EU Carbon Market as a Driver for CO₂ Removals: BECCS, Direct Air Capture, and the 2050 Pathway

The EU ETS, established in 2005, is the world's first and largest carbon market, operating on a "cap and trade" principle. A cap is set on total greenhouse gas emissions from covered sectors (power generation, heavy industry, aviation within Europe). Companies must hold enough emission allowances (EUAs) to cover their annual emissions; one EUA permits one tonne of CO₂ equivalent. The cap declines annually, creating increasing scarcity and a price signal that incentivises emissions reduction. Companies that reduce emissions below their cap can sell surplus allowances; those that exceed their cap must buy more. The EU ETS is now in Phase 4 (2021–2030) and has contributed to a 47% reduction in emissions from covered sectors compared to 2005.

Achieving net-zero and eventually net-negative emissions requires not just reducing new emissions but actively removing CO₂ already in the atmosphere. The IPCC has identified Carbon Dioxide Removal (CDR) as essential for limiting warming to 1.5°C. The two key engineered CDR technologies in the study are BECCS (Bioenergy with Carbon Capture and Storage) and Direct Air Capture (DAC). Each has different cost structures, land/resource requirements, and scalability profiles.

Key Details

• BECCS: Plants (biomass) absorb CO₂ as they grow; biomass is burned for energy; CO₂ from combustion is captured and stored underground → net removal from atmosphere. Risk: requires large land areas, raising food security and biodiversity concerns if biomass sourcing is unsustainable.
• DAC: Industrial facilities use chemical processes to directly capture CO₂ from ambient air, regardless of location; more energy-intensive but does not require land for biomass. Cost (2026): ~$300–500/tonne CO₂; projected to fall to $100–150/tonne by 2040 with scale.
• Study target: ~60 million tonnes/year of CDR by 2050 via EU ETS integration; higher volumes possible as costs fall.
• Carbon storage: captured CO₂ compressed and injected into deep geological formations (saline aquifers, depleted oil/gas fields); monitored for leakage.
• Global CDR capacity currently: <0.01 Gt/year — far below what IPCC scenarios require (1–10 Gt/year by 2050 globally).
• IPCC AR6: All modelled scenarios that limit warming to 1.5°C require CDR at multi-billion tonne scale by mid-century.

The Paris Agreement (2015) established a global framework for climate action with Nationally Determined Contributions (NDCs) as national commitments. Article 6 of the Paris Agreement created a framework for international carbon markets — allowing countries to transfer emission reductions to meet their NDCs through bilateral arrangements (Article 6.2) or a centralised UN mechanism (Article 6.4). The EU ETS is a unilateral regional carbon market; its integration with CDR would be a primarily domestic policy, but the precedent could influence Article 6 negotiations and the design of carbon markets globally.

The concept of net-zero emissions means that the total amount of greenhouse gases emitted is balanced by the total removed from the atmosphere. The IPCC defines a global carbon budget — the cumulative amount of CO₂ that can be emitted before breaching a given temperature threshold. Carbon Dioxide Removal is essential to net-zero because some sectors (aviation, agriculture, cement) are hard to fully decarbonise; residual emissions from these must be offset by CDR. The EU aims for climate neutrality (net-zero) by 2050; India has committed to net-zero by 2070 under its updated NDC.

Key Details

• IPCC SR1.5 (2018): To limit warming to 1.5°C, global net-zero CO₂ emissions must be reached by around 2050; CDR of 100–1,000 GtCO₂ over the century is required.
• Remaining global carbon budget (1.5°C): ~250 GtCO₂ as of 2023; at current rates (~36 Gt/year), exhausted within ~7 years.
• EU 2050 climate neutrality: legally binding under EU Climate Law (2021); requires net-negative emissions post-2050 (i.e., more CDR than residual emissions).
• India's NDC: Net-zero by 2070; 50% electricity from non-fossil sources by 2030; 45% reduction in emissions intensity of GDP from 2005 levels by 2030.
• India's CDR potential: Large-scale afforestation/reforestation (India's NDC includes 2.5–3 billion tonnes of carbon sink by 2030); coastal ecosystems (mangroves — blue carbon); engineered CDR nascent.
• BECCS in India: Biomass is abundant (agricultural residue); potential but requires CCS infrastructure which India is developing under its National Action Plan on Climate Change (NAPCC).