· 4 min read
Currently, the EU is in trilogue discussions about the Green Claims directive set to regulate corporate environmental claims. The European Parliament's position is that only “residual emissions” should be allowed to neutralise with CDR (Carbon Dioxide Removal) when making claims, and calls on the Commission to define which emissions qualify as residual. Here, they refer to a defined list of allowed emissions, not the original meaning of residual, referring to whatever emissions are left at net zero.
CDR for achieving Net Zero
The view assumes that CDR is needed to reach net zero, but that it is a necessary evil to be carefully allocated to the sectors that need it the most. However, almost no CO₂ emissions are theoretically impossible to reduce to zero without removals. (Although, other non-CO₂ greenhouse gas emissions, such as part of methane from agriculture, may be truly unavoidable.) In the net zero CO₂ context, carbon removal is not a must, but a tool with the potential to make net zero less costly and more quickly and easily achievable. CDR should be used where economically optimal in practice, not according to a fixed list of what is deemed “residual". Strictly limiting the voluntary use cases risks making net zero more difficult and expensive to achieve.
A market-based approach to CDR
A common objection to using CDR freely where it makes most economic sense is that CDR is a scarce resource and must therefore be carefully allocated. However, if CDR is scarce, basic market dynamics will inherently achieve this outcome, incentivising emissions reductions wherever they are most cost-effective. This would leave CDR as the preferred option only for sectors where reductions are more expensive. All natural resources have some level of scarcity. Still, we usually leave it to market forces and innovation to drive deployment where it is most cost-effective and impactful. Similarly, a market-based approach to CDR would direct it toward sectors where reductions are least feasible and most costly.
Even if CDR is scarce in the short-to-medium term, there are no fundamental physical limitations in the long run to deploying more CDR than we will ever need. Using carbon removal now also brings down costs, and builds future capacity as opposed to depleting it. Thus, our focus regarding CDR ought to be on starting to scale it, ensuring it is available to compensate for otherwise difficult or expensive to reduce emissions, and for removing excess CO2 from the atmosphere in the future to manage the global carbon budget, ensuring we meet the terms of the Paris Agreement.
Guardrails for environmental integrity
However, the sustainable use of CDR as a tool for net zero requires strong guardrails, such as strictly upholding removals’ quality and use cases. One such criterion for CDR use is like-for-like removals, and only permanent CDR should be allowed to neutralize fossil CO₂ emissions. Meanwhile, land-use emissions could be neutralized by land-based removals, for example, or short-lived greenhouse gases with short-lived removals. Strict sustainability criteria, such as land-use rules, are also needed to avoid social and ecological harm. Removals must be additional, creating real climate benefits rather than outcomes that would have occurred anyway. Initiatives like the EU Carbon Removal Certification Framework (CRCF) provide an example of how rules can be created for high-quality and fit-for-purpose removals. Effective climate policy must also include strict regulations on particulate matter, nitrogen oxides, and other harmful pollutants, as the negative impact of fossil fuel production extends beyond just carbon emissions.
When CDR is the best option will also vary with time. It is likely the optimal choice for some limited CO₂ emissions today, but that can change as technologies develop and emission reduction costs decrease. Long-term planning is needed to determine which solutions are cheapest overall and to incentivize investments there.
Regulating carbon removal presents complex policy challenges that are closely tied to broader environmental and economic issues. The EU should not excessively regulate exactly which emissions removals are allowed for in voluntary corporate claims for the reasons laid out above. Instead, robust guardrails, quality standards, and targeted policies can ensure that CDR is deployed where it is most beneficial. Decision-makers must however also consider how carbon removal policies interact with other environmental regulations and how these interactions may shape the broader energy transition. This is a very pertinent topic for the discussion about the integration of CDR into the EU ETS. By carefully addressing these interconnected challenges, the EU can develop a coherent strategy that leverages carbon removal to accelerate progress toward net-zero targets and lay the groundwork for paying off historic emissions debt.
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