The Clean Air Task Force (CATF) has published an analysis examining the integration of domestic permanent carbon removals into the European Union Emissions Trading System (EU ETS). The evaluation reviews the European Commission’s proposal to centrally procure 250 million tonnes of certified, permanent carbon removals by 2040, paired with an equivalent expansion of the EU ETS cap. It models three distinct pathways reaching climate neutrality by 2050 to assess market outcomes for technologies such as BioCCS and Direct Air Capture with Carbon Storage (DACCS).

The primary challenge identified in the analysis is the risk of environmental degradation and a funding shortfall leading to underdelivery. Integrating permanent removals into a cap-and-trade architecture primarily built for emission reductions requires precise design to prevent weakening the core abatement drivers. Furthermore, projected cost disparities and limited project pipelines create a significant risk that permanent removals will be underdelivered. This revenue shortfall could result in a net increase in atmospheric emissions due to the additional allowances placed on the market.

To address these vulnerabilities, the CATF proposes specific structural safeguards for the EU ETS framework. The solution centers on establishing mechanisms to secure additional revenue to cover potential funding shortfalls for permanent carbon removal units. Additionally, the framework must incorporate provisions to release fewer allowances or actively cancel released allowances to precisely match the volume of successfully procured removals. The organization also recommends that the European Commission be legally empowered to withdraw an equivalent volume of allowances from the market if a removal shortfall persists by 2040.

The anticipated outcome of implementing these safeguards is the preservation of environmental integrity within the EU carbon market alongside the structured deployment of permanent removal technologies. By bridging the revenue gap and ensuring that additional allowances are properly neutralized, the system can support vital negative emission technologies without undermining existing industrial decarbonization incentives. Ultimately, the analysis provides a roadmap for balancing compliance market stability with the scale of permanent carbon removals required for long-term climate targets.