As we count down to the 4th International Conference on Carbon Dioxide Removal in Milano, we are hosting a series of discussions on the research that will be shaping our sessions this June! 
This research investigates the “Removal Compliance System” (RCS) as a novel policy tool to generate long-term demand for permanent CDR in the EU beyond the existing ETS framework. 
It compares “polluter pays” versus “ability to pay” models, offering a roadmap to fill the projected policy gap between now and 2050. 
Read the full paper here: Link 
Full Abstract: Prospects for a large-scale CDR demand-side tool beyond the ETS: Investigating a Removal Compliance System
Authors: Francesca Battersby, Allix Baxter, Valter Selén
Achieving the EU’s climate neutrality target requires the rapid scale-up of permanent carbon dioxide removal (CDR). EU climate policy to date has been structured through three pillars – the EU ETS, the ESR, and the LULUCF regulation – however the post-2030 architecture remains largely unclear, with only the EU ETS set to continue under current law. What is more, permanent CDR does not have a clear place within this architecture. Integrating CDRs into the EU ETS has taken centre stage in discussions on the long-term financing of CDR. However the ETS may not be a full solution for CDR financing – overlooking other possible CDR demand sectors (such as residual emissions in ESR sectors), and alternative financing mechanisms that could be needed for different political times ahead. In this report, we examine possibilities for an EU Removal Compliance System (RCS) – a novel policy focused on generating long-term and large-scale demand for permanent removals in the post-2030 landscape. This builds on earlier proposals from Ecologic and IVL Sweden.
We consider three possible “demand sectors” – ETS entities, non-ETS non-CO2 emissions, and a “whole economy” approach – and two possible rationales – polluter pays and ability to pay. For each of these design options, we explore which sectors or economic actors could realistically be subject to an RCS. We estimate how much CDR different sectors could be expected to deliver, and, by modelling EU CDR availability and CDR costs, we quantify the cost of such an obligation. We also present insights, from interviews with experts, on the political, economic, and administrative practicability of each option.
Our findings indicate that a compliance scheme focused on ETS entities (where CDR obligations are levied as a share of total emissions) can generate significant early demand because of the large scope of the scheme. However, uncertainty about the future ETS cap, and the expected rapid decline in allowances, limits the role for the ETS to support CDR demand towards 2050. Expanding the RCS to non-CO₂ emissions increases coverage (and thus demand) while avoiding the “double burden” on each tonne of GHG emitted, enhancing political feasibility. However, MRV (im)maturity for emissions from non-ETS sectors presents a challenge. Finally, while polluter pays approaches are publicly supported and entrenched in law, they could be increasingly challenging to uphold: an ability-to-pay approach provides greater longevity for supporting CDR as emissions decline. Spreading CDR costs across the whole economy on an “ability to pay basis” is found to cost less than 0.22% of total turnover of “large” EU firms in 2050. We conclude with recommendations for sequencing CDR compliance policies into the future – highlighting a potential policy gap to support CDR demand in the period towards 2050. We make the case for a dedicated, novel CDR compliance instrument to address this gap.
Which of these policy paths do you think would work best for the EU to drive permanent carbon removal? 
