This post has been co-authored with Paul Zakkour, Director at Carbon Counts.
The provisional agreement on the EU’s Carbon Removal Certification Framework (CRCF) has been hailed as the first of its kind, a milestone for scaling carbon removal and potentially a foundation of a gold standard for carbon removal certification globally.
Yet there are some doubts over its actual political utility, and questions remain over how it will be implemented, by whom, and for what purpose. This situation is somewhat surprising, given the scale of analysis and discourse.
The evolving goal and use cases of CRCF
The goal and use cases of CRCF have been the subject of intense scrutiny since the proposal was first tabled in late 2022, as well as in the two years leading up to its publication. The purpose of the CRCF has been variously framed by the European Commission over recent years as:
1) Under the 2020 Circular Carbon Action Plan: the uptake of carbon removal and increased circularity of carbon, including restoration of ecosystems, forest protection, afforestation, sustainable forest management and carbon farming, long-term storage in wood construction, re-use and storage of carbon in products such as building material.
2) Under the 2020 Farm to Fork Strategy: certification to enable payments to farmers and foresters for carbon sequestration, including in the design of Common Agriculture Policy payments or, moreover, for private companies interested in purchasing such certificates to support climate action.
3) Under the 2021 Sustainable Carbon Cycles Communication: full integration of carbon removals into the EU climate policy to reach the climate neutrality objective.
By the time the legislative proposal was launched in 2022, CRCF was proposed as a “tool to support the achievement” of the EU’s climate neutrality goal by 2050.
Explicitly, the new provisional agreement text requires all carbon removals as well as the allowable emission reductions generated under the CRCF to contribute to achieving the Union’s Nationally Determined Contribution (NDC – the EU’s climate pledge under the Paris Agreement) and its climate objectives (the EU’s objective of climate neutrality by 2050 stipulated in the Climate Law). Contributing towards other countries’ NDCs and international compliance schemes through, for example, Article 6 related transfers is prohibited.
Thus, sitting at the core of the policy strategy is the tacit assumption that certifying individual CDR activities will result in removals that can be counted towards the EU climate objectives. Indeed, while some have expressed concerns about the approach leading to double counting, at least in our view, such ‘nesting’ of actions within national GHG accounts is an essential feature rather than a bug. But that is only half the story: even if we can agree that this connection is a political necessity, there are baked-in problems in trying to effect it.
The misunderstanding
Of course, carbon removal project developers undertake their activities in the belief that they are contributing to climate change mitigation and the Paris Agreement temperature goals by default—that is the premise of removing CO2 from the atmosphere.
Yet, carbon removal stakeholders seem to be mistakenly taking for granted that such actions seamlessly translate into removals that can be counted towards the NDC or 2050 climate objective. And therein lies a key misunderstanding: the MRV applied to removals using methodologies from the voluntary carbon market (VCM) do not necessarily ‘nest’ directly inside the accounts of removals recorded in Member States’ national GHG inventories. However, these GHG inventories are the MRV system that informs the EU’s policy performance scorecard with respect to its climate goals. Part of the job of the CRCF should be to close this gap.
Furthermore, the currently negotiated use case for CRCF units under the Green Claims Directive has added to the confusion. Stakeholders are assuming that the use case in the VCM is something to be taken for granted. Indeed, it has been highlighted as one of the possible CRCF use cases since the proposal was published. Of course, one way to circumvent ‘nesting’ problems is to restrict the use cases.
Yet, in an ideal world, emission reductions and removals created by VCM activities should contribute to the EU’s NDC and climate objectives. That is what the agreed CRCF text seems to be stipulating. But confusion reigns; while the U.S. has been the driving force of the VCM over recent years, Europe is still figuring things out – indeed, the very notion of using voluntary action to achieve EU climate goals is a radical departure from the Union’s more typical, top-down, regulatory approach.
National greenhouse gas inventories
The EU’s GHG emissions and removals are based on the measured and reported data in national greenhouse gas inventories of its 27 Member States. These data are used to track the progress toward its climate neutrality goal and the EU NDC. They count national emission tallies caused by human activity (industry, energy, waste, etc.) and emissions and removals on managed land. They are compiled based on the IPCC guidelines (1996, 2006, 2019).
The EU Governance Regulation seeks to harmonise data collection across EU policies (e.g. EU ETS data) and national authorities, but managed land poses some challenges. Here, countries can choose between more or less stringent accounting rules offered in the IPCC guidelines.
