FAQ: ETS revision & Carbon Dioxide Removal Integration

Integrating high-quality permanent carbon dioxide removals (CDR) into the EU ETS is a strategic opportunity to strengthen European competitiveness, drive innovation, and provide industry with a scalable pathway to hard-to-abate sectors’ address residual emissions.  

What is carbon dioxide removal? 

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Carbon dioxide removal, often referred to as CDR, is the removal of carbon dioxide (CO₂) from the atmosphere and its long-term storage. As hard-to-abate sectors continue their decarbonisation journey, permanent carbon removals are expected to play an important role in addressing residual emissions that remain after all feasible emissions reductions have been achieved. 

CDR methods can vary between temporarily storing CO2 for several decades (e.g. reforestation / afforestation) to permanently storing CO2 for centuries to millennia (e.g. biochar carbon removal, Direct Air Carbon Capture and Storage – DACCS, Biogenic Carbon Capture and Storage – BioCCS, Enhanced Rock Weathering – ERW, marine CDR technologies). 

What is the role of carbon dioxide removals in the EU and global climate targets and goals? 

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CDR is an essential complement to emissions reductions. The EU's climate neutrality objective by 2050 and global net-zero pathways rely on both deep decarbonisation and the removal of residual emissions from hard-to-abate sectors, such as cement, aviation, shipping, chemicals and steel, that cannot be eliminated through existing technologies. 

The International Panel on Climate Change (IPCC) has also stated that to be in line with the Paris Agreement and limit global temperatures to 1.5 degrees celcius, we will need up to 10 gigatonnes of CDR globally a year by 2050. In Europe, the 2040 Climate Target impact assessment foresees 75 Mt CO2 a year of industrial CDR by 2040 and 114 Mt CO2 by 2050. 

How can carbon dioxide removal contribute to EU competitiveness? 

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Carbon dioxide removal represents a significant economic opportunity for Europe. By 2050, the sector could generate between €110 billion and €220 billion in economic value across the EU-27 and support up to 670,000 jobs. Europe is already well positioned to capture this opportunity. The region is home to approximately 48% of all permanent carbon dioxide removal credit projects globally, giving the EU a strong first-mover advantage in the development of CDR technologies.  

If supported by consistent policy frameworks and investment signals, the EU could further consolidate its leadership, attract private capital, and accelerate deployment across a range of approaches including direct air capture, bioenergy with carbon capture and storage, and durable nature-based solutions. 

Why should permanent CDR be integrated into the EU ETS? 

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Europe is at a juncture for both its climate goals and industrial future. Carbon removal is not only a climate necessity; it is also an emerging industrial value chain.  

The EU ETS has proven to be one of the EU’s most effective tools for driving cost-efficient decarbonisation. As policymakers consider the design of the post-2030 ETS, there is a clear strategic opportunity: to integrate high-quality, permanent carbon removals in a way that both accelerates climate action and provides European industry with a credible, scalable pathway to manage residual emissions. 

Done right, this would not only help scale the CDR sector, but also enable European industries to incorporate carbon removals into their long-term business models – supporting competitiveness, investment certainty, and the transition to net zero. 

Today, permanent carbon dioxide removals typically cost more than EU ETS allowances. Costs vary by technology and project type, but early-stage deployment remains significantly more expensive than emitting carbon under the current ETS carbon price. Publicly reported transactions in the voluntary carbon market illustrate the current gap: in 2025, average prices for biochar carbon removal credits were around $136/tCO₂ (around €119/tCO₂), BECCS credits around $364/tCO₂ (around €320/tCO₂), and DACCS credits around $593/tCO₂ (around €522/tCO₂).

When it comes to the production costs of these novel CDR technologies, a 2025 European Commission study estimates current costs of approximately €83–251/tCO₂ for biochar carbon removal, €172–314/tCO₂ for BECCS, and €462–1,256/tCO₂ for DACCS. As technologies mature and deployment scales, these costs are projected to fall by 2030 to €66–215/tCO₂ for biochar, €167–261/tCO₂ for BECCS, and €288–567/tCO₂ for DACCS. 

While permanent CDR currently costs more than EU ETS allowances, the gap is expected to narrow over time. Recent modelling suggests that BECCS could become cost-competitive with ETS prices during the 2030s, while DACCS may approach parity closer to 2040. However, there is no single agreed crossover date, and policy and financial support will remain necessary to bridge the price gap and scale deployment. 

