The EU ETS can support permanent carbon removals by
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Remaining a strong climate tool
The EU ETS must retain its current climate ambition to strongly incentivise decarbonisation and help scale the permanent carbon removals needed for net zero
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Giving confidence to carbon removals investors
The EU must:
2. Be clear how the gap between costs and ETS price will be closed – ETS revenues must be earmarked to cover carbon removal purchases3. Provide investors with clarity on the science-based volume of carbon removals required each year to address residual emissions for hard-to-abate sectors under the ETS.
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Ramping-up removals now
5. The European Commission and national governments need to start funding the purchase of significant volumes of permanent removals now
6.The European Commission should clarify when and how corporate carbon removal claims can be substantiated, to mobilise the voluntary carbon market and incentivse near-term private funding for permanent carbon removals
7. Europe must unlock a portfolio of different carbon removal approaches via an acceleration of the CRCF certification framework and greater R&I funding.
Mainstreaming carbon removals in EU law
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Emissions Trading System
The EU should integrate permanent carbon dioxide removals into the ETS through a phased approach that builds long-term demand and revenue certainty while preserving the system’s environmental integrity. This would start with public funding and intermediary-led procurement, followed by the gradual inclusion of certified permanent removals without increasing the ETS cap. It should also be backed by separate CDR targets in EU climate law, and strong safeguards so that only high-integrity, permanent removals are eligible.
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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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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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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.