Using the IPCC guidelines to quantify carbon removal is challenging today for both conventional and novel carbon removal activities. By the end of 2027, the IPCC plans to finalise its methodology report on carbon removal technologies and carbon capture, utilisation, and storage. However, it will still take some time before countries can use this guidance to prepare their national GHG inventories.
Accounting for carbon removal
For conventional CDR activities (e.g. afforestation, reforestation, soil carbon sequestration), the way countries implement the IPCC guidelines varies widely and is often too general to link these calculations with project-based activities. For most novel CDR methods, there are no prescribed methods by which to capture the removal effect in the national GHG inventories. In these respects, there is currently no IPCC guidance for removals by DACCS, Enhanced Weathering, Biomass Burial, Ocean CDR, many types of CO2 stored in products, and many types of CO2 mineralisation.
Furthermore, the exact activity scope of the EU’s 2050 climate objective has not been established yet, so even if it were to encompass more than what can be accounted for under the national GHG inventories, there are no details on which exact activities are inside or outside of its scope.
In the EU context, BioCCS is in a peculiar situation. Whilst national accounting for emissions and removals from BioCCS is possible based on the IPCC guidelines, the EU’s climate policy structure today does not include BioCCS in its scope. During the last revisions, there were proposals to include BioCCS (specifically BECCS) in the scope of ETS and ESR, but those did not survive the negotiations. Hence, both ETS (Article 1) and ESR (Article 2) today only cater to emission reductions. Without such scope limitation and acknowledging that the existing guidance is far from perfect, BioCCS could be reported against the ESR targets already today.
Guidance exists for reporting emissions and removals from biochar production and use in the 2019 refinement to the IPCC 2006 Guidelines. This guidance doesn’t relate to the whole life cycle emissions of biochar production and use. Rather, at least in principle and depending on the actual material used to make biochar, a national GHG inventory would see harvested biomass leaving the LULUCF part of the GHG inventory (i.e. an emission), and then see it re-enter the LULUCF as biochar added to soil carbon (i.e. a removal). It would also see it leave the soil over time following assumed decay rates. Biochar production itself isn’t actually recorded as removal, and no other biochar use cases besides soil carbon enhancement are included. Using these guidelines is not mandatory, so countries can develop their own methods. Yet today, it is unclear whether any countries are reporting emissions and removals from biochar today.
Why is counting carbon removals towards the EU NDC and 2050 climate objective challenging?
The CRCF is seen as a critical bridge to creating a business case for economic agents to invest in carbon removals while addressing the political goal of increasing carbon removals towards the EU’s climate policy objectives. Thus, the CRCF’s utility lies in allowing removals to be certified and unitised by the private sector while also allowing these same actions to be counted in parallel in national GHG inventories.
When it comes to conventional carbon removal, national-level assumptions for large swathes of the same type of managed land and/or carbon pools therein are often applied in GHG inventory compilation. These assumptions are unlikely to dovetail with and/or capture at sufficient granularity the specific project-based carbon removal activities that might be certified under the CRCF. Yet it is the former, not the latter, that determines performance under the EU’s LULUCF Regulation, the EU’s NDC and so on.
Presently, novel CDR credits issued in the VCM to activities inside the EU today are mostly not contributing to achieving the EU’s climate objectives and so far fall outside the scope of its NDC. There are widespread expectations among stakeholders that the new NDC, due to be submitted in 2025 (still a year before the CRCF is likely to become operational), could add a few novel CDR activities to its scope. Clearly, MRV applied in national GHG inventories needs to be improved, but that takes significant time and effort. So, in parallel, smarter approaches are also needed to help plug gaps in national records so that these actions can start to count. The legislative proposal on the EU’s 2040 climate target, likely to be published in the summer of 2025, is expected to offer further details.
Conclusion
Effective nesting of CRCF certificates inside national GHG inventories cannot yet be taken as a given, and is unlikely to be so for some time to come. Hence, it is difficult to establish the link between the activities under the CRCF and their required contribution to the EU NDC and 2050 objective.
Some cleanup is needed to satisfy commercial, political, and of course, environmental goals. This may be through better harmonisation in MRV but also via other measures that can work to resolve accounting discrepancies and fully embrace a broad range of both conventional and novel CDR activities within EU climate action.
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