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EU considers bringing emissions removal credits into carbon market
Global Banking & Finance Review®
Company
By Kate Abnett
FLORENCE (Reuters) – The European Union is looking into whether to bring emissions removal credits into its carbon market, a move that could reopen the market to carbon credits in future years, a European Commission official said on Wednesday.
The EU’s carbon market is the bloc’s main policy for reducing planet-warming greenhouse gas emissions, which it does by requiring power plants and factories to buy a permit covering each tonne of carbon dioxide they emit.
Ruben Vermeeren, deputy head of the European Commission’s EU carbon market unit, said Brussels was assessing whether carbon removal credits should be brought into the scheme in future years.
“This is something we are starting to look at right now,” he told a conference organised by the International Emissions Trading Association in Florence, Italy.
The Commission has until 2026 to decide whether to propose rules adding removal credits to the market. Such credits represent the removal of carbon emissions, and can be generated by projects like planting new CO2-absorbing forests, or building technologies to extract CO2 from the atmosphere.
Vermeeren said the options included adding removals to the existing carbon market, or forming a separate EU market for removal credits.
Many companies “offset” their own greenhouse gas emissions by buying carbon credits, which represent the avoidance or removal of emissions. Unlike the EU’s carbon market, which is obligatory for industries in Europe, companies’ use of offset credits is voluntary.
Scientists have said removing billions of tons of carbon dioxide from the atmosphere annually, by using nature or technology, will be necessary to limit global warming. But critics warn a reliance on removal credits could slow country and company efforts to cut their outright emissions.
The EU has banned international carbon offsets from its emissions market since 2020, owing to concerns about cheap international credits with low environmental standards.
It has since taken a strict stance on the use of carbon credits, which cannot be counted towards meeting the EU’s 2030 emissions-cutting target.
Vermeeren said potential benefits of adding removals to the EU carbon market include that it would provide a way for industries to address the final emissions they cannot eliminate. But he warned of the risk that promoting the use of offsets could deter companies from actually reducing their emissions.
“Offsets cannot replace mitigation,” he said.
(Reporting by Kate Abnett; additional reporting by Susanna Twidale; editing by David Evans)
Emissions removal credits are certificates that represent the removal of carbon dioxide from the atmosphere, typically generated by projects like reforestation or carbon capture technologies.
The EU carbon market is a trading system that requires industries in the European Union to buy permits for each tonne of carbon dioxide they emit, aimed at reducing greenhouse gas emissions.
Carbon offsetting is a practice where companies or individuals invest in projects that reduce greenhouse gas emissions to compensate for their own emissions.
The European Commission is the executive branch of the European Union responsible for proposing legislation, implementing decisions, and managing the day-to-day operations of the EU.
Relying on removal credits may deter companies from reducing their actual emissions, as they might opt to purchase credits instead of implementing more sustainable practices.
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