On June 26, the European Roundtable on Climate Change and Sustainable Transition (ERCST) recommended a phased approach to integrating carbon removal credits into the EU Emissions Trading System (ETS). The Brussels-based think tank outlined nine key recommendations aimed at shaping policy for carbon removals ahead of a European Commission report expected by July 2026. The commission, which began consultations in April, is evaluating possible reforms to the ETS, including the integration of carbon removals.
Marina Garcia Alonso, a legal officer in the European Commission’s DG Climate Action, emphasized that decisions have yet to be made regarding this integration. The commission is actively considering various aspects, including scope limitations for operators. The ERCST urges that carbon dioxide removals should be incorporated into both the current EU ETS and the forthcoming ETS for buildings and road transport, known as ETS2.
They advocate for a phased approach that starts with the existing ETS to maximize market liquidity and enhance price discovery. Furthermore, the think tank proposes that carbon removal units should complement existing EU allowances to maintain market efficiency. Regarding permanence, the ERCST insists that only permanent carbon dioxide removals (CDRs) should be included until the system is sufficiently tested.
This includes methods recognized as permanent by the Intergovernmental Panel on Climate Change. A regulatory body to oversee the integration and impose volume limits for credits is also recommended. The ERCST advocates for collaborative efforts, stating Article 6.4 carbon units established by the Paris Agreement should be allowed in the EU ETS when available.
The integration aims to enhance economic efficiency across various sectors while maintaining the integrity of the emissions trading system. Robert Jezke from the Centre for Climate and Energy Analyses stressed the importance of these changes in ensuring market liquidity for long-term sustainability. In parallel, the UK is also exploring the inclusion of greenhouse gas removals in its ETS, aiming to utilize technologies that support its net-zero ambitions.