Key Contacts: Lev Gantly – Partner  |  Maeve Delargy – Senior Associate

On November 21, 2023, the European Parliament adopted the first draft legislation for the EU Carbon Removal Certification Framework (“CRCF” or the “Framework”), which works to define and formulate methodologies for certifying carbon removals in the European Union. The Framework’s core objective is to instil trust in the quality and reliability of certified carbon removals amongst project developers, investors, and the public.

In order to foster transparency, the CRCF establishes public registries and methodologies for various carbon removal methods and supplies the requirements for monitoring, reporting and verification. The Framework would act as the cornerstone for acknowledging and rewarding land managers, project developers, investors, and other market participants for their high-quality contributions toward achieving the EU’s Climate Change mitigation goals.

The CRCF classifies carbon removal into three categories: carbon farming (e.g., restoring forests, soil carbon management and management of wetlands and peatlands), permanent carbon storage (e.g., Bioenergy and Carbon Capture and Storage (BECCS) or Direct Air Carbon Capture (DACCs)), and carbon storage in products (e.g., wood-based construction materials). Capture of fossil Carbon for Storage (CCS) or Utilisation (CCU) are not included as they do not remove carbon that is currently in the atmosphere. Rather they recycle or store new fossil fuel emissions, preventing the addition of those emissions into the atmosphere. To ensure credibility, removals must adhere to “QU.A.L.ITY” criteria covering quantification, additionality, long term storage, and sustainability.

Emission reductions alone won’t be sufficient to address climate change; the Framework underscores the necessity of removing several hundred million tonnes of CO2 annually to balance out remaining emissions on the road to net zero.

The main objectives of the Framework are to accelerate the deployment of verifiable, high-quality carbon removals, encourage the adoption of effective carbon removal solutions by industries and agriculture, counter greenwashing, ensure the EU’s capacity to quantify, monitor and verify carbon removals, as well as stimulate result-based financing options.

What are the Implications?

Despite receiving recognition for providing clarity and a better foundation for delivery of a more robust and transparent framework, the CRCF faces criticism for including vague terminology and insufficient differentiation between carbon removals, emission reductions, and temporary carbon storage. The definitions and quality criteria for carbon removals, carbon farming, and carbon storage in products will also need further development to account for the impact they will have on the environment and their overall differences such as the duration for which these methods store carbon, varying reversal risks, and approaches to monitoring.

Definition of Removals

We consider that the definition of carbon removals is too broad and lacks clarity on the inclusion of technologies like biochar carbon removal, enhanced rock weathering and ocean carbon removal. It does however include, within the carbon removal definitions, protection of carbon sinks which would be better classified as a carbon reduction rather than a removal. Therefore, it would seem that the Framework is in need of clarification as to what is a removal and what is not. Carbon removal project developers were hoping for more technology neutral language; by way of clearer drafting within the CRCF definitions of carbon removals and permanent storage so that they are open to the best available science regarding technology and innovation. However, such recommendations were not included in the Commission’s amendments.

Revising Farming Practices

The European Council is advocating for expanding certifiable activities to certain carbon farming practices, that include emissions reductions from agricultural soils and proposing inclusion of marine environment activities. However, such practices that do not bring about soil emission reductions or carbon removals will not be included in the proposed Framework, for example, deforestation or livestock emission reductions. This grouping of carbon removals, storage in products and carbon farming is problematic. Each method results in very different climate impacts and permanence and therefore this can create loopholes when permanent removals and temporary carbon storage are lumped together. The Framework requires a clearer distinction between removals with high durability and low durability.

Who are the Regulators?

The European Commission will set out the quality criteria and certification methodologies, and recognise certification schemes that will register carbon removal activities and issue carbon credits.

Certification schemes will verify if the information and data submitted by the operator for the certification of compliance were subject to independent auditing and if the certification of compliance was carried out in an accurate, reliable, and cost-effective manner. Every year certification schemes will also publish a list of the appointed certification bodies.

Certification bodies must be independent and accredited by a national accreditation authority. The certification body will carry out an independent audit of the information received from the operators and issue a certificate of compliance. Recertification audits will be held at least every five years for carbon farming activities, and at least every 10 years for other activities, following a risk-based approach.

Operators of carbon removal activities will need to apply to a certification scheme which is recognised by the Commission. Once its application to the certification scheme is accepted, the operator will submit a description of the removal activity, the certification methodology which will be applied, the expected amount of carbon removals and net carbon removal benefit from the activity to the certification body to be audited. Once the certification body deems the carbon removal activity to be compliant with the quality criteria, sustainability requirements, and alignment with the Paris Agreement goals, it will issue the certificate and certification audit report.

Next Steps

The trilogues, negotiations between EU legislators of the Council, the Parliament, and the Commission, is now able to commence and participants are seeking agreement by March 2024. Once an agreement is reached, it will then need to be approved by the Parliament and the Council and then published in the Official Journal of the EU. Once the Commission adopts the first certification methodology and recognises the first certification scheme the CRCF will then be fully operational.