Industrial Decarbonisation Accelerator Act

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Position paper · July 2025

Executive summary

The Industrial Decarbonisation Accelerator Act (IDAA) offers a vital opportunity for the EU to scale up permanent carbon dioxide removal (CDR), a critical tool for energy-intensive industries to reach net-zero and, ultimately, net-negative emissions.

To support this goal, we propose the following policy actions under the IDAA:

  1. Streamline Permitting: Simplify and harmonise permitting processes for permanent CDR projects through fast-track approvals, an EU-wide framework, and a one-stop-shop digital platform.

  2. Integrate CDR into the carbon intensity labels: The Carbon Intensity Label should reward companies investing in permanent CDR with enhanced scores and enable access to subsidised CRCF-aligned credits, driving both industrial decarbonisation and CDR market growth.

  3. Encourage Interim CDR Milestones: Companies should set voluntary 3–5 year milestones for permanent CDR procurement or deployment. These milestones could become mandatory over time and be incentivised through subsidies from the Industrial Decarbonisation Bank.

  4. Establish a CDR Readiness Index: Create a benchmark tool to assess industry and sectoral progress on permanent CDR. This Index would promote accountability and drive competition across sectors.

Together, these measures would accelerate industrial decarbonisation, boost investment in CDR, and ensure that the EU remains a global leader in climate innovation.

Intro

The EU Industrial Decarbonisation Accelerator Act presents a significant opportunity for the EU to support the scale-up of permanent carbon dioxide removal (CDR) technologies and support energy-intensive industries on the path to net-zero. In addition to steep emissions reductions, permanent CDR is critical to industries and the EU’s climate targets. Many energy-intensive industries will depend on permanent CDR to accelerate their decarbonisation efforts; to compensate emissions on the road to net-zero; and neutralise their residual emissions.

To achieve net-zero and move towards net-negative emissions, the EU must rapidly scale up permanent CDR. IDAA provides a crucial platform to drive investment, innovation, and regulatory support for these technologies, ensuring that energy-intensive industries have the tools they need for a sustainable future.

What is CDR and how does it contribute to industrial decarbonisation

CDR encompasses a family of approaches which removes CO₂ from the atmosphere and durably stores it in geological, terrestrial, or ocean reservoirs, or in products. Beyond its critical role in achieving the EU’s climate targets, the permanent CDR sector presents a major economic opportunity. The sector is projected to grow to €220 billion annually by 2050, creating 670,000 high-quality jobs and playing a key role in strengthening the EU’s global competitiveness (McKinsey, 2023; BCG & DVNE, 2024).

To meet global climate targets, we must remove up to 10 gigatonnes of CO₂ per year by 2050. Currently, we’re removing just 2 gigatonnes, and less than 1% of that comes from permanent CDR (IPCC, 2023; Geden et al., 2024). For energy-intensive industries to reach net-zero, and for the EU to ultimately achieve net-negative emissions, scaling up permanent CDR must start now.

The Industrial Carbon Management Strategy and the Clean Industrial Deal both highlight the need to build a strong business case for permanent CDR. The IDAA presents a key opportunity to do just that. By incentivising heavy-emitting industries to integrate permanent CDR into their decarbonisation strategies; showcasing leaders in this space; and streamlining permitting processes, the IDAA can accelerate industrial adoption of these critical solutions.

Policy recommendations for scaling permanent CDR under the Industrial Decarbonisation Accelerator Act

1. Streamline permitting

Despite being essential to the EU’s net-zero climate objectives, permanent CDR was excluded from the list of net-zero technologies under the Net-Zero Industry Act (NZIA), a missed opportunity. As a result, the CDR sector continues to face lengthy and complex permitting processes, making it difficult to launch first-of-a-kind projects and scale up deployment.

In addition, the absence of harmonised permitting rules across Member States poses a major barrier, particularly for CDR supply chains that span multiple jurisdictions. This regulatory fragmentation limits investment and slows the development of cross-border CDR infrastructure.

Examples of permitting challenges

CDR technologies that rely on geological storage (e.g. DACCS & BioCCS) have faced significant challenges in obtaining permits for CO₂ storage sites, including onshore saline aquifers in Europe.

Similarly, in some Member States, the deployment of ex situ mineralisation plants that store biogenic CO₂ in construction and demolition waste (such as concrete) has been hindered by administrative and bureaucratic barriers. Permitting procedures have been delayed due to the lack of regulatory recognition of certain storage components by the relevant authorities.

To accelerate deployment, the IDAA should include policies to simplify and expedite permitting for permanent CDR projects. This could include:

  • Fast-Track approvals: Establish priority permitting pathways for permanent CDR projects

  • Standardised regulatory framework: Develop an EU-wide permitting framework with clear, consistent guidelines for CDR technologies

  • One-Stop-Shop for CDR Permits: Create a digital platform where companies can apply for and track all necessary permits in one place.

2. Integrate CDR into the Carbon Intensity Label

NEP welcomes the proposal to introduce a Carbon Intensity Label and calls on the European Commission to integrate permanent CDR credits into the label framework. Doing so would not only create a robust market signal to scale up high-quality, permanent CDR, but also provide a pragmatic decarbonisation pathway for hard-to-abate sectors.

The Carbon Intensity Label can also support the scale-up of CDR in several ways:

  • Benchmarking and recognition: Companies that go beyond emissions reductions and invest in permanent CDR should be recognised with enhanced label categories or scores. This would set new benchmarks for climate ambition and incentivise leadership within and across sectors.

