need.
Policy: CRCF
Type: Regulation
Status: Entry into force expected in December 2024 – implementing rules and methodologies under discussion
Description: The European Commission's Carbon Removal Certifica-tion Framework (CRCF) is a voluntary regulatory system aimed at certifying permanent carbon removal, carbon farming, and carbon storage in products. The CRCF sets quality criteria to ensure the credibility of carbon removals, with plans to develop methodologies and recognize certification schemes, leading to the establishment of a common registry by 2028.
Relevance: The CRCF aims at facilitating corporate compliance and includes robust monitoring requirements, ensuring impactful removals activities.
Policy: EU ETS Directive
Type: Directive
Status: In force – planned adoption of implementing act on rules for monitoring and reporting emissions
Description: The EU Emissions Trading System is a “cap-and-trade”, market-based mechanism that sets a cap on greenhouse gas emissions from specific activities, converting this cap into tradable emission allowances. The ETS created a compliance market for CO₂ emissions originating from energy and heat generation, energy-intensive industries (e.g. steel, cement), aviation and maritime transport. Currently, CDR credits cannot be used within the ETS. However, the European Commission will assess by 2026 whether durable removals, as defined in the CRCF, could be subject to emissions trading starting from 2030.
Relevance: Integrating permanent removals in the ETS will dramatically boost demand for CDR. Early purchases of removal credits can help companies subject to the ETS obtain better pricing and supply conditions in the future.
Policy: GCD
Type: Directive
Status: Proposed – EU Council adopted its general approach
Description: The Green Claims Directive is designed to combat greenwashing by setting stringent requirements for companies’ climate-related claims, such as carbon neutrality claims based on avoidance, carbon removal and other offsetting credits.
Relevance: Permanent CDR credits can be used to substantiate corporate claims and boost credibility.
Policy: ICMS
Type: Communication
Status: Published by the EU Commission
Description: The European Commission's Industrial Carbon Management Strategy (ICMS) details the role of industrial carbon removal technologies like BECCS, DACCS, and others in achieving the EU's decarbonization goals. It also outlines measures to enhance the methods’ development and scalability.
Relevance: The ICMS provides a framework to financially support the deployment of BECCS and DACCS in the EU.
Policy: NZIA
Type: Regulation
Status: In force
Description: The Net Zero Industry Act is the EU’s response to the Inflation Reduction Act in the US, aiming at setting the regulatory conditions to scale up net zero technologies. The NZIA does not explicitly mention CDR, but includes references to carbon capture and storage/utilization (CCS/CCU), including an annual EU CO₂ injection capacity goal of 50 million tons.
Relevance: A clear injection capacity target and an explicit support of CCS and CCU infrastructures ensure that the relevant infrastructures for the deployment of CDR are already available when needed the most.
Policy: RED
Type: Directive
Status: In force
Description: The Renewable Energy Directive represents the European Union’s framework for the development of renewable energy sources (RES) capacity. Other than setting binding targets of RES, it regulates the use of biomass and biofuels for energy generation, directly influencing the development of biomass-based CDR methods like BECCS and BiCRS. The directive has been reviewed four times since it was first introduced in 2009.
Relevance: RED offers a clear framework to identify sustainable biomass use, ensuring the highest standards for CDR credits based on capturing and storing biogenic CO₂.
Conclusion
Although a lot of action has been taken and we’ve made some great progress, some challenges remain:
- Timelines are stretching beyond initial expectations, highlighting the need for clearer roadmaps.
- The use of CRCF units beyond the voluntary carbon market raises questions about the EU's ability to meet its ambitious goals.
- For robust methodologies, it’s critical to include input from those doing CDR every day, yet industry involvement has been minimal.
Is your company at the forefront of climate action? Or should be? Then let's join forces to remove CO₂ together – today. As a highly durable and scalable method, mineralization is already a reality in EU’s carbon removal efforts. At neustark are proud to be making a growing impact with our solution.
Contact
Lisa Braune
Head of Carbon Removal