The global voluntary carbon market operates largely without regulatory oversight. Currently, the quality of carbon reduction and removal credits is assessed and certified by independent organizations. The criteria used to certify these credits varies widely, leaving consumers at risk of investing in carbon removal projects that remove far less carbon dioxide than they claim. To protect investments and ensure climate impact, the European Commission has proposed new rules for the certification of carbon credits.
What is the proposed regulation?
The European Commission has launched an initiative to establish a Europe-wide certification framework that would verify high-quality carbon removals by setting a quality standard for a range of carbon removal projects in the EU. There are a number of carbon removal pathways that would be eligible for certification under this framework. These include carbon farming (also known as nature-based carbon removal), permanent storage (such as bioenergy with carbon capture and storage or direct air capture and storage), and carbon storage in products and long-lasting materials. Point-source carbon capture and storage and/or utilization that “helps to recycle or store new fossil carbon dioxide emissions” are not eligible for certification under this framework.
Why is the EU carbon removal certification framework significant?
Back in June 2021, the European Parliament and the Council of the European Union enacted the European Climate Law which requires the EU to achieve net-zero emissions by 2050 and in each year following. Later that year, the European Commission adopted the Sustainable Carbon Cycles initiative which focuses on short-term actions to first, scale up carbon farming such as forest and wetland restoration and sustainable management, and second, to “foster new industrial value chains for the sustainable capture, recycling, transport and storage of atmospheric carbon.”
The establishment of the EU carbon removal certification regulatory framework is the necessary next step in the rollout of the Sustainable Carbon Cycles initiative as it will be an effective tool for ensuring the quality of carbon removal projects. By addressing concerns for project quality and greenwashing, this initiative will increase confidence in these carbon removal pathways, encouraging result-based investments from private and public sources.
What did Carbon Direct recommend and why?
Carbon Direct shared our feedback to the EU Commission during its regulatory adoption feedback process.
Carbon Direct applauds the EU for its recognition of the role of carbon removal in achieving net-zero emissions throughout the EU by 2050. In our comment to the EU on the carbon removal certification framework, we identified areas where we are supportive of the initiative as it is written and where there are opportunities to improve the carbon removal certification mechanism.
Here are the highlights from our recommendations:
Distinguish carbon certificates by removal solution
The proposed ruling would only distinguish credits that offer permanent CO2 storage from those that result in temporary storage. We feel that evaluating credits solely on the amount and duration of carbon stored invites false comparisons between carbon removal technologies that vary in value, transparency, impact, and scientific validity. Carbon Direct recommends that the Commission also account for the type of removal solution in their certification standards.
In our submission, we provide detail on our criteria for high-quality carbon removal in the following areas: forestry, soils carbon, biochar, bioenergy with carbon capture and sequestration and biomass with carbon removal and storage, direct air carbon capture and storage, carbon mineralization, and blue carbon. Each of these categories brings distinct environmental, social, and economic benefits and risks. Each of these categories are also linked to specific emissions-intensive sectors. We feel that distinguishing credits in these areas will result in more diverse carbon removal projects presenting a wider range of durability, and will minimize the market for inexpensive, low-quality carbon removal projects.
Time-limited certification standards
The duration of carbon storage varies with each carbon removal pathway. Many carbon removal credits are currently issued without taking into account the temporary nature of some carbon storage methods. To account for this, the Commission has proposed time limits for certifications, but we also recommend the Commission require both retiring used carbon certificates and the mandatory replacement upon expiry—a practice referred to as horizontal stacking.
Incorporate environmental justice
Environmental justice is one of the key factors missing from the Commission’s proposed framework. Statistically, low-income and other disinvested communities contribute the least emissions but stand to bear the most harm from the impacts of climate change. At the same time, carbon removal projects can put the same disinvested communities at risk of displacement or economic harm.
To account for this, we recommend the Commission factor environmental justice into their framework, following the Criteria for High-Quality Carbon Removal.
Adopt language that differentiates minimum and preferred requirements
To raise the floor on carbon credit quality, we believe in a continuous improvement mindset. To do this, we recommend that the Commission adopt language to differentiate minimum requirements from preferred methodology. Using ‘must’ language for minimal thresholds and ‘should’ requirements with the preferred thresholds helps to set a higher standard and paves the way to elevate preferred standards to required once a threshold of market evidence is met.
Implement a standard for life-cycle assessments
The net removal of carbon emissions can vary with each type of carbon removal technology. Emissions life cycle assessments (LCA) are an important tool that should be used for assessing the efficacy of a carbon removal project. To ensure that the emissions associated with every aspect of a project are accounted for, we encourage the EU Commission to adopt clear standards for lifecycle assessments.
Align with science-based methodologies and certifications being developed globally
Quality and trust are eroded when too many organizations are allowed to set their own certification standards. The EU Commission’s certification standard has the potential to increase that trust by setting a scientifically-backed baseline for all organizations in the EU to abide by.
We recommend that the Commission look to the carbon removal project standardization and certification initiatives being developed around the world for guidance in the development of these baselines. We advise the EU Commission to align with other regional-, national-, and state-level policies that support science-based carbon removal certification methods.
Parallel to the public consultation process, the EU Commission has started a process for developing methodologies for specific carbon removal pathways, which will land into delegated acts. This process will be supported by an Expert group, which had its kick-off meeting on March 7th, 2023. Carbon Direct will be following this process closely, and where appropriate, provide insight into these developments.