Sultani et al. (2026): How the EU can utilize its carbon market to scale up carbon dioxide removal
Darius Sultani, Sebastian Osorio, Claudia Günther, Michael Pahle, Katrin Sievert, Tobias S. Schmidt, Bjarne Steffen, Ottmar Edenhofer, IN: Joule, https://doi.org/10.1016/j.joule.2026.00079
This study investigates how the integration of permanent CDR into the EU ETS could impact both the ramp-up of novel CDR technologies and EU ETS price dynamics in the years to come. Deploying the EU ETS model LIMES-EU with recent cost projections for direct air capture technologies, the authors find that by mid-century, an integration of CDR into the EU ETS could incentivize 68–86 Mt CO₂/year of bioenergy with carbon capture and storage (BECCS) and direct air carbon capture and storage (DACCS) combined. These volumes are sufficiently large to affect allowance prices, substantially moderating price spikes as the EU ETS cap tightens. However, an integration also raises challenges. Over-reliance on expected future removals could undermine abatement if cost reductions fail to materialize, and low biomass prices could lead to excessive BECCS deployment with environmental impacts. These risks depend on technology learning, governance, and policy credibility over time. An integration of CDR into the EU ETS should begin with the target picture in mind (policy backward induction) and gradually build on the techno-economic and governance structures in place today (policy sequencing). Since the need for overshoot management will become more prevalent over the next decades, CDR integration should be seen as a starting point for transforming the ETS into a removals trading scheme in the long run. A reframing of the ETS “endgame” is therefore needed, and the system’s long-term potential to incentivize negative emissions at a large scale needs to be highlighted.