How much do permanent carbon dioxide removals cost and how will the EU address the price gap?

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What is the Carbon Removal & Carbon Farming Certification Framework and what is its link with the EU ETS? 

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The Carbon Removal Certification Framework (CRCF) is the EU's framework for certifying carbon removals and carbon farming activities. It establishes common rules for measuring, monitoring, reporting, and verifying carbon removal activities and aims to ensure environmental integrity, transparency, and trust. 

The CRCF creates an important foundation for future policy development because it helps define what constitutes a high-quality and certified carbon removal within the EU. It sets a definition of permanent CDR for 200+ years. The first round of CRCF methodologies were adopted in December 2025 and includes DACCS, BECCS and biochar carbon removal.

How do carbon removals fit into the broader EU climate policy framework? 

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Carbon removals are playing an increasingly important role in EU climate policy. In addition to the Carbon Removal & Carbon Farming Certification Framework (CRCF), the amended European Climate Law, adopted in 2026, includes the first explicit recognition of permanent CDR in EU climate legislation and supports their future integration into the EU ETS. The European Commission is also establishing an EU Buyers Club to aggregate voluntary private-sector demand for CRCF-certified removals and stimulate investment, while assessing options for a future EU purchase programme to support the deployment of permanent carbon removals. At Member State level, several countries have developed national CDR strategies, pilot programmes, and dedicated funding schemes to support carbon removal deployment and infrastructure development. 

While these initiatives provide important foundations, additional measures will be needed to scale the CDR sector to the level required for future ETS integration, such as early public procurement, targeted use of ETS revenues, clear rules for corporate climate claims, and increased support through existing EU funding instruments for research, innovation, and commercial deployment. This should be complemented by the establishment of dedicated permanent carbon removal sub-targets in the upcoming legislation on national targets and flexibilities, in order to provide a clear and predictable demand signal for the CDR sector. Together, these measures can help establish the investment certainty and market demand needed to scale carbon removals ahead of future compliance demand. 

FAQ: ETS & Carbon Removals

Mainstreaming carbon removals in EU law

  • Emissions Trading System

    The Negative Emissions Platform (NEP) calls for the integration of permanent carbon dioxide removals (CDR) into the EU Emissions Trading System (ETS) through a phased approach. This would support the EU’s path to net-zero by creating long-term demand and revenue certainty for the CDR sector, while maintaining the environmental integrity of the ETS. NEP proposes starting with public funding and intermediary-led procurement, followed by gradual integration of certified permanent CDRs without increasing the ETS cap.

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  • EU Climate Law

    The EU Climate Law should be strengthened to support both climate neutrality by 2050 and the growth of a competitive permanent carbon dioxide removal industry. This means setting a 90% net emissions reduction target for 2040, alongside separate targets for gross emissions reductions, permanent CDR and LULUCF, backed by a broader support package beyond ETS integration. It should also include strong safeguards for any international credits and support a portfolio of permanent CDR methods to ensure consistency across EU policies.

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  • Green Claims Directive

    The Green Claims Directive proposed by the European Commission is crucial for combating greenwashing and promoting investment in permanent carbon removal. This directive would require companies to substantiate and communicate their environmental claims, including guidelines on using carbon credits.

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  • Making a short-term EU purchasing programme work for CDR

    Making a short-term EU purchasing programme work for CDR

    The EU should scale permanent carbon dioxide removal by 2030 through near-term support, including an EU Buyers’ Club, results-based payments for verified removals, and a pathway from a €1 billion pilot in 2026 to longer-term support through the Industrial Decarbonisation Bank. It should also make CDR visible in key EU funding instruments, support large-scale R&D through FP10, and secure long-term funding to strengthen competitiveness, jobs and climate goals.

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  • CDR in the Multiannual Financial Budget

    CDR in the Multiannual Financial Budget

    The EU budget will help decide which net-zero technologies scale in Europe, but carbon dioxide removal is still not clearly included in funding priorities. To protect competitiveness, jobs and climate goals, the EU should make CDR eligible in key funding instruments, support large-scale R&D through FP10, and secure long-term funding as negotiations move forward.

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