The emissions trading system operated by the European Union could one day also be used to capture carbon dioxide on a large scale, according to new research by the Potsdam Institute for Climate Impact Research (PIK).
The research, which was published in the journal Joule, examines the potential for the EU Emissions Trading System (ETS), which has been in place since 2005, to incorporate carbon removal technologies. If harnessed correctly, this could enable companies to remove between 68 and 86 million tonnes of carbon dioxide annually by 2050.
This analysis is based on modelling incorporating the European Union, the United Kingdom and Norway, and focuses on two novel removal methods: direct air capture and bioenergy with carbon capture and storage.
‘Removal potential’
“The removal potential we have calculated would make a significant contribution to the implementation of the EU climate targets,” commented Darius Sultani, PIK researcher and lead author of the study.
“Of course, dedicated support programmes for removals are also needed to achieve climate neutrality by 2050, and net carbon removals thereafter. But fiscal space is limited, and it makes sense to make good use of the market-based instrument of emissions trading. We show how this could work – and that it even strengthens the acceptance of climate policy.”
The inclusion of carbon removals in emissions trading could also provide incentives for investment, the researchers note, with participating companies potentially receiving certificates that could be sold to firms with residual emissions, creating a market mechanism for negative emissions.
The study also estimates future projections for the carbon price formed in emissions trading, noting that this is likely to rise ‘steadily’ to €400 per tonne by 2050, but will stabilise at a lower level in the second half of the century due to the inclusion of removals.
Step-by-step approach
The researchers suggest a step-by-step approach for integrating carbon removals into emissions trading – firstly by establishing standards for monitoring, reporting and verification. This would then be followed by the gradual inclusion of removal projects in the trading system, ‘in a manner that avoids misguided incentives for investors’, and lastly, by around 2040, to a situation where removals and residual emissions be controlled via a uniform carbon price.
“With this scientifically sound proposal, we are targeting the current political discussion in Brussels on the future regulation of carbon removals,” explains Michael Pahle, PIK researcher and a co-author of the study.
“The decision on whether to transfer removals to EU emissions trading is now pending, and the European Commission must submit a proposal on this by 2026. Our study shows that the objections to this can be refuted.” Read more here and here.
