There is a consensus that developed economies should be net-zero in greenhouse gas emissions by 2050, leaving one or two more decades for less developed economies to achieve the same goal. There are significant nuances in the net-zero pledges of these countries, with some targeting the reduction of emissions, others allowing the compensation of emissions with carbon removal and some going further in allowing the use of offset mechanisms to compensate for emissions. Company decarbonisation objectives exhibit the same differences and pose the same questions regarding the validity of all the possible actions further to pure emission reductions.
The emergence of removals
Carbon dioxide removal (CDR), sometimes called greenhouse gas removal, is a process in which carbon dioxide is removed from the atmosphere and sequestered for long periods of time. Such processes are also known as negative emission technologies. Until a few years ago, CDR was seen negatively by policymakers as they feared it could be an excuse to do less on emission reduction efforts. This has changed because even if mitigation must remain the top priority, some remaining emissions will be unavoidable when moving towards very low emissions, mainly in the transport, heavy industry, and agricultural sectors.
CDR methods come in several kinds, like afforestation agricultural practices to store carbon in soils, carbon capture and storage (CCS), bioenergy with CCS (BECCS), and direct air capture combined with storage.
Potential, permanence, additionality, and credibility
All the carbon removal ideas pose questions of scalability and permanence of the storage. For instance, some solutions like reforestation can store large amounts of carbon at a low cost, but with climate benefits that can be reversed quickly with wildfires.
CCS has been supported by European Commission research and innovation funding for many years, and some large flagship projects (in the Netherlands, the UK and Norway) are now looking for national and European subsidies and incentives to proceed at full scale.
BECCS need large quantities of biomass, which can be considered neutral if it captures as much CO2 during growth as it emits when burned. Many environmentalists, however, question this and prefer a complete project life-cycle carbon accounting to ensure that BECCS projects deliver negative emissions.
DAC is still very costly, even if some recent developments look more promising. Large-scale deployment of DAC could potentially consume a substantial fraction of the future energy demand, as it is up to now very energy intensive, even more than CCS.
The certification of removals
The European Commission first mentioned the idea of a carbon removal certification scheme in the 2020 New Circular Economy Action Plan. Carbon removal certification is proposed as a necessary preamble to establishing a carbon trading system for land sector removals from 2030.
However, the debate on carbon removals is highly controversial. Environmental groups criticise carbon offsetting schemes like tree-planting as a potential greenwashing tool allowing fossil fuel companies to continue polluting with the excuse that their emissions would be compensated by carbon withdrawals elsewhere.
There is an agreement that a strict hierarchy needs to be implemented for climate mitigation policies, with carbon removals clearly at the bottom. Avoiding carbon emissions must be on top and at the heart of policy. There is also an unspoken agreement to use nature-based solutions like reforestation in the short term, and technologies like CCS with bioenergy or air capture in the longer term given their higher costs.
Oil and gas companies have been vocal about ramping carbon dioxide removals. The way forward for them may be to decarbonise their products with CCS when they consider their scope 3 emissions, i.e. the emissions for which their products are responsible.
Monitoring, reporting and verification
An important step for the European Commission is to put in place the necessary instruments to ensure those carbon removals are monitored, verified, and accounted for.
It certainly requires a clear definition of permanence for what can actually be counted as carbon removed from the atmosphere. It is an issue which is particularly important to all nature-based carbon removal options like afforestation or soil carbon sequestration, where there is a substantial risk that the carbon is re-released into the atmosphere after just a few years or decades.
The upcoming EU Commission proposal for the certification of carbon removals, expected at the end of November 2022, will also certainly look at the range of carbon removal technologies available and may have a restricted application to just a subset of that range, excluding the more problematic options. It will need, for instance, to introduce a distinction between real carbon removals and avoided emissions like avoided deforestation.
This could result in the creation of several categories of credits, some EU-certified and some non-EU-certified, which would be exchangeable on different markets and would presumably have very different values. This is not new as there are already several certification schemes, like the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA[1]) system for the aviation industry or the schemes put forward by some of the carbon trading houses, and a large range of prices from a fraction of € per ton to several dozen € per ton.
Looking forward
In the long term, it is conceivable that carbon removal credits are merged with the Emission Trading System (ETS) to form a revised ETS capable of dealing with the carbon market when emissions are close to net-zero. But this is only a very long-term view, say post-2040.
In the meantime, different Member States have different expectations on what a European carbon removal policy addressing the farming/forestry sectors should be in practice. A key issue is how support measures should be financed. France for example, advocates for a system based on carbon markets, modelled after what the country already has in place. Other countries have different embryo systems in place. In the French view of things, farmers could sell carbon removal certificates to other sectors and thus receive private money for the measures they implement. On the other hand, Austria would like carbon farming to stay within the CAP framework rather than introducing new instruments.
Other countries like Germany are worried that a market-based approach could lead to “double counting”, where both the farmer capturing the carbon and the company buying the negative emission certificates would be rewarded for the same reduction.
In total, the definition of a credible carbon removal certification system is very complex, politically risky, and will create new activities and new obligations for companies.
[1] https://www.consilium.europa.eu/en/press/press-releases/2022/05/20/decision-corsia-carbon-offsetting-and-reduction-scheme-for-international-aviation-le-conseil-adopte-sa-position/
Author: Pierre Dechamps is a Senior Advisor in our Energy & Natural Resources team in Brussels.
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