23 September 2026

With its proposal to revise the EU Emissions Trading System, the European Commission laid the groundwork for a European market for permanent carbon removal in July. The design of that market now matters. DVNE calls for six changes to ensure that the proposed procurement mechanism can deliver 250 million tonnes of permanent carbon removal by 2040. The decision concerns climate action – and whether a new industry creating sustainable economic value and high-quality jobs can grow in Europe.

The proposal must create a market that works

In July, DVNE welcomed the proposal as a potential market breakthrough for carbon removal. It stands by that assessment. The focus now turns to implementation: What rules, exactly, will turn this political signal into tonnes of CO₂ permanently removed? Under the Commission’s proposal, the EU would initially act as the central buyer. Companies with EU ETS compliance obligations would not generally be able to buy removal units themselves and surrender them against those obligations.

Why Europe needs this industry

Carbon removal is necessary to balance residual emissions on the path to climate neutrality and, after a temperature overshoot, to help bring temperatures back down by removing historical emissions. Scaling up CDR also offers an economic opportunity. New companies and supply chains can emerge around removal methods, facilities, storage and services. For Germany and Europe, which need to end their dependence on fossil fuels and transform established industries such as the automotive sector, this is a major opportunity.

“Germany and Europe urgently need an answer to the question of where future economic value and sustainable jobs will come from. We must end our dependence on fossil fuels, while major sectors such as the automotive industry are undergoing profound change. A strong CDR industry can be part of the answer. Whether it grows here also depends on how we design the EU Emissions Trading System now.”

Stefan Schlosser, Managing Director of DVNE

This potential will not realise itself. Projects with long development and construction timelines need reliable demand and financing that works before the first tonne is delivered. Whether the EU ETS provides these conditions will help determine whether this new industry is built in Europe. DVNE proposes six specific changes to the Commission’s proposal:

1) Make 250 million tonnes a binding delivery obligation

Auctioning 250 million allowances does not yet create a legal obligation to deliver 250 million tonnes of permanent carbon removal. DVNE therefore calls for that volume to be written explicitly into law as a delivery obligation by 2040. The allowances would be the means of paying for it. For project developers, a binding commitment would provide a firmer basis for long-term investment than an announced procurement volume alone.

2) Open eligibility to all permanent removal methods

The Commission’s proposal names bioenergy with carbon capture and storage (BioCCS) and direct air carbon capture and storage (DACCS). Yet the EU’s Carbon Removals Certification Framework (CRCF) also recognises other methods as permanent, including biochar carbon removal. DVNE calls for all methods certified as permanent under the CRCF to be eligible, including methods certified in the future. Common quality requirements should determine which removals can enter the mechanism. Technology neutrality can strengthen competition and support industrial deployment across more regions of Europe.

3) Close the price gap

Permanent carbon removal often costs more today than the proceeds from auctioning an allowance can cover. In DVNE’s view, the ten million allowances that the Commission proposes to hold in reserve against this price gap are a first step, but not a complete solution. The association calls for carbon removal to be made eligible for Carbon Contracts for Difference under the proposed Industrial Decarbonisation Bank. These contracts could cover the difference between the cost of a removal and the prevailing allowance price. Unused revenue from the proposed International Credits fund should also go to the European removals programme first.

4) Offer offtake agreements from 2029

Large new facilities need three to five years from a final investment decision to their first delivery. If long-term offtake agreements are signed only when central procurement begins in 2031, the first tonnes from those projects may arrive too late for the planned scale-up. DVNE therefore calls for agreements to be offered from 2029 and for the enabling delegated act to be adopted within twelve months of the reform entering into force. Construction needs to begin before the EU needs the removed tonnes.

5) Open a capped direct purchase route

Alongside central procurement, EU ETS operators should be able to buy CRCF-certified permanent removal units directly. DVNE proposes a clear limit: up to one per cent of an operator’s annual surrender obligation. Every unit used through this route would be deducted from the central 250-million-tonne programme, and the corresponding allowance would be cancelled. This would create another group of buyers without creating additional emission space. It would also allow operators and removal suppliers to establish direct commercial relationships.

6) Provide a pathway beyond 2040

The proposed programme ends in 2040. Permanent removal facilities, however, are often financed through offtake agreements lasting ten to fifteen years. Without a pathway beyond 2040, it could become difficult to contract new projects years before the programme formally ends. DVNE therefore calls for the review scheduled for 2034 to be accompanied by a legislative proposal for the period after 2040. That proposal should also cover ETS2, the emissions trading system for buildings and road transport.

Further questions for the legislative process

For international credits, DVNE calls for standards of permanence, additionality and traceability at least equivalent to those the CRCF requires of European suppliers. Within that quality threshold, removals should take priority over reduction credits and account for the large majority of the volume purchased.

DVNE also believes carbon farming should not be excluded from the EU ETS permanently. If a carbon farming unit is to compensate for a fossil emission, its effect must be backed by an equivalent guarantee of permanence. DVNE calls for potential guarantee mechanisms to be assessed as part of the 2034 review and piloted beforehand. Such units should become eligible for this purpose only once a mechanism exists and has been tested.

The EU has opened a potential route to scaling up permanent carbon removal. Parliament and Member States must now decide whether the mechanism can deliver the volumes it promises. The outcome will also help determine whether Europe turns a climate necessity into an industry for the future.

Joint statement by European CDR associations

In a joint statement, the European carbon removal associations DVNE (Germany), NEP (Europe), AFEN (France), NCRA (Denmark, Norway, Sweden, Iceland and Finland) and RIRC (Italy) welcome the Commission’s proposal. Together, they represent more than 170 companies and organisations. They also call for stronger measures to enable permanent carbon removal at the scale Europe will need.