Commission proposal for a carbon removal certification framework

The Carbon Removal Certification Framework aims to promote sustainable solutions and innovative carbon capture and storage technologies.

The European Commission has presented a proposal for a first EU-wide voluntary framework for reliable certification of high-quality carbon removals (Carbon Removal Certification Framework, CRCF) (Regulation COM(2022) 2022/0394(COD)). The proposal published on 30 November 2022 is intended to an effective certification framework for the certification of carbon removal and sequestration from the atmosphere. This is intended to incentivise business models in this area and create greater transparency and quality. The Regulation is part of the European Green Deal.

In addition to the reduction of greenhouse gas emissions, the removal of carbon from the atmosphere (carbon removal) is a key pillar of the European climate protection project to become the first climate-neutral continent by 2050. Not all CO2 emissions can be prevented altogether. Particularly in the aviation sector and individual industrial sectors, it will be impossible to completely eliminate carbon emissions. As compensation for such emissions, the EU is now relying on carbon removal and storage in addition to reduction of carbon emissions.

Companies and countries in the EU and around the world already use various mechanisms to balance their emissions. The certification of so-called negative emissions now adds a new procedure. In order to create an incentive for operators in agriculture, forestry and industry to capture and store carbon, the planned certificates are to serve as proof of high-quality carbon removal and can be sold. This is intended to create a new income opportunity for various industries.

Smaller markets for voluntary carbon removal certificates already exist, for example in afforestation. However, there is no EU-wide established, controlled and quality-assured system to monitor and verify whether the certificates actually reflect the amount of carbon removed from the atmosphere. In addition, the value of the certificates is often not quantifiable due to the currently unclear possibilities of use. Meanwhile, according to the draft Regulation, carbon removals in natural ecosystems have been decreasing in recent years, and there are also no significant industrial carbon removals. Accordingly, the proportion of carbon removed is therefore low. Yet demand from companies for certificates to offset carbon emissions is continuously increasing.

The Commission is now addressing these problems with its proposal to harmonise the certification of negative emissions. The aim of the CRCF is to establish consistent monitoring, reporting and verification procedures for various removal activities.

Certification option to incentivise carbon removals

Under Article 2 (1) (a) CRCF, the term CO2 removal means, 

either the storage of atmospheric or biogenic carbon within geological carbon pools, biogenic carbon pools, long-lasting products and materials, and the marine environment, or the reduction of carbon release from a biogenic carbon pool to the atmosphere.

Article 2 (1) (g) – (i) of the draft CRCF specifies and defines three different certification methodologies for carbon removal activities: permanent carbon storage, carbon farming, and carbon storage in products.

The removal activity of permanent storage by industrial processes means in particular technological processes for the long-term storage of carbon, such as direct air carbon capture and storage (DACCS) or bioenergy with carbon capture and storage (BECCS). In addition, carbon can also be stored in products, especially in durable building materials such as wood or bonded carbonate.

"Carbon farming" as a pillar of the agriculture of the future

In addition, climate-efficient agriculture (carbon farming) in particular holds considerable potential for effective carbon removal. This generally means targeted agricultural measures for carbon removal and sequestration. The draft regulation defines carbon farming in Article 2 (1) (h) CRCF as

a carbon removal activity that, under normal circumstances and using appropriate management practices, stores atmospheric or biogenic carbon for several centuries, including bioenergy with carbon capture and storage and direct air carbon capture and storage.

Carbon is often broken down by nature, which absorbs carbon as part of the natural carbon cycle. Forests, moors and fields bind carbon. These natural processes can be fostered by implementing appropriate measures. Activities that enable and enhance carbon storage in soils and forests, such as forest restoration or better soil management, as well as reducing carbon release from soils, for example by restoring peatlands that can store carbon, can naturally remove and store carbon. Carbon farming will become an integral part of EU agriculture due to its considerable potential. It is treated as an essential removal option in the proposal. As the EU has set an ambitious target in the land use, land use change and forestry (LULUCF) sector to remove a net amount of 310 million tonnes of carbon by 2030, the introduction and expansion of carbon farming is a necessity for the EU member states.

