Access to state support and EU emissions trading key to scaling carbon removals – report

Carbon dioxide removals (CDR) from the atmosphere will be key to reaching climate neutrality, and the scale-up of relevant technologies requires subsidies and the integration into European emissions trading systems (EU ETS), said a report commissioned by the lobby group German Association for Negative Emissions (DVNE).

“The integration of CDR into the EU Emissions Trading System (EU ETS) is one of the most important levers for creating sustainable, large-scale demand for permanent CO2 removal,” said the report by the Boston Consulting Group (BCG). It proposes step-by-step integration from the early 2030s, initially focussed on permanent carbon removals – usually those that store carbon underground. In addition, the German government should introduce a national support system which includes state purchases of CDR certificates, one-off subsidies for individual projects, and carbon contracts for difference (CCfD).

 Removing CO2 from the atmosphere will be necessary to balance out unavoidable residual greenhouse gas emissions, such as methane from livestock farming, making it a key tool that the EU will use to reach its net zero by 2050 target. In addition, reports by the United Nations Intergovernmental Panel on Climate Change (IPCC) have said it will likely even be necessary to remove more carbon from the atmosphere than is emitted to return global warming to 1.5°C following a higher peak this century. This would be done through natural carbon sinks like forests and peatland, and through technologies like direct air carbon capture and storage (DACCS).

Germany aims for climate neutrality by 2045, which could require the removal of 49-229 million tonnes of CO2 annually to balance out residual emissions by that time, as the report states.  For this, investments to the tune of 6 billion euros by 2030 and 90 billion euros by 2045 are needed, it said.

The last German government aimed to introduce a 2060 target for net-negative greenhouse gas emissions, as well as intermediate targets for technical carbon sinks as part of a long-term strategy for negative emissions. However, it failed to present a strategy before the coalition collapsed in 2024. Business daily Handelsblatt reported that the current coalition government aims to continue efforts and present a strategy in August or September.