While Washington is busy dismantling climate policy, Brussels is quietly building the market architecture that could make carbon dioxide removal a viable industry. A new paper published in the journal Joule on March 31st makes the case — with numbers.
The Study
Led by Darius Sultani and Michael Pahle at the Potsdam Institute for Climate Impact Research (PIK), the paper — How the EU can utilize its carbon market to scale up Carbon Dioxide Removal — models what happens when CDR technologies are integrated into the EU Emissions Trading System.
The headline finding: around 60 million tonnes of CO₂ removals per year by 2050, primarily through direct air capture (DAC) and bioenergy with carbon capture and storage (BECCS). Potentially higher, depending on how fast costs fall.
That number matters. 60 Mt/yr is roughly the point at which CDR stops being a niche demonstration activity and starts being infrastructure — comparable in scale to entire national emissions budgets.
Why ETS, Not Subsidies?
The authors’ core argument is that markets do what grants cannot: they provide long-run price certainty.
DAC and BECCS are capital-intensive. The economics only work if developers can count on a carbon price floor years into the future. Grant-by-grant government support — however generous — doesn’t provide that signal. A carbon price built into ETS does.
“Using a market-based instrument makes sense,” said Sultani, “given limited fiscal space and growing pressure to meet climate neutrality targets.”
The EU faces a fiscal bind: lots of climate ambition, not infinite budget. ETS revenue is already substantial. Extending the price signal to cover removals is, in principle, free to governments — the market does the incentivising.
The “Permanence Guarantee” Question
The obvious concern: what happens if removals are used as an excuse to weaken emissions cuts? This is the classic offset loophole problem that has plagued carbon markets since Kyoto.
The PIK study addresses it directly. Within a capped system, the risk is structurally limited. The total allowances in the system are fixed. If removals underperform, carbon prices rise, which forces additional emissions reductions elsewhere. The cap does the disciplining.
The authors do flag one real risk: political pressure to raise the cap in response to rising prices. That’s not a market failure — it’s a governance failure. The paper calls for safeguards, including sustainability standards for BECCS (excessive biomass demand is a real concern for land use and biodiversity).
Phased Integration — Three Stages
The proposal isn’t “throw CDR into ETS immediately.” It’s a careful step-by-step:
- Phase 1 (now → ~2035): Build the infrastructure — robust MRV systems, sustainability standards, baseline data. Get the plumbing right before turning on the tap.
- Phase 2 (~2035–2040): Introduce removal credits gradually, with volume limits and scope restrictions. Let the market learn.
- Phase 3 (~2040 onward): Full integration — removals and residual emissions governed by a single carbon price, the ETS cap adjusted for net-zero ambition.
That’s a realistic timeline. It matches the EU’s own Carbon Removal Certification Framework (CRCF) trajectory and the European Commission’s pledge to decide on ETS inclusion of removals by 2026.
The Contrast with Washington
It would be easy to frame this as “Europe vs the US.” It’s more structural than that. The EU has spent 20 years building a carbon pricing infrastructure. It has institutional memory, regulatory capacity, and political will to use price signals as the primary climate tool.
Whatever direction US federal policy takes, that infrastructure exists. And it can be extended to removals.
CDR investors looking for durable demand signals know where to look: Brussels, not Washington.
What This Means for the CDR Ecosystem
If the European Commission follows through — and the PIK paper gives policymakers a concrete mechanism to do so — the implications are significant:
- DAC developers gain a credible long-run revenue model in Europe, independent of US DOE funding cycles
- BECCS projects (like those at Drax and Stockholm Exergi) can price their removal credits against a transparent market benchmark
- Smaller CDR methods (enhanced weathering, ocean alkalinity enhancement) that earn certificates under the CRCF could eventually plug into the same price signal
The 60 million tonne number is a model output, not a guarantee. Cost trends, political decisions, and technological progress will all shape the actual outcome. But the architecture being proposed is coherent — and that’s more than most CDR policy proposals can claim.
Source: Down to Earth | Sultani et al., Joule, March 2026