Oct.

14 2021

Although it was developed independently, the CEPS report draws on the experience of members of Negative Emissions Platform, which supported the study. Frontrunners such as Climeworks, or Stockholm Exergi, and smaller developers of biochar and enhanced weathering applications are trying to mitigate the effects of climate change by developing and implementing solutions to pull CO2 out of the atmosphere, but they will need the right political framework to do so at scales large enough to make more than a dent into the issue. CEPS, one of the top think tanks in EU policy, translated the experiences of this emerging industry into options for the future of Europe’s climate legislation. Especially regarding the regulations and related market mechanisms that will allow for the field of negative emissions technologies to kick-off an exponential growth.

The development of the sector largely hangs on the future of a market for carbon, where polluters, including national governments, pay negative emission tech developers to capture CO2 and other climate change-inducing gases. The CEPS paper opposes two broad policy options for how such a market would work towards the removal of greenhouse gases out of the atmosphere. Either a new, separate political target is to be created for how much carbon to remove from the air using negative emissions techs and solutions, or such a target could be integrated into already existing carbon market instruments aiming to reduce greenhouse gas emissions in the EU. 

The authors of the report remark that the latter seems to be so far the option that the EU has chosen, and this mostly for practical reasons. A single carbon target integrating both reductions - emitting less CO2 for example by deploying solar panels, and removals - pulling carbon dioxide out of the air via negative emissions, would provide EU member states with the flexibility of adding as much reduction, offsets, and removals as they want into their mix of options.

How carbon removal is accounted for will in any case become an important aspect of scaling up the sector of negative emission technologies, by attracting funds into the start-ups developing it.

But CEPS warns that mixing carbon reduction, offsets and removals would come with many caveats. It would require for example that carbon removal credits, earned by governments for removing carbon from the atmosphere, would be fungible with those other types of credits which are already foreseen in the EU block's carbon economy.

These other credits cover a diverse set of actions against global warming, with vastly different consequences on climate. For example, using forests as carbon sinks via what is known as the ‘LULUCF regulation’, which is cheaper than doing the same via most negative emissions technologies but does not ensure the same level of permanence of storage for carbon: while negative emissions store carbon geologically for up to a thousand years, forests can burn and plants decay, releasing carbon back into the atmosphere over the course of decades. Integrating carbon removals into the EU’s carbon toolbox would therefore require a differentiated approach depending on their ‘permanence’. A proposal for a clear regulatory framework on the certification of carbon removals is set to be released next year by the European Commission and could include provisions regarding the duration of carbon storage.

Another point of contention is whether such a certification mechanism should integrate the use of carbon removed from the atmosphere for the creation of new products, something commonly referred to as carbon capture and usage, or CCU. Even though this offers the negative emissions sector a commercial outlet, safe some notable exceptions, it is not always efficient in terms of storing carbon over long periods of time. The risk being that CO2 ends up back in the atmosphere within a few decades of having been removed.

Much larger contributions will be needed to ensure that enough carbon is removed from the atmosphere.

How carbon removal is accounted for will in any case become an important aspect of scaling up the sector of negative emission technologies by attracting funds into the start-ups enabling its development. So far, private investment into these companies has been at least as instrumental as funding from public sources. An example of investment from the private sector into carbon removals is the reinsurance giant’s SwissRe $10 million dollar contract with the direct air capture company Climeworks, which will allow Europe’s carbon removal champion to finance its long term expansion. While SwissRe is not the only player in the area of ‘voluntary carbon markets’, even such generous contribution is but a drop in the ocean compared to what would be needed to reach climate-relevant levels of removals. Much larger contributions will be needed to ensure that enough carbon is removed from the atmosphere. According to scientists, several gigatons of CO2 will need to be pulled from the air every year year by the end of the century, requiring billions of euros in investments. 

CEPS’ paper discusses some of the implications of such a rapid scale up negative emissions technologies. The study’s authors emphasise the fact that additional, dedicated public support instruments might be needed to fund these efforts. So far, the EU is mostly funding ‘early stage’ research into carbon removal technologies, with a certain success, but also resulting in the most advanced companies in the sector being stuck in an eternal pre-commercial stage.

The CEPS study also makes another important point. While EU policy generally strives to be as technology-agnostic as possible, complete technological neutrality in the case of carbon removals might be difficult to achieve. This is because all negative emission solutions are not equal in terms of their capacity for early deployment, their consequences on the availability of biomass, and their price-range, to mention only a few criteria. 

Complete technological neutrality might be difficult to achieve.

This leads to some technologies, which are cheap and ready to scale having a built-in cap in terms of the amount of CO2 they could safely pull out of the atmosphere. This concerns methods such as ‘biochar’ or biomass with carbon capture. Some other carbon removal solutions - such as direct air capture, are already advanced and have a quasi-limitless physical capacity to pull CO2 out of the air, but they are for now off-target in terms of price at scale. Rapidly deploying the first category, and at the same time efficiently ramping up the second, would require the type of EU-level planning that some European policymakers are not comfortable with. But they might have to rapidly come to terms with it if Europe wants to take a leading position on the global stage in this strategic field of action against climate change.

Another example of a rapidly scalable, relatively cheap and technologically mature solution is ‘carbon farming’, and an EU initiative incentivising carbon sequestration via agriculture will be launched at the end of this year by the European Commission. It will allow EU farmers to generate additional revenue by removing CO2 from the air and selling these removals on the carbon market. Most probably, they will do so by using some of the solutions being developed by the carbon removal community, such as the use of biochar or ‘enhanced weathering’.

Negative emissions solutions are, for now, a mixed field of widely different technologies with varied levels of maturity and price at scale. It is also entirely plausible that the technology that will eventually become carbon removal’s best bet is still being developed in one of the EU’s many dedicated labs, and any regulatory framework covering negative emissions would therefore need to be “flexible enough to be able to adapt to new types of technology” tell us the authors of the recent report. It will also have to be “adaptable to changing economic incentives in the rapidly developing carbon removal market”, concludes CEPS. The way in which such a market will come to maturity is yet to be determined. As the urgency of climate change increases the pressure on the EU Commission to consider carbon removals, the question is not whether a carbon removal market will be achieved, but how, and how fast.