"QU.A.L.ITY" – European carbon removal quality standard

The main objectives of the Regulation are to ensure high-quality carbon removals and to establish an EU governance system for their certification. For quality assurance purposes, the EU uses four quality criteria set out in Articles 4–7 CRCF, which must be met for certification:

1. The carbon removal activity must be quantifiable and provide a net carbon removal benefit.
2. It must go beyond statutory requirements, i.e. be additional.
3. The activity must ensure the long-term storage of carbon.
4. The activity must be fully sustainable, i.e. it must also take into account further environmental objectives such as biodiversity, adaptation to climate change, reduction of greenhouse gas emissions, water quality and the circular economy, or have a positive side effect in relation to these sustainability objectives (sustainability).

Carbon removal must result in clear benefits for the climate and protect, or ideally strengthen, other environmental goals such as biodiversity. Compliance with these criteria (quantification, additionality, long-term storage and sustainability) will be regularly verified in practice by recognised independent certification bodies and – if demonstrated – certified. The certification body's certificate of compliance is registered in the certification scheme and the net benefit of carbon removal is certified in a publicly accessible register.

No one-size-fits-all solution for all carbon removal activities

In order to harmonise the quality and comparability of carbon removals, the EU Commission lays down rules for this independent verification of carbon removals and rules for the recognition of certification schemes in Articles 9–13 CRCF. However, the methods for certification still have to be developed by the European Commission within the framework of a delegated act. Since there are varying advantages and disadvantages to each of the different carbon removal activities, there must be several certification methods. In order to be able to establish these appropriately, the Commission will gradually develop the certification methods and tailor them to the individual activities, taking into account various climate-related factors. The development process is based on experience with existing certification protocols and consultation with a carbon removal expert group. This expert group will meet twice a year. A first meeting is scheduled for the first quarter of this year.
It will then be up to the EU member states to implement the Regulation's provisions. They must establish public certification systems for the participation in EU-wide certification, which must be approved by a decision of the Commission. The certification systems will appoint the certification bodies responsible for testing and issuing, which must be accredited by a national authority. These certification bodies are then responsible for assessing the conformity of the carbon removal activity submitted with the application with the quality criteria.

Versatile use cases for certificates

There are many possible uses for the certificates. In addition to the sale on voluntary removal certificate markets, the following application and use options are available, for example:

• Food companies can reward farmers for the additional carbon reduction from storage in soil or climate-friendly practices such as agroforestry and in return label their products accordingly.
• Operators of carbon farming can reliably document their carbon footprint for a wide range of purposes.
• Authorities and private investors promoting innovative removal projects can use the certification schemes to better compare bids and promote the respective projects based on the amount of certified removals.
• The establishment or expansion of nature parks can be financed through the sale of carbon removal certificates.
• Construction companies or property owners who invest in sustainable building materials that remove and store carbon can earn additional revenue by selling carbon removal credits.
• The certificates can be used as evidence of results-based funding under EU programmes such as the Common Agricultural Policy or the Innovation Fund.
• Within the private market, e.g. for offsetting and reducing carbon for international aviation, the certificates can be used transparently as evidence of offsetting aviation emissions.

Details of the certification still to be clarified

Regulations implementing the certification framework envisaged in the draft Regulation have yet to be developed and adopted as secondary legislation. Before that, however, the European Commission's proposal must be adopted in the European legislative procedure. Certification can therefore only be used once the Commission has adopted the first certification method and recognised the first certification system proposed by an EU member state. Whether a new market for negative emissions trading will develop from this remains to be seen, not least given the voluntary nature of certification. In any case, it is not intended that the certificates would be eligible to participate in the EU Emissions Trading System (ETS).

Farmers, foresters and individual industries should keep an eye on further developments and the legislative process and keep themselves up to date regarding their individual options and potentials for carbon removal as well as any associated costs. CMS has been successfully involved in the past in connection with carbon certificates and carbon farming and offers all-round advice on the issues arising.