  • Access to subsidised CRCF credits: To further incentivise uptake of permanent CDR, the Commission should offer access to subsidised, permanent CRCF-aligned credits for industrial sectors, such as steel and cement producers, that demonstrate verifiable emissions reductions and transparent carbon accounting under the label. This would not only provide a practical use case for the CRCF units which will be operational from 2026, but fundamentally allow hard-to-abate sectors to neutralise residual emissions and improve their carbon intensity rating, whilst also supporting the development of a high-integrity CDR market.

3. Encourage interim milestones for permanent CDR

To facilitate energy-intensive industries to decarbonise and begin building their CDR portfolio, which they will need to be net-zero, companies and sectors should establish interim permanent CDR milestones or targets on a 3–5-year basis on the way to net-zero. This could cover the purchase of permanent CDR credits and/or the conversion or repurposing of existing assets for CDR.

Given the current push to reduce bureaucracy, NEP recommends that these interim milestones remain voluntary during an initial phase, with the aim of making them mandatory thereafter. To encourage early adopters, first movers could be rewarded, for example, through subsidised CRCF permanent CDR units and having a leadership board of the top 10 companies who are engaged with permanent CDR per sector. This could be based on the CDR Readiness Index (see below).

Subsidies for CDR & the Industrial Decarbonisation Bank

Funding for this subsidy should come from the Industrial Decarbonisation Bank (IDB) proposed in the Clean Industrial Deal, the aim of which is to invest in the innovation and technologies that will shape the EU’s economy. NEP calls on the European Commission to earmark 5% of the IDB for permanent CDR.

To maximise policy coherence and economic impact, IDB support for industrial efforts to address residual emissions could be aligned with forthcoming public or public-private purchasing programmes for carbon removal credits, currently under evaluation by DG CLIMA. The IDB could either directly finance the procurement of high-quality removal credits or match private sector contributions, thereby unlocking greater volumes of private investment.

In addition to interim targets, the latter approach could be linked to the voluntary carbon intensity labels also being introduced under the IDAA. Access to subsidised CDR could be tied to proven emissions reductions and transparent reporting under the label, e.g. steel or cement producers who improve their carbon intensity could gain preferential CDR access, helping them neutralise residual emissions and further improve their label rating.

Utilising the IDAA to subsidise permanent carbon removal credits can help support hard-to-abate sectors, many of which are already burdened by high energy costs, in their transition while catalysing the early growth of this necessary clean-tech sector.

Incorporating interim milestones for permanent CDR into the IDAA would align with global best practices, including the SBTi’s upcoming revision of the Net-Zero Standard.

This approach would not only stimulate early investment in permanent CDR but also actively engage industries in scaling supply, ensuring that these solutions are available when needed.

Interaction with ETS

The European Commission is currently assessing whether and how permanent CDR can be integrated into the EU’s cap-and-trade system, the Emissions Trading Scheme. DG CLIMA is expected to publish a report and potentially a legislative proposal by July 2026.

This presents a unique opportunity to scale high-integrity permanent CDR, while also providing a credible pathway for hard-to-abate sectors, many of which are already covered under the ETS, to address their residual emissions on the road to net zero.

In this context, it is essential to consider how voluntary interim targets under the IDAA could align with and reinforce ETS compliance. Rather than seeing voluntary and compliance uses of CDR as inherently in tension, there is an opportunity to design a system where CDR credits used for ETS compliance also contribute to voluntary net-zero progress, provided they are deployed in line with the ETS cap and associated rules.

This could act as a further incentive for hard-to-abate sectors to adopt interim CDR targets. By enabling alignment between voluntary interim targets and regulatory compliance, the integration of permanent CDR into the ETS could unlock critical investment, build trust in the removals ecosystem, and accelerate climate ambition across hard-to-abate sectors.

4. Introduce a permanent CDR Readiness Index

To further accelerate the adoption of permanent CDR, the EU should establish a Permanent CDR Readiness Index. This benchmarking tool would assess and track industries’ progress in integrating permanent CDR solutions, fostering transparency, accountability, and competition among sectors.

The CDR Readiness Index would evaluate industries based on a set of key indicators:

  1. Permanent CDR Commitments & Implementation Plans: including whether industries have a strategy for permanent CDR and whether industries have set and are on track to achieve interim milestones

  2. Investments & procurement of permanent CDR: how much funding has been allocated to permanent CDR projects (e.g., direct investments, offtake agreements)

  3. Technology deployment and innovation: whether industries are developing CDR solutions themselves or formed partnerships with CDR developers

  4. Transparency & reporting: companies should be encouraged to report on their purchase of permanent CDR as part of the revision of the European Sustainability Reporting Standards (ESRS) of the Corporate Sustainability Reporting Directive. Initially, this disclosure could be introduced as a voluntary reporting requirement, allowing early movers to demonstrate leadership and build best practices. Over time, this should evolve into a mandatory element of the ESRS framework, ensuring consistent, transparent reporting across sectors.

The European Commission or an independent climate body (e.g., the European Environment Agency) could oversee the Index. The Index could be updated annually, providing a ranking of industries based on their efforts to integrate permanent removals.

About NEP

The Negative Emissions Platform (NEP) is a Brussels-based partnership of European and international organisations focused on carbon removals. Our members are primarily technology companies, but also include project developers, investors, carbon marketplaces, and buyers of carbon removals. We provide a forum in which diverse like-minded organisations actively collaborate to improve political and public recognition of carbon removals.