The European Commission’s proposal to regulate the bloc’s carbon removals market will be based on existing verification and certification schemes and will aim to create a common method in order to bring more transparency to the opaque sector, an EU official has said.
The carbon removals market, which refers to the capturing, recycling and storing of CO2 by farmers, foresters and industries, plays a key role in achieving the land sector’s goal of reaching carbon neutrality by 2035.
However, inconsistencies in measurement, reporting and verification (MRV) processes offered by various private bodies have resulted in low prices on the voluntary market, providing little incentives for investors.
By the end of the year, the Commission will present its proposal to unify the EU’s carbon removals MRV process with the aim of bringing order in a market deemed essential to reach the EU’s objective of reducing emissions to net-zero by mid-century.
“The voluntary market of carbon credits is not something that the Commission is now going to introduce from scratch. These carbon credits exist, they are verified and certified by private schemes (but) the price is often very low,” Lukas Visek, Member of the Cabinet of European Commission climate chief Frans Timmermans, told a EURACTIV online event last week.
The Commission’s proposal will only apply to carbon credits generated in the EU and not to international credits, he explained, saying “the money can come from outside but the removals have to be in the EU.”
Credit prices for carbon removal projects will also differ in value according to the permanence of the removal and the amount of investment required to eradicate the emissions, Visek added.
CAP as the main tool
The EU’s Common Agricultural Policy (CAP) will be a key instrument through which the EU can support carbon removals by European farmers and foresters. The latest update of the CAP includes incentives for carbon sequestration schemes and ringfencing a percentage of funds for environmental and climate purposes.
“One source of funding is the CAP but another one is private funding from companies (who are looking) to invest in having more carbon removals. In my view, another source of funding is the ETS revenues,” said Norbert Lins MEP, Chair of the European Parliament’s agricultural committee.
But others are more skeptical and flagged issues around public funding for the policy and liability for emission reversals – when CO2 is re-emitted back in the atmosphere, for example when a forest goes up in flames.
“The MRV is not ready, there is no permanence and there are very key questions around the liability of land managers if carbon that they have sequestered is then reemitted. We will need to get the answers right in order to have anything that has any environmental integrity and a robust system,” said Célia Nyssens from the European Environmental Bureau (EEB), a green NGO.
Differences across member states on the costs of labour or land add further complications to creating a unified European price for carbon removals, Nyssens added.
“That would then create very large incentives in countries that have cheaper labour and land. What impact will that have on rural communities, on farmers, on land prices?” she asked.
> Watch the full event on video:
[Edited by Frédéric Simon]