We are particularly happy to see that permanent removals and non-hazardous waste incineration are proposed to be included in the EU ETS, both very important initiatives for the Union to reach net-zero. Building a domestic industry for permanent removals is fundamental for the Union to reach its climate targets in the most cost-efficient way while ensuring high integrity.
This is a strong signal to the market – permanent carbon removals are now a centrepiece of the Union’s climate policy. However, the proposal seems to be underfunded with the 250 million tonnes of removals until 2040 to be covered by revenues from up to 260 million EUAs, or the suggested funding assumes additional support from member states and/or Union funds like the Industrial Decarbonisation Bank. Today’s introduction of domestic permanent removals is nevertheless an essential step for putting Europe on a path towards net-zero and for hard-to-abate sectors’ ability to stay competitive in relation to other trading blocs as nations approach residual emissions.
We welcome the Commission’s proposed amendment of Article 14 to “provide for the possibility for operators, aircraft operators and shipping companies to compensate their fossil emissions with domestic permanent carbon removal units generated from the storage of their biogenic emissions under the scope of this Directive and certified under Regulation (EU) 2024/3012”. However, this possibility must not be limited to “their” biogenic emissions but rather be a general right for ETS companies to voluntarily acquire removals on the market. Such a parallel track to drive demand for removals with private funding could help mitigate what still seems to be a funding gap and reduce the need for public funding to support the early stages of development and cost-reduction cycles.
To the extent that international credits will be used, we agree with the Commission’s proposal to managed them by an indirect central purchasing facility. However, Europe should avoid relying on international credits; it is essential that scarce European resources are spent on developing European capabilities to decarbonize and provide domestic permanent removals.
We also support the gradual introduction of EUA obligations for waste incineration, allowing the European waste industry to restructure and get ready for the inevitable point where these emission sources must be addressed. However, we object to the implied discriminatory treatment where installations already covered by the ETS will be excluded from this phased approach – equal treatment of all included incineration facilities during this transition is essential to ensure a long-term efficient waste infrastructure within the Union as the market consolidates and new waste flows emerge.