In a recently published report prepared for the European Commission, ‘An EU Purchasing Programme for Permanent Carbon Removals: Assessment of Policy Options and Recommendations for Short-Term Policy Design’, Hugh Mcdonald, Jonathan Gardiner, Benjamin Gorlach and John Tarpey from Ramboll have tackled the absence of demand for permanent CDR. In doing so, they have ascertained and evaluated the policy tools that can be used to operationalize an EU purchasing programme and elaborated upon a policy tool that can be implemented to put in place a purchasing programme running from 2025 until 2030.
Key takeaways:
- The general goals of a programme to be launched for the realization of permanent CDR are geared towards ensuring that the EU achieves its climate objectives in a secure, equitable and efficient manner.
- More specifically, such a programme would endeavor to ‘support CDR technology and market development, generate public and private demand for high quality permanent CDR and ensure effective and cost-effective public CDR governance.’
- There are seven different policy tools that can be put in place to facilitate the implementation of the program through the establishment of an ‘EU-Coordinated Buyers’ Club, EU Removals Fund, Centralized Procurement Agency, Investment Vehicle, Independent Foundation, Carbon Central Bank and Rules-based Mechanism’.
- In the short term, from 2025 until 2030, the establishment of a model on the basis of the EU Removals Fund that also possesses the features of the Centralised Procurement Agency and EU Coordinated Buyers Club would offer the most swift and effective pathway for incentivizing demand and assisting in technology development.
- In the medium term, from 2030 until 2040, a variety of policy tools such as EU Removals Funds or Carbon Central Bank can be put in place depending on the long-term goals shaped by decisions pertaining to ‘ETS integration, carbon removal obligations or continued public funding of CDR’. The successful implementation of all policy tools is contingent upon robust support for technology and market growth.
- In the long term, from 2040 onwards, a carbon removal purchasing programme should reflect the EU’s general climate goals and be designed on the basis of the identity of the entity held responsible for carbon removal, i.e. public bodies or private emitters.
- In the short term, the purchasing program should not only finance removal credits but also facilitate the diversification of the available permanent removal methods by buying credits for CDR activities carried out through having recourse to a wide range of CDR methods.
- During the creation of a portfolio for purchasing CDR credits, a trade-off should be made between different goals that relate to innovation underpinning the emergence of different CDR methods, social exigencies and cost minimization.
- Competitive tendering using offtake agreements should be implemented for the short-term purchases as they can give weight to divergent goals and be quickly implemented.
- The purchasing program can offer additional services such as due diligence, diversification and provision of guarantees to mitigate the risks other carbon removal purchasers may face stemming from the quality and completion of carbon removals as well as the policies that are used to govern them.
- Diverse entities such as the EU, member states and private entities should be incentivized to provide funding.
See the full report here: An EU purchasing programme for permanent carbon removals - Publications Office of the EU