1.The voluntary CO2 market (VCM) plays an initial role in the storage of carbon dioxide, but the VCM will ultimately remain too small. The mandatory and regulatory CO2 market, like the EU ETS, is indispensable to deliver the amount of removals necessary.
IPCC definition of Carbon Dioxide Removal (CDR): ”Anthropogenic activities removing carbon dioxide (CO2) from the atmosphere and durably storing it in geological, terrestrial, or ocean reservoirs, or in products. It includes existing and potential anthropogenic enhancement of biological or geochemical CO2 sinks and direct air carbon dioxide capture and storage (DACCS) but excludes natural CO2 uptake not directly caused by human activities“
According to the IPCC, removing carbon dioxide from the atmosphere (CDR), is needed:
- firstly to keep global CO2 emissions negative after 2050. Because in developing countries the emissions will not yet be at zero
- secondly, residual emissions after 2040 are still difficult to reduce. In the EU, this concerns 5-20% residual emissions from agriculture, aviation, shipping and industrial processes
- thirdly, if the average temperature on Earth exceeds 1.5 Degrees C (the so-called ‘overshoot’), then the temperature will have to be reduced with extra carbon removals. The UN Overshoot Commission recommended the use of carbon removals; it was more cautious on ‘geoenineering’ (reduce solar radiation impact) en demanded more small scale research.

2.Removals are also indispensable for net zero aviation. In Destination 2050, the European aviation industry is expected to have 8% hard to abate emissions and to invest in carbon removals. And the Mission Possible Partnership expects global aviation to become one of the largest consumers of DAC: up to 490–730 Mt/y by 2050 for jet fuel emissions only. Including all product outputs of Power to Liquids plants even 800–1,200 Mt.
During the ICAO Assembly 2022, countries adopted a global net-zero target for aviation in 2050. In the Resolution, the North is invited to achieve ‘net-minus emissions’ even earlier than 2050, in order to create emission space for the South. This implicitly asks for removals. ANA was the first airline to purchase DAC credits. IAG (British Airways) plans to buy 2 million CDR annually from 2030 and 100 million in 2050.

3.Limiting warming to 1.5°C translates globally to about 4 Gtonne per year in 2030 and 10 GtCO2 of CDR per year by 2050. Currently only 2 Gtonne is stored cumulatively, the majority of which in forests and soils, and only 0.002 Gton of technical removals, or Direct Air Capture (DAC). See “State of Carbon Dioxide Removal 2023”. According to the IEA, DAC installations must be able to absorb 85 Mton CO2 by 2030. By 2050, this should be 980 Mton per year. The current 18 DACs in Canada, Europe and the United States now capture 0.01 Mton of CO2.
4.How can we stimulate CDR supply in a timely manner?
Some organizations in the EU want this to be done only with policy and subsidy, as was shown at CarbonGap’s Carbon Removal Basel event last month. This concerns risks regarding permanence and social aspects and political preferences. Carbon Gap keeps track of what policy there is in Europe that wants to promote carbon removals. The European Commission is neutral about this, and only wants removals to be certified as reliable. They are working on this in the Carbon Removal Certification Framework system. At the Zero Emission Platform event last month, participants said that believe that the voluntary CO2 market initially plays a role in the current request for removals, but will remain too small rto mewet the demand. Ultimately, the mandatory CO2 market will be indispensable in this respect. This column is about possible market mechanisms.
5.Carbon Removals in the Voluntary CO2 Market (VCM) and initiatives
In 2021, almost 1 Gton of carbon credits was traded, half of which were nature-based. In 2020, this was 328,000, three-quarters of which are nature-based (cookstoves, wind, sun, biogas, forest, forest protection, etc.). As far as DAC removals are concerned, 800,000 in futures have been purchased, but only 80,000 removals have been realised and transferred.
Under their methodologies the Verra and PURO carbon credit programs – endorsed by ICROA as robust and high quality programmes – can issue carbon credits for the carbon stored with biochar. Currently there are 30 biochar credit suppliers under Puro. There are no projects listed yet under Verra. Puro also has methods for carbon storage in building materials. In addition, there are many carbon programs that provide credits for nature-based removals.
The voluntary carbon market demand is expected to increase to 3.5 GtCO2e by 2050. The voluntary CO2 market will not be able to generate 10 Gigatons of removals per year alone by 2050 (more details in the regular Energeia Carbon Podcast; in Dutch).
6.Linking Carbon removals to the mandatory CO2 market: EU ETS
Some organisations published recently their views on linking CDR to the EU ETS.
- The Kiel Institute c.s. advise that the EU agree a ‘net negative cap’ to create negative emissions demand in general and to introduce various EU supporting mechanisms for removals.
- Perspectives cs suggest 2 ways of linking: accepting removal credits instead of allowances or allocating free allowances to installations achieving removals.
- ICAP identifies 3 ways of linkage of CDR credits to ETS: integrated carbon markets, connection with limits or connection through governments.
- Ecologic says future linking to carbon removal helps continue the acceptance of the ETS, but they prefer to limit the use of removals as much as possible or leave the purchase to an intermediary. They would only accept DAC and Enhanced Weathering, and not allow BECCS for example.
- CAKE calls for an EU Central Carbon Bank to take over ETS mechanisms like the Market Stability Reserve and to purchase additional CO2 budget for residual emissions and negative emissions after 2040 via Art 6, DAC and CDR.
7.Negative emissions cap is key
The EU ETS Directive should in my view indeed be amended to include a negative emissions target after 2040 (see figure below). Whereas ETS led to clinate neutrality in 2040, it should now lead to a climate positive impacts by participants. The ETS has been proven to be an effective instrument to comply with targets and to distribute cost. It needs to be elaborated how to and allocate the negative cap. That can be done for example by the obligation to purchase x gr negative emissions/kWh energy, or per ton of green carbon used. In that case also the use of green power, green hydrogen and green carbon leads to an obligation to surrender negative emissions.
For the linking to removal credits the previous Linking Directive to the CDM could be a model, by which removal credits can be exchanged by the European Commission for EU Allowances. And Art 25 of the ETS Directive provides linking possibilities to other ETS. I would prefer a minimum access to ensure necessary support.

