Executive Summary

As the European Union moves towards its legally binding 2050 climate neutrality target, Carbon Dioxide Removal (CDR) has a limited yet essential role to play in reaching these obligations. CDR will be needed, broadly sequentially, to accelerate net emission reductions by balancing residual emissions and to enable net-negative emissions. Achieving climate neutrality will require robust systems and frameworks to ensure CDR contributes effectively and does not act as a substitute for necessary emissions cuts. CDR should not lower the incentive for industries to reduce their emissions. Nevertheless, additional efforts need to be pursued to enable the development of CDR such that it can fulfil the role it is expected to play. Given the long lead times for developing reliable legal and physical infrastructure at the scales needed, due consideration of these issues is a must.  

Meanwhile, the EU is preparing to review its carbon market, the EU Emissions Trading System (EU ETS), with several potential changes including the potential integration of CDR into the system, with an impact assessment and, if relevant, a legislative proposal from the European Commission expected by July 2026. In light of this review, we recommend to the Commission to explore an indirect interaction of CDR with the EU ETS. This pragmatic and effective approach would leverage the climate benefits of CDR without prematurely fully integrating removals into the ETS, because this would be deeply complex and could significantly undermine the functioning of the EU’s primary decarbonisation framework. It might also overlook critical quantification issues when it comes to generating CDR units, which could overestimate the climate effect of integrating carbon removals into the EU ETS and lead to a climate target shortfall. 

This document stresses the urgent need for strong Monitoring, Reporting and Verification (MRV) and accounting systems as a prerequisite to ensure the environmental integrity of the interaction between CDR and the EU ETS, or any other system that may use CDR to counterbalance emissions.  

Any interaction of CDR with the EU ETS should follow a phased approach with new types of removal only allowed as they become adequately demonstrated with enough understanding for realistic and robust MRV.   

Key guiding principles for successfully designing a role for CDR in the EU’s climate policy architecture, that addresses current technical, accounting and policy challenges, include:  

• accounting for the timing and equivalent climate impact of emission reductions versus removals,  

• covering the full scope of emissions,  

• ensuring additionality for removal activities that are included,  

• excluding projects with negative environmental or social impacts, 

• replacing the current zero-emissions-rating assumption for biomass,  

• and addressing other accounting inconsistencies. 

These improvements are necessary for CDR to reliably contribute to reaching net zero, irrespective of whether CDR is included in the EU ETS or not.  

Read more below

• Report (pdf)