The European Commission’s plans to integrate permanent carbon removals into the EU Emissions Trading System (ETS) have come under scrutiny after industry figures questioned whether the modelling underpinning the proposal is achievable.
The Commission’s impact assessment estimates that a public purchasing programme for carbon dioxide (CO2) removals could require between €35.7bn ($40.7bn) and €55.5bn ($63.3bn) between 2031 and 2040, depending on the modelling scenario.
It says the final cost will depend on removal prices, ETS allowance prices, the mix of BioCCS and direct air capture with carbon storage (DACCS), and the timing of purchases.
In simple terms, the Commission wants to use revenue from ETS allowance auctions to buy certified carbon removals. The modelling assumes those removal costs will fall over time, allowing the EU to purchase the volumes needed to support its 2040 climate ambitions.
The modelling assumes average BioCCS costs fall from €214($244)/t in 2030 to €176($200)/t by 2040, while DACCS costs decline from €428($488)/t to €278($317)/t over the same period.
The Commission says those projected cost reductions “significantly shape the results”, given they are lower than current removal costs and expected future ETS prices.
Sebastian Manhart, Head of Regulatory Affairs at carbon dioxide removal (CDR) marketplace Carbonfuture, questioned whether those projections reflect the likely trajectory of the carbon removal market.
Writing on LinkedIn, he said the proposal appeared to rely heavily on projections that ETS allowance prices would reach around €200($228)/t by 2036, while carbon removal costs – particularly for BioCCS – would fall below the same level.
“Only problem: this time it looks like the entire CDR integration into the ETS rests on these assumptions,” he wrote.
Manhart argued that “every single number in this table is problematic”. On BioCCS, he said the technology “currently costs €300 ($342) to €400 ($456)/t unsubsidised” and questioned whether economies of scale would deliver the reductions assumed by the Commission.
“Sub-€200/t, even sub-€250($285)/t is difficult to imagine in the next 15 years.” He was equally sceptical about DACCS. “Currently costs well above €500($570)/t unsubsidised. I don’t see sub €300/t DACCS in Europe unless we experience an energy miracle.”
©Data source: European Commission. Image source: Sebastian Manhart, Carbonfuture
On biochar, Manhart argued costs were more likely to increase than fall, saying producers would instead sell into non-CDR markets such as metallurgy if prices dropped too low.
Taken together, Manhart said, “I do not see how the EU will be able to buy 250Mt of CDR in the 2030s.”
While the Commission could instead purchase whatever removals it could afford, he warned this would create “misalignment with the 2040 Climate Target” and “de facto create an emission surplus here.”
The Commission’s impact assessment acknowledges that the final fiscal cost of the proposed purchasing programme depends on several variables, including removal prices, ETS allowance prices, the balance between BioCCS and DACCS deployment, and the timing of purchases.
It estimates cumulative procurement costs of €35.7bn under the PRIMES model and €55.5bn under the POTEnCIA model. Applying lower and upper technology cost assumptions produces investment ranges of €29bn ($33bn) to €43bn ($49bn) and €46bn ($52bn) to €65bn ($74bn).
The PRIMES and POTEnCIA models are simulation tools used by the EU to project how different energy and climate policies will impact the future supply, demand, and pricing of energy across Europe.
These models combine economic analysis and engineering data to help policymakers evaluate the impact of various measures on emissions, investments, and technology adoption.
The assessment also notes that its cost projections are based on published literature, industry surveys and stakeholder interviews, and are presented as ranges because of uncertainty around future technology development.
It adds that reliable cost estimates currently exist only for BECCS, while other BioCCS pathways carry greater uncertainty over costs and scalability.
The Commission proposes a gradual introduction of permanent carbon removals into the ETS from 2031.
It suggests procurement mechanisms including long-term offtake agreements, reverse auctions and other public purchasing tools to help scale the market before wider integration into the compliance system.
