EU Considers Including Carbon Removal Credits in Its Emissions Trading Market

The European Union is considering the possibility of incorporating carbon removal credits into its carbon market, a move that could open the market to carbon credits in the coming years, a European Commission official said on Wednesday.

The EU’s carbon market is the bloc’s primary policy tool for reducing greenhouse gas emissions that drive global warming. It requires power plants and factories to purchase permits for every tonne of carbon dioxide they emit.

The Commission has until 2026 to decide whether to propose rules that would add carbon removal credits to the market. These credits represent the removal of carbon emissions and can be generated through projects such as planting new forests that absorb CO₂ or deploying technologies that extract CO₂ directly from the atmosphere.

Ruben Vermeeren, deputy head of the European Commission’s carbon market unit, said the options include adding carbon removal to the existing market or creating a separate EU market specifically for carbon removal credits.

Many companies currently “offset” their greenhouse gas emissions by purchasing carbon credits that represent either avoided or removed emissions. Unlike the EU’s mandatory carbon market for European industries, the use of credits for offsetting purposes remains voluntary.

The EU banned the use of international carbon credits in its emissions market in 2020 due to concerns over cheap international credits with weak environmental standards. Since then, the bloc has taken a strict stance on carbon credits, which cannot be counted toward meeting the EU’s 2030 emissions reduction targets.

Vermeeren noted that a potential benefit of including carbon removal in the EU carbon market would be allowing industries to address residual emissions that cannot be eliminated. However, he warned of the risk that encouraging the use of offset credits could distract companies from making real reductions in their own emissions.