EU ETS pilot phase for Beccs, Daccs in 2025: study

The EU emissions trading system (ETS) should integrate bioenergy carbon capture and storage (Beccs) and direct air carbon capture and storage (Daccs), starting with a pilot phase in 2025 and moving to full EU ETS coverage in 2030-35, researchers suggest.

In a paper expected to be published at the end of May, researchers including Wilfried Rickels of the Kiel Institute for the World Economy suggest a path starting with the revision of the EU ETS in 2021, and leading up to 2040, when the EU could start designing a net-negative cap. An earlier version of the paper, Kiel Working Paper 2164, was published last September.

The researchers suggest that the revision of the EU ETS, due this summer, should include replacing free allowance allocations with a carbon border adjustment mechanism. This would further boost incentives for fossil CCS, which in turn could lead to declining costs for Beccs and Daccs — thanks to scale effects and increased competition and learning, and because transport and storage infrastructure can be shared with fossil CCS.

The researchers then suggest that in 2023 the EU continues to lower existing regulatory barriers for Beccs and Daccs regarding, among other things, permitted means of CO2 transport, monitoring and reporting regulations, and the EU taxonomy for sustainable activities.

By 2025, the researchers suggest launching the pilot phase, which would be evaluated between 2030-35, gradually moving towards full EU ETS coverage. Evaluating the effects should take into account the long lead times between investments and operation of Beccs and Daccs. If needs be, the policy should be adapted to ensure that the reward is sufficiently strong for investors to risk financing Beccs and Daccs.

Between 2035-40, scaling up should be allowed as marginal abatement costs increase and Beccs and Daccs become more competitive. And in 2040, the EU should start the "challenging task" of designing a net-negative cap.

Regarding the comment made late last year by the European Commission's Peter Zapfel that carbon removals will play a bigger role in the 2030s than in the 2020s, Rickels argues that whether or not negative emissions technologies have a quantitative impact in the EU ETS, the legal framework conditions should be created and the technology development supported.

Zapfel, head of governance and effort sharing at the commission's Directorate-General for Climate Action, said that "quality over speed is more likely to lead us to success" in setting up a carbon removals framework for the bloc.

But the market is overtaking politicians, Rickels warns. Several larger companies have announced net-zero or even — in the case of Microsoft — net-negative reduction targets. They will add to the dynamism of negative emissions technologies on the voluntary market, away from the EU ETS. More companies will follow suit and put increasing pressure on regulators and politicians to create standards for aspects such as eligibility or permanence, Rickels says.

Now that the EU's new reduction target has been finally agreed, its focus will shift towards how to reach it, Rickels points out. In this context, negative emissions technologies will have to play a role, he adds.

Rickels also expects other sectors — mainly buildings and transport — to be integrated in the EU ETS, and for agriculture to be merged with the land use, land use change and forestry (LULUCF) sector to form the "ALULUCF" sector. Afforestation credits would then offset agricultural emissions.

By Chloe Jardine