In a report that has been published by Carbon Gap, ‘EU-US Carbon Removal Policy Comparison - Final Report’, Francesca Battersby, Alexis Dunand, Katie Lebling, Danielle Riedl and Valter Selén have compared CDR policies of the US and EU.
Key takeaways:
- The EU’s Carbon Removal and Carbon Farming Regulation (‘CRCF’) is set to regulate the first certification program run by a public body upon its entry into force.
- In the US there are no federal regulations setting out rules regarding CDR certification. However, there are policies mandating operators to follow certain monitoring, reporting and verification (‘MRV’) requirements.
- The rules that will be issued in relation to Paris Agreement’s Article 6.4 are likely to influence the quality of other MRV standards.
- Despite the increase of the carbon transport and storage activities in the EU, most of them are at a nascent stage. Factors that may hamper the growth of such activities include lack of investment, concentration of carbon transport and storage facilities in the vicinity of the North Sea to the exclusion of other regions and lack of public understanding.
- In the US, the carbon transport and storage activities are not growing due to the lengthy approval processes and public skepticism.
- The EU funding for CDR research, development and innovation (‘RD&I’) is insufficient due to three reasons. First, other green technologies are preferred over CDR. Second, the EU and member states cannot take adequate coordinated action. Third, sources allocated to CDR funding are not monitored systematically.
- The US funding for RD&I has increased significantly during the last five years. The majority of funding, particularly for pilot activities, has been allocated to direct air capture (DAC) projects. However, more funding will be needed to expand the scope of the research activities carried out with respect to other CDR methods as well as social science issues pertaining to CDR.
- In the EU, member states such as Denmark, Sweden and the Netherlands have granted more deployment incentives than the EU. Most of such deployment incentives focus on bioenergy with carbon capture and storage (‘BECCS’) due to being perceived as cost effective by the Nordic countries.
- Notwithstanding the present lack of action, as demonstrated by the progress it has made with respect to other technologies, the EU possesses an adequate regulatory framework that it can put into use for incentivizing the deployment of CDR technologies.
- In the EU, the 45 Q credit, the only federal deployment incentive, facilitates the employment of DAC to the exclusion of other CDR methods, a situation that has led to demands for facilitating the application of this policy for other technologies. Deployment incentives adopted at the state level provide support both for DAC and other CDR methods.
- The US is playing a pioneering role in the government procurement of CDR, with tools available to support different CDR technologies at various levels of maturity. This status quo shaped by the strength of federal laws can undergo transformations in the case of changes with the Administration and Congress, potentially leading states to act as the major public funders for the CDR.
- Neither the EU nor the member states engage in CDR procurement.
- In the EU, the CRCF may be used to carry out quality evaluations in relation to the incorporation of CDR into EU compliance instruments, However, integrating CDR into the EU Emission Trading Scheme may pose a moral hazard by hindering the achievement of the goal of eliminating the covered emissions if certain guardrails are not taken.
- In the US, there is no federal compliance regime governing CDR. However, some states have started including CDR in their compliance frameworks.
Read the full report here: https://tracker.carbongap.org/regional-analyses/eu-us-final-report/