INCLUSION IN GREEN TAXONOMY

Inclusion in a green taxonomy classifies specified carbon-removal activities as environmentally sustainable when they meet technical screening criteria. This gives banks, funds, bond issuers and companies a common definition for green capital allocation and disclosure. It identifies what may be financed as green; it does not purchase removals, guarantee a loan or certify the removal itself.

Criteria need to identify the economic activity being classified and the boundaries between capture, transport, storage, biomass supply and final use. They should address net removal, lifecycle emissions, durability, reversal risks, additionality, environmental harm and minimum safeguards. The EU’s Carbon Removals and Carbon Farming framework, for example, could provide measurement rules, but certification under that framework should not automatically confer taxonomy alignment. Separate criteria may be needed for removal activities and enabling infrastructure.

Recognition can make qualifying removal activities eligible for taxonomy-aligned funds, green bonds, loans and capital-expenditure reporting, improving their visibility and potentially their access to finance. Common criteria can reduce duplicated due diligence, improve cross-border comparability and raise quality by making lifecycle accounting and safeguards conditions of green classification. Early movers can also shape definitions that other markets subsequently adopt.

Loose criteria could greenwash low-integrity removals, while rigid or technology-specific criteria could exclude credible emerging methods. Divergent taxonomies may fragment the market. Inclusion can also be mistaken for evidence that a project is certified, additional or bankable. Conversely, omission from a taxonomy does not prove that an activity is environmentally harmful; it may simply mean that criteria have not yet been developed.

A useful test is whether formal eligibility fosters financial usage. Taxonomy-aligned capital expenditure, labelled-bond proceeds, lending volumes and financing terms can be compared before and after inclusion, with results separated by removal method. Applications, assurance findings and investor feedback can show whether criteria are clear, credible and usable and where revisions are needed.

Financial regulators, taxonomy authorities and assurance providers bring implementation expertise. Removal scientists and certification bodies can test carbon-accounting requirements, while developers and financiers can test whether the criteria work in actual transactions. Environmental organisations and affected communities can scrutinise safeguards. Dialogue between taxonomy authorities can improve interoperability without erasing legitimate jurisdictional differences.

The lever is strongest at supranational and national level, where taxonomy criteria can be connected to binding disclosure and financial-product rules. International coordination can support interoperability, while City/municipal and Corporate/Industry actors can operate narrower local or voluntary systems. These variants can influence finance but lack the regulatory reach of national or supranational taxonomies.