8.For linking CDR credits specifically to the EU ETS there are seven ways by which carbon removals can be directly, or indirectly, linked to the EU ETS and be stimulated.
When ETS companies purchase CDR credits:
- Direct linking, whereby ETS participants buy carbon credits on the market, and can exchange them for EU emission allowances;
- A limited link. Now that the ETS will no longer auction new emission allowances after 2039, CDR is still in its infancy, and the costs of CDR are very high, it is wise to have a limited link after 2030 – for example for 1% of the emissions – 8 Mton. By 2035 that percentage can increase to 25% for example 100 Mton by then. In 2040 import of CDRs ands ITMIOs will be 100%.
- The direct link with an extra reward, for example that a ton carbon removed can be exchanged with 1.5-2 ton EU Allowances provided the storage is permanent in order to generate negative emissions;
- To reward removals extra, from 2040 ETS participants may also be obliged to surrender 1.5-2 tonnes of emission allowances or carbon removals for each tonne of remaining emissions
When authorities or linked ETS organise the import CDR credits. - The purchase of international CDR credts can also be done by the European Commission, via the EIB or by Member States to build up a negative CO2 emissions budget into the MSR. Thereafter they exchange can them for emission allowances in the Market Reserve (see below on international CO2 deals using Article 6 Paris Agreement).
- The EU can also decide to allocate free emission allowances to EU CDR installations; they can then sell EUAs.
- An indirect link to international removal credits can also arise when the EU ETS for example, links to the Californian, Canadian or South Korean ETS and removal credits are then imported or generated there.

