As home to 48% of all permanent carbon dioxide removal credit projects, Europe has established a clear first-mover advantage in the development of carbon removal technologies and methodologies. However, this advantage is not self-sustaining. Moreover, the voluntary carbon market, which currently provides a key source of early-stage demand, is characterised by a limited and relatively concentrated buyer base, making it vulnerable to shifts in corporate purchasing strategies and broader macroeconomic conditions.

Carbon removal deployment depends on long-term, bankable demand. Without a credible and durable demand signal, project development and associated engineering and storage expertise risk shifting to jurisdictions that provide clearer revenue certainty.

The period leading up to ETS integration (now until 2031) represents a critical window for the EU to shape the global market for permanent carbon removals. Decisions taken now will determine whether the sector can attract sufficient investment, scale early deployment, and drive down costs - or remain fragmented and underdeveloped. Acting early would not only accelerate innovation and cost reduction, but also help secure the EU’s strategic leadership in carbon removals at a time when global competition is intensifying.

Despite its importance, permanent carbon dioxide removal has so far received only around €0.3 billion - roughly 0.1% of total EU funding - and remains largely absent from the EU’s main funding programmes. This underinvestment risks slowing the emergence of a sector that will be essential for achieving long-term climate neutrality and balancing residual emissions.

The EU therefore has a clear interest in aligning its existing public funding tools (including Innovation Fund, Industrial Decarbonisation Bank) with the needs of this nascent industry. In parallel, a stronger policy framework is needed to increase certainty and confidence in the voluntary carbon market, including through the newly established EU Buyers’ Club for carbon removals and the introduction of clear guidance on carbon removal claims. Together, these measures would ensure that the EU not only supports the growth of permanent carbon removals, but also shapes the rules, markets, and standards that will define it globally.