The European Commission has proposed integrating permanent carbon removal into Phase 5 of the EU ETS, creating a 50 billion euro compliance market for domestic CDR. Under the plan, the EU will auction 250 million additional allowances between 2031 and 2040 and use the revenue to purchase permanent removal credits. Only BioCCS and DACCS certified under the CRCF framework will qualify initially, with biochar excluded from the first phase. At an estimated carbon price of 200 euros per ton, annual government-backed spending could reach nearly 10 billion euros by 2040. The proposal also allows up to 260 million international credits between 2036 and 2040, subject to a 2033 review. Industry groups like CATF welcomed the demand signal, while BeZero Carbon cautioned that the central purchasing body should use project-level due diligence to manage risk and avoid constraining supply.