9.Art 6 of the Paris Agreement
Countries can use Art. 6.2 of the Paris Agreement to purchase removal credits from other countries to contribute to their NDC target. Switzerland wants to buy 5 Mton of DAC abroad. Countries can for example then use these so-called ‘internationally transferred mitigation outcomes’ (ITMOs) to exchange for ETS allowances for companies in their regional scheme. Those ITMOs can be created by using carbon credits from voluntary market programs, like Verra and Gold Standard, or from the newly to be set up UN carbon credit mechanism of Article 6.4. of the Paris Agreement. But there are still a lot of discussions and conflicting views amongst countries and observers of the eligibility of carbon removals for Art 6.4. and on the pros and cons of natural and technological carbon removals (see UNFCCC Note for upcoming talks).
10.Next steps for the EU
With these above 6 options it is possible to create negative emissions and room with removals for residual emissions from the EU ETS (see blue shaded area in the figure after 2040). Although CDR is not yet explicitly included in the EU ETS, the ETS already covers CCS, CO2 transport via pipelines and geological storage relevant for removals. In addition, the proceeds from emission allowance auctions are reallocated via the Innovation Fund, including 4.6 Mtonnes of CO2 via CCS. Through the Net Zero Industry Act, the EU wants to stimulate 50Mt annual carbon storage in 2030. The US also stimulates $ 369 billion through the Inflation Reduction Act $ 180 per ton removal of DAC installations.
The European Commission could include the above options in the adjustments to the ETS in 2026 and report on how negative emissions can be accounted for and covered by emissions trading. And if the waste incineration plants fall under the ETS from 2028, there will be a link with the BECCS available there for the 50% biogenic CO2.
11.EU 2040 target
As the Removal Basel event showed, the EC is open to the EU target for 2040 for the import of DAC via Art 6 transfers. That may contain an ETS link. The EC has started consultations on the EU CO2 target for 2040 and whether international carbon credits can be used. The EC also needs insight into the required CDR for 2040. The EU has agreed in the Climate Act to be CO2 negative after 2050. It may appear from the consultations on 2040 that the EU must already be climate neutral by 2040 – scientists are calling for this – which brings forward the obligation of negative emissions.
12.Private CDR Initiatives
In addition to the carbon credit programs, there are all kinds of private initiatives to bind buyers to expensive carbon removal and DAC investments. For example:
- Frontier’s $1 billion Carbon Removal Buyers’ Club: Stripe, Alphabet, Shopify, Meta, McKinsey, H&M, JPMorganNextGen
- CDR Facility with South Pole: Mitsubishi, Boston Consulting Group, Mitsui OSK Lines, Swiss Re , UBS. They want to generate 1 Mton of carbon credits in 2025.
- JPMorgan is buying 800.000 ton of removals: 25.000 over 9 years from Climeworks (DAC) and 28.500 from bio-oil removals firm Charm over 5 years (bio-oil removals) and 450.000 tonnes via a 15-yr deal from CO280 (BECCS)
- Microsoft is spending $1 trillion to be carbon negative by 2030 and made a recent deal with Ørsted for 4,7Mton carbon credits over 11 years generated from their BECCS project
- Apple has a deal with Climeworks for 10Mt CDR in 2030 at $1,000/ton
- Klarna invests $ 5 mln in various international carbon removal companies via its Climate Transformation Fund arranged by Milkywire
- Amazon purchased 250,000 tons DAC credits over 10 years from the future 1PointFive DAC plant in Texas, developed by oil subsidiary Occidental’s Oxy Low Carbon Ventures.

13.What types of Carbon Dioxide Removal are there?
Natural removals
That is forest planting, forest management with CO₂ sequestration, mangrove restoration, peat meadow growth, regenerative agriculture with carbon sequestration in the soil, also known as (carbon farming) by returning organic residues to the soil.
This natural removal has additional advantages: soil improvement, biodiversity, water is better retained and it offers a healthy living environment. The disadvantage is that the captured carbon is not always permanent; usually 100 years is used. This is possible, for example, if a farmer chooses a different working method after a few years, or if newly planted forests are felled by a disease or fire, or if mangroves are damaged by sea level rise. Therefore, natural methods are rated as less permanent. Although that uncertainty can be corrected (for example by applying a discount of 10%) or by maintaining credit buffers.
Technical removals
These are socalled technological measures to capture CO2 from the atmosphere:
- BECCS: that is capturing the CO₂ emitted from co-firing of bioebergy or biogene waste incineration and storing it permanently in the soil
- DACCS: direct air carbon capture and storage. In that case, the CO₂ is filtered from the atmosphere with large vacuum cleaners or sponges or membranes and permanently stored as minerals like basalt
- Biochar: Another option is biochar, which is the charcoal as a residue of pyrolysis (sustainable energy generation with organic material) that is permanently stored in the soil
- Enhanced Weathering or accelerated weathering of minerals such as olivine by contact with CO2
- Ocean Carbon Removal. Removing carbon from the ocean to create additional uptake. This can be done biologically (photosynthesis with seaweed for example) or chemically (add alkaline compounds to water to raise the pH and counteract acidification through CO2 absorption). Both ways help increase the absorption of extra carbon dioxide by oceans.

Europe first opts for natural carbon removals. In 2030, the aim is to capture 310 megatons of CO₂ annually via forest planting and land use, and 5 Mton via BECCS. The European Commission is working on a Carbon Removal Certification Framework system to encourage this. Only then does the EU want to get started with DAC.