Integrating Carbon Dioxide Removal Into European Emissions Trading

In one of the central scenarios for meeting an European Union-wide net zero greenhouse gas (GHG) emissions target by 2050, cap in Union Emissions Trading System (EU ETS) becomes negative. Despite this ambition, no mechanism allows inclusion CO 2 removal credits (CRCs) EU ETS to date. Amending legislation is required create enabling conditions a negative cap. Here, we conceptually discuss various economic, legal, and political challenges surrounding integration CRCs into ETS. To analyze cap-and-trade systems encompassing emissions, introduce effective (elastic) resulting from addition regulatory (inelastic) cap, latter now being binding only. Given current cost estimates BECCS DACCS, minimum quantities use removals, as opposed ceilings currently discussed, would be promote near-term such technologies. Instead direct interaction between companies involved trading providers CRCs, authority could also transitionally act intermediary buying supplying them turn conditional upon observed allowances prices, example, supporting (soft) price collar. Contrary collar without dedicated support case (net) compliance with overall maintained. already provides safeguards physical carbon leakage concerning CCS, making Bioenergy Carbon Capture Storage (BECCS) Direct Air prioritized Furthermore, special opportunity might apply installations. Repealing provision that installations exclusively using biomass are not covered Directive, combined freely allocated these installations, allow operators sell made available through BECCS. Achieving GHG neutrality 2050 requires designing suitable incentive removal, which includes option open up CRCs.