Please find attached Climeworks response to the public consultation on "Carbon removals and carbon farming - methodologies for certifying permanent carbon removals". We would like to thank the Commission for all of your efforts in developing this important piece of regulation for the Carbon Dioxide Removal industry in Europe.
Integration of removals into the ETS is critical for the ETS functioning and scaling permanent removals. Removals are critical meet the EUs 2040 climate targets. The EU ETS is a core component of EU climate policy. Without removals, the ETS will face liquidity challenges as the number of allowances reduces towards zero towards the end of the 2030s. Thereafter permanent removals are required to achieve the economically efficient balance between permanent removals and residual emissions. Integration must be designed to support a gradual scale-up in permanent removals across technology types already in 2030 to achieve this goal a straightforward integration is not sufficient. Complimentary policies are required. Simply creating equivalence between permanent CRCF units and EUAs will not deliver the volume of removals required in a sustainable ramp-up, likely only incentivizing BECCS and DACCS from 2035-40. This delayed incentivization would require a rapid, and likely infeasible, scaling of permanent removals from 2035-40. Policy design choices need to ensure a more sustainable ramp-up from 2030. To achieve this ramp-up within the ETS we propose a Carbon Removal Allowance (CRA) sub-mandate within the ETS. This integration model would function as follows: Permanent removal projects generate Carbon Removal Allowances (CRAs) These are differentiated from European Union Allowances (EUAs) Compliance entities are required to surrender a growing % of CRAs over time, reflecting volumes under EU climate targets and reaching 50% by 2040 (see Figure 1) Such an approach would support the transition to a net cap whereby at net-zero 100% of emissions are compensated for with permanent removal units. The attached file has more details on the policy design and implications.