The path for permanent carbon removals in the EU must now be set

While rapid and significant reductions in emissions must be the cornerstone of climate action, permanent carbon removals will have a role to play to achieve zero-net greenhouse gas emissions by 2050, argue Dr. Felix Schenuit and Martin Birk Rasmussen.

Dr. Felix Schenuit is research associate at the German Institute for International and Security Affairs (SWP). Martin Birk Rasmussen is international climate analyst at CONCITO, Denmark’s leading climate think tank.

As the clock ticks down to the European elections, this week’s carbon capture, utilisation and storage (CCUS) Forum is the next opportunity to discuss the future role of carbon management in the EU.

While rapid and deep emission reductions must be the cornerstone of European climate action, permanent carbon removals will have a role to play to counterbalance those limited emissions that cannot be otherwise reduced to achieve net-zero greenhouse gas emissions in 2050 and net-negative emissions thereafter.

The upcoming Communications on the 2040 climate target and the industrial carbon management strategy set for early 2024 mark milestones that will influence how the role and regulation of permanent carbon removals will evolve in the coming decades.

As Ursula von der Leyen signaled in her State of the Union, the interfaces between industrial and climate policy will receive even more attention – and carbon management will play a role to bring these different policy spaces together. Now is the moment to delve into the intricacies of carbon management, elucidating the role of permanent carbon removals in shaping the EU’s climate future.

The role of permanent carbon removals in the EU

The trio of carbon capture and storage (CCS), carbon capture and utilisation (CCU), and carbon dioxide removal (CDR) methods have emerged on the EU climate agenda.

Yet, the umbrella term “carbon management” summarising these three should not be misunderstood to suggest that their upscaling can be tackled in the same way. Rather, it necessitates a nuanced approach, tailoring policy interventions to address the distinct functions and risks involved in each component.

Notably, permanent carbon removals, such as bioenergy with carbon capture and storage (BECCS) and direct air carbon capture and storage (DACCS), currently sit outside the purview of the EU’s climate policy architecture. The establishment of a regulatory framework for the certification of carbon removals (and soil emissions reductions) is a first step, but integration into the core pillars of EU climate policy, such as potentially the EU Emissions Trading System (EU ETS), remains a task for the upcoming European Commission.

The integration of BECCS and DACCS is not merely a technicality but the initial steps in policy making will set the tone for the role the EU sees for permanent carbon removals in EU climate policy and how it addresses concerns of risks linked to the integration. A two-tiered strategy to mitigate risks and barriers could be envisioned.

Towards a two-tiered strategy

One tier of the strategy involves identifying options for immediate action.

The EU must further develop a proactive stance on innovation policy. Initiatives like the Innovation Fund and other EU funds can play a pivotal role in fostering technological advancements. Ensuring financing instruments and other support for innovative technologies are critical to harvest the learning curves of early efforts. Additional funding would be needed moving forward (especially for DACCS), while avoiding weakening the support for other technologies critical to provide deep and timely emission reductions.

Furthermore, supporting an adequate and coordinated development of EU-wide infrastructure for transport and storage of CO2 is pivotal. This infrastructure will be necessary not only for addressing the limited amount of emissions in hard-to-abate sectors, but also for facilitating large-scale carbon removals in the long term. Ensuring storage and transport networks, e.g. through the Net-Zero Industry Act, would lay the groundwork for a comprehensive and scalable approach to BECCS and DACCS.

In parallel, a crucial risk must be considered and mitigated. There are increasing and competing demands for using biomass in the EU, and the use of biomass could more than double towards 2050, if regulation in the EU remains unchanged, putting pressure on carbon stocks, biodiversity, and food security both inside and outside the EU.

Prioritisation and stronger regulation of biomass use is needed in parallel with incentivising the deployment of no-regret BECCS applications to avoid lock-in of high biomass use for purposes that could be served by other means e.g. electrification.

Structural integration into EU’s climate policy

As we pursue immediate actions, we must also initiate another tier in the strategy to prepare for structural integration of permanent carbon removals into the EU’s climate policy.

A careful consideration of target design is needed to ensure that carbon removal upscaling does not inadvertently obstruct the efforts needed to make deep and rapid cuts to near zero emissions.

One potential avenue could be to establish clear and differentiated targets for emission reductions and carbon removals. This consideration needs to find a balance between integrating carbon removals in the headline targets while making sure that the ambition of EU climate policy is not undermined.

Furthermore, we propose an exploration of a conditional integration of BECCS and DACCS into the EU ETS taking into account the risks involved. Aiming for EU ETS integration, while mitigating said risks, could align the broader goal of fostering an ambitious and robust approach to carbon removals with managing the lack of incentives to establish BECCS and DACCS today. Many options are in play, e.g. a Carbon Central Bank, and it is critical that the final policy design focuses on ensuring the environmental integrity of the system.

In conclusion, a two-tiered strategy that combines immediate actions with visionary structural reforms is essential for effective CDR policy as a building block of climate policy in the EU, standing on the shoulder of deep emission reductions.

By incentivising innovation and mitigating the risks of removal technologies while also preparing for future integration, CDR policy can contribute to sustainable and impactful response to the challenges of climate change.