By Codie Rossi and Martin Birk Rasmussen

The debate on the EU’s post-2030 climate targets and policies is heating up again. The Climate Commissioner is currently exploring different options – some worse than others – for the design of the upcoming 2040 climate target. One of the options for the bloc’s policymakers to decide on is whether and how permanent carbon removals should be covered by the EU’s climate policy.

Permanent carbon removals are technologies that remove CO₂ from the atmosphere and store them permanently. These carbon removals are necessary as a complement to deep and rapid emissions reductions, both to achieve climate neutrality and, eventually, net-negative emissions, where we remove more greenhouse gases from the atmosphere than we emit.

A new public consultation on the 2026 revision of the EU ETS confirms that potentially integrating carbon removals into the system is on top of the agenda. In our view, there is a need to broaden the carbon removal debate beyond the EU ETS, which is not a silver bullet solution to scaling up permanent carbon removals.

That said, the discussions are moving fast. Many central stakeholders, including the European Scientific Advisory Board on Climate Change (ESABCC), are now supporting gradually integrating permanent carbon removals into the EU ETS. If this is to be the case, we need to ensure it is done in a way that works best for the climate by discussing and analyzing specific design features and safeguards for the different policy options on the table.

Integration into the EU ETS is not without risks

In a recent report, we urge policymakers to carefully balance trade-offs between environmental integrity, cost-effectiveness, and fiscal sustainability if permanent carbon removals are integrated into the EU ETS as a way to recognize and incentives their climate contributions.

In this balancing act, we should not compromise the system’s core function in delivering a strong and credible incentive for emissions reductions. Nor should we risk an unsustainable use of biomass, negatively impacting the already challenged carbon removals in the land sector. As we see it, the risks are not impossible to mitigate in a very careful and gradual integration, but serious considerations need to be applied to ensure the environmental integrity of the system.

For one, safeguards would be needed from the beginning, such as maintaining the gross emissions cap to prevent abatement deterrence and applying supply controls to manage the risks of unsustainable biomass use and potential fiscal impacts. Secondly, setting a high bar for the permanence of carbon removals would also be key to ensuring the integrity of the whole system.

The need for a middleman?

Some stakeholders, including the ESABCC, recommend delegating some of these functions to an ‘intermediary institution’, which should oversee the supply and demand of carbon removals into the EU ETS.

If an institution or agency is proposed to solve the complexities associated with integration, an important step would be to lay out a clear and rule-based mandate for that entity. This mandate should include rules on the acquisition of a portfolio of permanent carbon removals and explicitly address the aforementioned risks of abatement deterrence and unsustainable use of biomass. Furthermore, the political feasibility of delegating different functions to the institution remains to be seen.

Many ideas are circulating on different wish lists for an intermediary institution, and not all are good for the environmental integrity of the EU ETS. In the end, the effectiveness of an intermediary institution is only as good as its mandate.

The importance of complementary policies

In the short term, complementary EU funding mechanisms outside or in conjunction with the EU ETS will likely be needed to bridge a possible cost gap between the allowance price and permanent carbon removals (especially the case for costly DACCS). Additionally, we urgently need to address the rising and competing use of biomass and biogenic CO₂ through stronger policies, such as carbon pricing and better incentives in the land sector.

In the longer term, new policies will also need to be crafted to achieve net-negative emissions – such as obligations on Member States and/or a separate compliance mechanism. There is no shortage of ideas out there, but they do need to be fleshed out and their effects further analysed.

A proposal is coming closer

The debate on the 2040 climate target and the consultation on the EU ETS provide important opportunities to shape the future of permanent carbon removals in Europe. Policymakers should prioritise a balanced and careful approach that takes into account the full scope of potential risks and benefits.

The decisions made now will set the stage for how we tackle climate change in the decades to come. Integrating permanent carbon removals into the EU ETS could be part of the puzzle, but it should be done carefully and as part of a larger and more comprehensive policy framework. It’s time to get this right.

Codie Rossi is Europe Policy Manager on Carbon Capture at Clean Air Task Force (CATF) and Martin Birk Rasmussen is Lead on Emissions Trading and Carbon Removals at CONCITO.

Any opinions expressed in this commentary reflect the views of the authors and not of Carbon Pulse.