The European Parliament has adopted two pieces of legislation establishing a framework for carbon removals to be used as part of companies’ net zero strategies. Here is what Chief Sustainability Officers need to know before adding them to decarbonisation plans.
On October 24, the European Parliament adopted the Carbon Removal Certification Framework, a set of criteria defining “high-quality carbon removals”, as well as the process to monitor, report and verify their authenticity.
The day after, it also approved amendments to the Net Zero Industry Act, adding carbon dioxide removal (as well as carbon capture and storage) to the list of net zero technologies in the scope of the act.
Carbon removals have already been identified as a promising decarbonisation solution by the likes of Stripe, Alphabet, Shopify, Meta and McKinsey: together, these companies and their Chief Sustainability Officers have committed to buy an initial US$1 billion of permanent carbon removals by 2030 in a bid to accelerate the development of these technologies.
But with these two consecutive decisions, European legislators have given a clear signal to European companies that carbon removals can now form part of their net zero strategies.
So what exactly are carbon removals, and how do they differ from carbon offsets?
Carbon Removal Certification Framework vs Core Carbon Principles
All projects that “remove and store carbon” are eligible for certification under the Carbon Removal Certification Framework. They include long-lasting products and materials, as well as technologies such as direct air carbon capture and storage (which is increasingly emerging as a favourite technology in the race to net zero, judging by corporate demands ahead of COP28).
But they also encompass nature-based solutions: forest and soil restoration, and innovative farming practices – some of which are already selling carbon credits on the voluntary carbon market.
The European Commission specifies that to receive certification, the carbon removals need to be “correctly quantified, deliver additional climate benefits, strive to store carbon for a long time, prevent carbon leaks, and contribute to sustainability”.
The framework significantly overlaps with the Core Carbon Principles developed by the Integrity Council for the Voluntary Carbon Market (ICVCM): these state that the greenhouse gas (GHG) emission reductions or removals from the mitigation activity must be “robustly quantified”, as well as additional and permanent.
How long exactly emissions must remain stored through these projects is open to interpretation, but the commonly accepted definition of permanence is 100 years or more.
Both the Carbon Removal Certification Framework and the Core Carbon Principles also require independent third party verification.
Potential use of carbon removals: beyond offsetting
Chris Villiers, Director of Portfolio Management at carbon finance company Respira, believes the introduction of this EU-approved standard will “give a boost to carbon removal credits as an asset class” and increase confidence in the wider voluntary carbon market. “While the new standard will likely share similarities with existing ones (which are constantly evolving and being updated), the fact that the EU oversees this standard will provide further credibility and likely instil confidence in the quality of carbon credits among buyers,” he tells CSO Futures.
But while the EU framework and the voluntary market’s Core Carbon Principles are aligned in terms of what constitutes quality, they may differ in the use that can be done with the carbon removals.
According to Carbon Gap, a non-profit aiming to scale up the use of certified carbon removals in Europe, these can be used for offsetting purposes, but not only. “Next to offsetting, many promising use cases of a carbon removal certification framework can deliver positive climate and economic impacts without allowing for compensation claims,” says the organisation.
Among these other use cases, it names “contribution claims” made by companies or governments on the basis of fostering climate innovation without attempting to compensate for their own emissions; and “uses not quantised into carbon credits”. The latter refers to projects with certified carbon reduction that cannot be divided up into tradable carbon credit units worth one tonne of CO2 equivalent.
Under this definition, the Core Carbon Principles set minimum quality requirements for carbon removals (as well as other types of carbon mitigation) used for offsetting, whereas the EU framework aims to certify carbon removals for all types of uses.
Inclusion of carbon removals in EU strategy: reactions
Carbon Gap welcomed the European Commission’s decision to include carbon removals in the Net Zero Industry Act, commenting: “Scaling up sustainable carbon removal from both the land sector and technologies is needed to achieve climate neutrality. The inclusion of CDR in the NZIA would ensure that these critical technologies get the attention they need to contribute to Europe’s climate action whilst bringing clear economic and strategic benefits.”
But climate activists saw it as a “weakening” of the act, likely to divert funding away from the most impactful clean technologies, such as solar panels and wind turbines. “Changing the scope of the Net Zero Industry Act risks diverting taxpayers’ money from the key green technologies we need to decarbonise our industry,” said Camille Maury, Senior Policy Officer on the Decarbonisation of Industry at WWF European Policy Office.
As climate change accelerates, solutions previously perceived as a ‘licence to pollute’, such as carbon removals and carbon capture, are now being encouraged by regulators – a mindset shift driven by necessity.