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Carbon Removals and EU ETS future
Eve Tamme
Managing Director
Climate Principles
Managing the future risks of the EU ETS and Net Zero, 20 April 2023
Who am I?
Eve Tamme
• 20 years of experience in climate policy, 15 years as a
policymaker
• Worked on the EU ETS since its launch in 2005
• Managing Director of Climate Principles — climate policy
advisory with a focus on carbon markets, carbon removal
and carbon capture
• Chair of Zero Emissions Platform
• Board of Directors at Puro.earth
• Board of Advisors at Carbon Gap
• Part of the European Commissions Expert Group on Carbon
Removals (observer in an individual capacity)
• Writing, speaking and media engagements + climate policy
blog at evetamme.com
Carbon Removal Methods
Source: Carbon Dioxide Removal and Certification – What is it and why is it needed? Carbon Gap, Bellona and CATF, 2022
Source: The State of Carbon Dioxide Removal – 1st Edition, 2023
Broad durability timescale
Agreed LRF 4.3 % per year 2024-2027 and 4.4 2028-2030, reaching zero at 2039
EU ETS reaches zero in 2039
Source: Wilfried Rickels, Roland Rothenstein, Felix Schenuit, Mathias Fridahl, Procure, Bank, Release: Carbon Removal Certificate Reserves to Manage Carbon Prices on the
Path to Net-Zero, Energy Research & Social Science, Volume 94, 2022
• Decreasing allowance
supply
• Increasing volatility
and price spikes
Including removals in the EU ETS
Three main ways to include removals in the EU ETS in its current form:
1) as new activities in Annex I of the EU ETS Directive, or
2) by allowing the use of carbon removal certificates from outside the EU
ETS for compliance in the EU ETS, or
3) combination of the two options above.
Considerations
What types of removals?
Governance
Quantity
How many removals?
How? The ETS design,
role of gvts etc
From when? A phased
approach?
Timing
Quality
“… by July 2026 the Commission should report to the European Parliament and to the Council on how
emissions removed from the atmosphere and safely and permanently stored, for example through
direct air capture, could potentially be covered by emissions trading, without offsetting necessary
emissions reductions.”
Source: La Hoz Theuer, S., Doda, B., Kellner, K. and Acworth, W. (2021). Emission Trading Systems and Net Zero: Trading Removals. Berlin: ICAP.
Governance models (1)
Governance models (2)
Rickels et al:
• Conditional supply of carbon
removal certificates to the EU ETS to
support dynamic carbon price caps
• Supply organised by Carbon Central
Bank (no direct exchange between
emitters and carbon removal project
developers)
• Creates further options for climate
policy by more flexibility in
managing the purchase and the
inventory of purchased certificates
Conclusions
• The EU ETS needs removals, and removals
need the EU ETS
• The upcoming 2040 climate target defines
the way forward. 2030-2040 will need to see
substantial scale-up of removals
• There is a wide range of governance options
to consider + aspects of timing, quality and
quantity
• The allowance price will not be enough to
scale more expensive carbon removal
methods. CCfDs and other tools can help.
@EveTamme
EveTamme
evetamme.com;
Eve.Tamme@climateprinciples.com
climateprinciples.com
Thank you

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Carbon Removals and EU ETS future

  • 1. Carbon Removals and EU ETS future Eve Tamme Managing Director Climate Principles Managing the future risks of the EU ETS and Net Zero, 20 April 2023
  • 2. Who am I? Eve Tamme • 20 years of experience in climate policy, 15 years as a policymaker • Worked on the EU ETS since its launch in 2005 • Managing Director of Climate Principles — climate policy advisory with a focus on carbon markets, carbon removal and carbon capture • Chair of Zero Emissions Platform • Board of Directors at Puro.earth • Board of Advisors at Carbon Gap • Part of the European Commissions Expert Group on Carbon Removals (observer in an individual capacity) • Writing, speaking and media engagements + climate policy blog at evetamme.com
  • 3.
  • 4. Carbon Removal Methods Source: Carbon Dioxide Removal and Certification – What is it and why is it needed? Carbon Gap, Bellona and CATF, 2022
  • 5. Source: The State of Carbon Dioxide Removal – 1st Edition, 2023 Broad durability timescale
  • 6. Agreed LRF 4.3 % per year 2024-2027 and 4.4 2028-2030, reaching zero at 2039 EU ETS reaches zero in 2039 Source: Wilfried Rickels, Roland Rothenstein, Felix Schenuit, Mathias Fridahl, Procure, Bank, Release: Carbon Removal Certificate Reserves to Manage Carbon Prices on the Path to Net-Zero, Energy Research & Social Science, Volume 94, 2022 • Decreasing allowance supply • Increasing volatility and price spikes
  • 7. Including removals in the EU ETS Three main ways to include removals in the EU ETS in its current form: 1) as new activities in Annex I of the EU ETS Directive, or 2) by allowing the use of carbon removal certificates from outside the EU ETS for compliance in the EU ETS, or 3) combination of the two options above.
  • 8. Considerations What types of removals? Governance Quantity How many removals? How? The ETS design, role of gvts etc From when? A phased approach? Timing Quality “… by July 2026 the Commission should report to the European Parliament and to the Council on how emissions removed from the atmosphere and safely and permanently stored, for example through direct air capture, could potentially be covered by emissions trading, without offsetting necessary emissions reductions.”
  • 9. Source: La Hoz Theuer, S., Doda, B., Kellner, K. and Acworth, W. (2021). Emission Trading Systems and Net Zero: Trading Removals. Berlin: ICAP. Governance models (1)
  • 10. Governance models (2) Rickels et al: • Conditional supply of carbon removal certificates to the EU ETS to support dynamic carbon price caps • Supply organised by Carbon Central Bank (no direct exchange between emitters and carbon removal project developers) • Creates further options for climate policy by more flexibility in managing the purchase and the inventory of purchased certificates
  • 11. Conclusions • The EU ETS needs removals, and removals need the EU ETS • The upcoming 2040 climate target defines the way forward. 2030-2040 will need to see substantial scale-up of removals • There is a wide range of governance options to consider + aspects of timing, quality and quantity • The allowance price will not be enough to scale more expensive carbon removal methods. CCfDs and other tools can help.