The Council of the EU (the Council) and the European Parliament reached a provisional political agreement (the Agreement) earlier this week on a regulation to establish the Carbon Removals Certification Framework (CRCF), the first EU-level certification framework for permanent carbon removals. The CRCF is a voluntary framework intended to facilitate deployment of high-quality carbon removal and soil emission reduction activities in the EU, in support of net-zero by 2050.
The Agreement follows the European Commission’s (the Commission‘s) regulatory proposal for the CRCF (released December 2, 2022) and the Council’s mandate for negotiations with the European Parliament (released November 17, 2023).
The European Parliament and Council now need to formally approve the Agreement. Once this process is completed, the new legislation will be published in the Official Journal and enter into force.
We anticipate that the CRCF will facilitate integration of carbon dioxide removals into the EU’s broader package of climate policies and eventually allow for market-based trading of CRCF-certified units. CRCF certification may also serve as an integrity benchmark for CDRs developed for the voluntary carbon market.
This bulletin briefly summarizes the main elements of the Agreement.
Scope of activities. The CRCF will use an “open definition” of carbon removals, in line with the IPCC and which only covers atmospheric or biogenic carbon removals. It will cover the following carbon removal and emission reduction activities and differentiate between four corresponding unit types:
- permanent carbon removal (storing atmospheric or biogenic carbon for several centuries);
- temporary carbon storage in long-lasting products (such as wood-based construction products) of a duration of at least 35 years and that can be monitored on-site during the entire monitoring period;
- temporary carbon storage from carbon farming (e.g., restoring forests and soil, wetland management, seagrass meadows) of a duration of at least 5 years; and
- soil emission reduction (from carbon farming) of a duration of at least 5 years, which includes carbon and nitrous oxide reductions from soil management, and which activity must reduce overall carbon emissions of soils or increase carbon removals in biological matter (e.g., wetland management, no tilling and cover crop practices, reduced use of fertilizer combined with soil management practices, etc.)
The Agreement expressly excludes enhanced hydrocarbon recovery and activities that do not result in carbon removals or soil emission reductions, such as avoided deforestation or renewable energy projects.
The Agreement also notes that the CRCF applies to activities taking place in the EU, but provides for the possibility of allowing geological carbon storage in neighbouring third countries, provided that those countries align with EU environmental and safety standards.
Certification criteria and procedure. The Agreement provides that carbon removal activities need to meet four overarching criteria in order to be certified: quantification, additionally, long-term storage, and sustainability (consistent with the Commission’s proposal).
The Commission, assisted by an expert group, will develop tailored certification methodologies for different types of carbon removal activities. We understand that the identification of priority methodologies is expected to be an agenda item at the upcoming meeting of the expert group set for April 15-17, 2024.
Use of certified units. The Agreement provides that certified units can only be used for the EU’s climate objectives and nationally determined contribution (NDC) and must not contribute to third countries’ NDCs and international compliance schemes. These rules, including on corresponding adjustments, will be reviewed in 2026.
Registry. The Agreement calls on the Commission to establish a common and transparent electronic EU-wide registry four years after the entry into force of the regulation to make information on the certification and units publicly available and accessible.
For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.