The EU’s leading climate advisory body recommends bold steps for carbon removal deployment in Europe: here’s what you need to know

Europe just got a major nudge toward scaling up carbon removal technologies. The European Scientific Advisory Board on Climate Change (ESABCC) has released its much anticipated report, “Scaling Up Carbon Dioxide Removals: Recommendations for a Rapid and Sustainable Scale-Up in the EU”. To save you the trouble, we have carefully analysed the 300-page report and the recommendations they propose so you don’t have to.

With a new EU mandate focused on creating a clean and competitive economy, the ESABCC report goes beyond presenting climate and environmental benefits and begins to demonstrate how scaling up CDR will create the need for highly-skilled labour and diverse income streams, which is a clear path to positioning the EU as a leader in CDR and creating the conditions needed for scale.

The report highlights numerous gaps that still exist in the EU’s approach to scaling this sector and provides key policy recommendations to guide the EU’s efforts in achieving climate neutrality by 2050. In this analysis, we have focused on the most relevant recommendations the EU should take action on to promote a swift scale-up of carbon dioxide removal (CDR) and highlighted our own views where relevant.

The report recommends setting separate legally binding targets for gross emissions reductions, permanent carbon removals, and temporary removals. The ESABCC proposes defining a minimum level of permanent and nature-based removals the EU needs to deliver by 2040. This “minimum target” will send a strong demand signal to the sector while encouraging greater ambition. At the same time, a fixed cap on the contribution of removals to the net 2040 objective will prevent over-reliance on CDR at the expense of emissions reductions. Crucially, by recommending separate targets for permanent and temporary removals, the ESABCC seeks to ensure that forests and soils are not overburdened with offsetting emissions beyond their storage capacity. We have strongly advocated for this target structure and welcome the advisory board’s recommendation, which lays the groundwork for the upcoming revision of the Climate Law. The EU must seize this opportunity to establish clear, ambitious targets alongside strong price signals and policy incentives to ensure their effective implementation.

The ESABCC recommends that the EU develop robust monitoring, reporting, and verification (MRV) systems at both activity and national levels to build trust, ensure accountability and drive investments while addressing associated reversals and impacts on ecosystems and communities. Robust MRV can be accomplished by clarifying CDR’s contribution to achieving EU climate objectives and by developing and regularly updating CDR methodologies under the CRCF. The current CRCF text leaves room for ambiguity regarding uses of certificates, which could enable greenwashing practices. We have always been strong proponents for a clear distinction between the uses of CRCF certificates corresponding to temporary removals, permanent removals and emission reductions, and we welcome this report’s similar recommendation.

The EU is falling behind the US in carbon removal funding, with minimal direct support and structural barriers (e.g., fragmented access to funding, administrative burdens, restrictive eligibility criteria) limiting research and development effectiveness. The ESABCC recommends increasing funding through Horizon Europe and other programmes for a portfolio of CDR methods, prioritising CCS-based permanent removals in the Innovation Fund, and improving collaboration between financial institutions to attract private investment. Based on our analysis, current EU funding for carbon removal stands at €657 million (2020-2023), which falls far short of the €2.88-5.85 billion needed over the next 15-20 years. We recommend that the EU allocate at least €2.6 billion to CDR innovation during its next 7-year funding cycle to ensure the rapid scale up of the sector.

The report highlights how policy and market uncertainty is hindering investment in CO₂ transport and storage (T&S) infrastructure, a critical component of the CDR value chain. Key barriers include:

• Unclear demand for T&S infrastructure due to competition between carbon removal infrastructure (net-negative) and point-source CCS (net-neutral)
• Unclear rules for offshore storage allocation among member states
• Lack of removal-specific CO₂ storage targets

The ESABCC recommends creating harmonised rules for third-party access to transport and storage networks, as well as standardised CO₂ quality criteria to ensure broad participation. It further expands on the need to uphold environmental protections while resolving regulatory hurdles, such as the London Protocol, and calls for comprehensive monitoring rules covering the entire CO₂ value chain, not just storage. Establishing policy clarity on carbon removal’s role in this infrastructure and setting dedicated targets is crucial for accelerating investment and deployment.

For scaling carbon removal supply, the report examines several mechanisms:

• Subsidies through capital grants, reverse auctions, and contracts for difference
• Public procurement to demonstrate demand
• Integration with the EU Emissions Trading System (ETS)

The report recognises the need for an enduring policy and financial framework to support removals, to both deliver climate neutrality and enable reaching net-negative emissions. The ESABCC suggests integrating permanent CDR into the EU ETS with a gradual, constrained approach which considers the different maturity and permanence of CDR methods, as well as potential environmental risks, as a way to support cost-effectiveness and fiscal sustainability goals. To facilitate the integration process, the report recommends leveraging the role of an intermediary institution, which could be an existing body or a new institution with a legal mandate. This body could manage demand for allowances and removals, supporting the scaling-up of CDR methods toward achieving net-negative emissions.  Our proposal for a “Carbon Clearing House” is referenced as one potential design.

A compliance market approach will need to be complemented by additional financial instruments like reverse auctions, especially in the earlier phases, to lower costs and bring about a portfolio of options. Additional interventions like procurement can kick-start demand and enhance market confidence. We propose creating an EU pilot procurement programme as soon as possible, which we see as an effective framework for demonstrating demand and de-risking early investments. While instruments like reverse auctions will likely play a role in future, in the near term, we see a need for support that looks beyond cost and supports the highest-impact projects to develop and scale.

The report highlights the challenges facing the Land Use, Land Use Change and Forestry (LULUCF) sector and underscores the important role of temporary removals in the short term, given their higher maturity and lower costs. However, it also emphasises the need for better regulating temporary removals, as they lack sufficient permanence to fully neutralise fossil emissions. We welcome the proposal to create an advanced pricing mechanism that would support the restoration of the natural carbon sink.

This policy guidance arrives at a pivotal moment, with the European Commission preparing to launch its Clean Industrial Deal on February 26th and revise the European Climate Law. The report is also set to inform EU decision-makers as they prepare for the so-called “Fit for 90” package expected in 2026. This package should include, among other initiatives, a report and a potential proposal for integrating CDR into compliance markets.