EU Climate Framework for 2040: How to Incentivise Carbon Removals?

Dr. Nils Meyer-Ohlendorf; Sabine Gores; Jakob Graichen

EU Climate Framework for 2040: How to Incentivise Carbon Removals?

Selected EU policies and measures for carbon removals

Publication: Document
Citation: Meyer-Ohlendorf, Nils, et al. (2025): EU Policies and Measures to Incentivise Carbon Removals. Ecologic Institute, Berlin.

Carbon removal is a double-edged sword. On the one hand, the EU cannot achieve its climate neutrality target and net negative emissions without carbon removals. On the other hand, carbon removals can delay and deter emission reductions. Certain carbon removal technologies require substantial amounts of renewable electricity and can divert significant financial resources away from direct emissions' reduction efforts. Technologies such as BECCS and biochar production can pose serious risks to ecosystems, compromise food security, and may even exacerbate climate impacts. Policies and measures to scale up and incentivise carbon removals must take account of the ambivalent nature of each type of carbon removal.

A new paper by the Ecologic Institute and Oeko-Institut explores how to incentivise carbon removals. It discusses selected measures that could help incentivise carbon removals at larger scale:

establishing a removal trading scheme (RTS),
removals as a requirement for granting permits,
integration of carbon removals into the EU Effort Sharing Regulation,
Feed-in-Tariffs for carbon removals,
contracts for difference for carbon removals and
competitive bidding or auctioning for removals.

The paper is part of a research project funded by the German Federal Ministry for Economic Affairs and Climate Action. The paper is available for download.

Contact

Dr. Nils Meyer-Ohlendorf

Head, International and European Governance

Senior Fellow

Climate Targets for EU Member States after 2030

Functions and Options

Year 2025

Publication:Report

A new research report by the Ecologic Institute and Oeko-Institut discusses the implementation of the EU's new 2040 climate target. It identifies building blocks and measures particularly relevant for cutting the EU's emissions by net 90% in 2040.

Implementing the EU 2040 Climate Target: Building blocks and measures

Year 2025

Event:Conference

The Conference "Implementing the EU 2040 Climate Target: Building blocks and measures" took place in Brussels on 7 November2024. This conference convened experts, policymakers, and representatives of Member States and EU Institutions. At the event, participants discussed ways for the implementation of the EUs new 2040 climate targets. Participants also discussed key building blocks and key measures particularly relevant for cutting the EU's greenhouse gas emissions by net 90 % in 2040. Nils Meyer-Ohlendorf (Ecologic Institute) and Sabine Gores (Öko-Institute) presented preliminary results of the forthcoming report "Implementing the EU 2040 Climate Target: Building Blocks and Measures" were presented.

Implementing the EU 2040 Climate Target: Building blocks and measures

7 November 2024
Brussels, Belgium

Publication:Report

A new report by the Ecologic Institute and the Oeko-Institut explores the past contribution of the industry sector to already achieved emission reductions as well as the contribution of the industry sector to the upcoming 2040 climate target and what it takes for industry to achieve the related emission reductions. With a focus on measures and policies governing that would further reduce emissions in industry, the report also examines the key challenges faced by the industry sector and how this is addressed in EU legislation.

EU 2040 Climate Target: Contributions of the industry sector

Year 2024

Publication:Report

A new report by the Ecologic Institute and the Oeko-Institut explores the role of carbon removals in the EU's climate framework for 2040. The report gives an overview of past trends in carbon removals in the EU, and explores possible contributions from natural and technical sinks to reaching the 2040 climate target. With a focus on measures and policies governing and incentivizing carbon removals, the report also examines the extent to which temporary and permanent carbon removals can contribute to achieving the EU's 2040 target.

EU 2040 Climate Target and Framework: The Role of Carbon Removals

Potentials, incentives, and regulation

Year 2023

Publication:Report

This report by the Ecologic Institute and the Oeko-Institut provides an overview of design options for the EU's 2040 climate target and options for the implementation framework. The report discusses reforms how to make the EU climate policy framework fit for achieving the 2040 climate target.

EU 2040 Climate Architecture: Target Designs and Framework Options

Discussing design options for the EU 2040 climate framework

Year 2023

Publication:Report

This report by Ecologic Institute and the Oeko-Institut discusses the level of ambition of a 2040 EU climate target. The report analyses the implications of a 2040 climate target for Member States and sectors. It also discusses the political context in which the EU 2040 climate target will be negotiated.

Designing the EU 2040 Climate Target

Political context, level of ambition, implications for Member States and sectors

Year 2023

Project

Ecologic Institute and the Oeko-Institute have launched a project to analyse the ambition level of the 2040 target. The project also examines the impacts of a new 2040 target on EU Member States, sectors, and instruments.

EU 2040 Climate Target

Level of ambition and implications

Mar 2023 - May 2025

Language: English
Authorship: Dr. Nils Meyer-Ohlendorf

Sabine Gores (Oeko-Institut)

Jakob Graichen (Oeko-Institut)
Funding: Federal Ministry for Economic Affairs and Climate Action (BMWK), Germany
Published by: Ecologic Institute, Germany
Year: 2025
Dimension: 27 pp.
Project: EU 2040 Climate Target
Project ID: 60028
Table of contents: Click to show full table of contents

Executive summary
Introduction
Selected measures to scale up and incentivise carbon removals
2.1 Removal Trading Scheme
2.2 Carbon removals as a requirement for permits under the Industrial Emissions Directive?
2.3 Integration of carbon removals into the Effort Sharing Regulation
2.4 Competitive bidding
2.5 Feed-in-Tariffs for carbon removals
2.6 Government purchase programmes for carbon removals
2.7 Carbon Contracts for Difference
References
Keywords: Climate

Industry

EU 2040, climate target, industrial sector emissions, greenhouse gas reduction, renewable energy, low-emission technologies, EU Emissions Trading System, ETS, emission reduction strategies, sustainable industry transformation, green technologies, climate neutrality, technological innovation, investment in infrastructure, material efficiency, steel industry, cement industry, chemical industry, Carbon Capture and Storage, CCS, Carbon Capture and Utilisation, CCU

Europe

Policy and Economic Analysis

Attachments

60028-BMWK-EU-2040-Removals-Incentives.pdf (482.33 KB)

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