Trinomics, VITO, Wageningen University, Research, Technische Universität, Graz and Ricardo, 2021. Evaluation of the climate benefits of the use of Harvested Wood Products in the construction sector and assessment of remuneration schemes. Report to the European Commission, DG Climate Action, under Contract N° 340201/2020/831983/ETU/CLIMA.C.3, Trinomics BV, Rotterdam ( link ).

Spekreijse, J., Lammens, T., Parisi, C., Ronzon, T., Vis, M., 2019. Insights into the European market of bio-based chemicals. Analysis based on ten key product categories, EUR 29581 EN, Publications Office of the European Union, Luxembourg, doi:10.2760/549564, JRC112989 ( link ).

Regulation (EU) No 305/2011 of the European Parliament and of the Council of 9 March 2011 laying down harmonised conditions for the marketing of construction products and repealing Council Directive 89/106/EEC (Text with EEA relevance), consolidated text ( link ).

Regulation (EU) 2021/2116 of the European Parliament and of the Council of 2 December 2021 on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013, OJ L 435, 6.12.2021, p. 187–261 ( link ).

Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) ( link ).

Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (Text with EEA relevance), OJ L 198, 22.6.2020, p. 13–43 ( link ).

Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework, and amending Regulation (EU) No 525/2013 and Decision No 529/2013/EU (Text with EEA relevance) , OJ L 156, 19.6.2018, p. 1–25 ( link ).

Platt, R., Bauen, A., Reumerman, P., Geier, C., Van Ree, R., Gursel, I. V., Garcia, L., Behrens, M., von Bothmer, P., Howes, J., Panchaksharam, Y., Vikla, K., Sartorius, V. and Annevelink, B., 2021. EU Biorefinery Outlook to 2030. Studies on support to research and innovation in the area of bio-based products and services, Publications Office of the European Union, Luxembourg, doi:10.2777/103465 ( link ).

Olfe-Kräutlein, B., Strunge, T., and Chanin A., 2021. Push or Pull? Policy Barriers and Incentives to the Development and Deployment of CO2 Utilization, in Particular CO2 Mineralization, Frontiers in Energy Research, 9, 2021 ( link ).

ISO, 2019. ISO 14064-2:2019. Greenhouse gases — Part 2: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements. April 2019, 2nd edition ( link ).

European Commission, 2022b. Proposal for a Regulation of the European Parliament and of the Council laying down harmonised conditions for the marketing of construction products, amending Regulation (EU) 2019/1020 and repealing Regulation (EU) 305/2011. COM/2022/144 final ( link ).

European Commission, 2021b. Impact assessment report. Accompanying the document Proposal for a Regulation of the European Parliament and the Council amending Regulations (EU) 2018/841 as regards the scope, simplifying the compliance rules, setting out the targets of the Member States for 2030 and committing to the collective achievement of climate neutrality by 2035 in the land use, forestry and agriculture sector, and (EU) 2018/1999 as regards improvement in monitoring, reporting, tracking of progress and review. SWD/2021/609 final ( link ).

Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (Text with EEA relevance), OJ L 140, 5.6.2009, p. 114–135 ( link ).

Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (Text with EEA relevance), OJ L 140, 5.6.2009, p. 114–135 ( link ).

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance), OJ L 275, 25.10.2003, p. 32–46 ( link ).

Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (recast) (Text with EEA relevance), OJ L 328, 21.12.2018, p. 82–209 ( link ).

Commission Implementing Regulation (EU) 2018/2066 of 19 December 2018 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council and amending Commission Regulation (EU) No 601/2012 (Text with EEA relevance), OJ L 334, 31.12.2018, p. 1–93 ( link ).

Allen, M., Axelsson, K., Caldecott, B., Hale, T., Hepburd, C., Hickey, C., Mitchell-Larson, E. Malhi, Y., Otto, F., Seddon, N. and Smith, S., 2020. The Oxford principles for net zero aligned carbon offsetting. Oxford Net Zero. September 2020 ( link ).

An initial evaluation of progress towards this objectives will take place in 2028.

3.By 2028, any ton of CO2 captured, transported, used and stored by industries should be reported and accounted by its fossil, biogenic or atmospheric origin, and

1.By 2028, every land manager should have access to verified emission and removal data to enable a wide uptake of carbon farming,

A comprehensive evaluation of the Regulation should be informed by the outcomes of these monitoring activities, build upon solution-specific review studies and focus on the contribution of the framework to achieving the aspirational objectives set out in the Communication on Sustainable Carbon Cycles:

Reports by certification schemes and from the certified carbon removal projects will provide the Commission with data on the climate, environmental and socio-economic impacts of the certification framework and on the overall quality of the certified projects and of the certification process (including information about the validation, verification, issuance and registry stages).

In addition, the Commission will monitor the following impact indicators on a regular basis (annual or biannual) at the level of different types of carbon removal activities:

A plan will be designed to track the Commission’s implementation of the actions required against a specific timeframe (e.g. adoption of secondary legislation covering certification methodologies and implementing rules for the governance framework).

Figure 4 shows an overview of the various actors and responsibilities of the EU certification framework under the preferred option.

·A number of implementing acts establishing harmonised technical rules on the functioning of the certification schemes, on the verification and certification process, on the management of registries and databases, and on the process of notification and recognition of certification schemes.

·A number of delegated acts establishing the tailored certification methodologies for specific carbon removal activities. In developing these delegated acts, the Commission will be assisted by a new Expert Group on Carbon Removals;

·A Regulation establishing the QU.A.L.ITY criteria for carbon removals and the requirements for the certification of carbon removal activities, on the functioning of certification schemes and public registries, and on the process for their EU recognition;

The framework would be established through several legal acts, in the following order:

Member States may opt for the establishment of a public certification scheme to implement the framework, in order to provide operators on its territory with a closer contact point; such public scheme would need to be recognised by the Commission in the same manner as private certification schemes, to ensure a level-playing field across Member States.

Considering the effectiveness, efficiency and coherence dimensions discussed in the previous section, it can be concluded that the package Q2+G2 performs better against all impact indicators and addresses more effectively almost all objectives. Thus, the preferred policy option is one where the Commission: (i) develops certification methodologies in consultation with experts and stakeholders, and (ii) ensures the correct implementation of the framework by recognising the certification schemes that comply with the Transparency criteria and that will certify the compliance of operators with the QU.A.L.ITY criteria.

All options are based on QU.A.L.ITY criteria, which are designed to build on existing legislation, such as the CCS Directive, the LULUCF Regulation, the Taxonomy Regulation, the Renewable Energy Directive, the Common Agricultural Policy. See Section 5.1.4 for more details. In addition, existing and future EU policies will benefit from the existence of the EU certification framework, e.g. for better company accounting under the European Sustainability Reporting Standard, better incentives for nature-based solutions to achieve the restoration targets under the Nature Restoration Law, or better removal data for the national LULUCF inventories.

·Costs for public administrations would only occur under option G1 where Member States would have to recognise exiting certification schemes in case a Member States decides to set up a public certification scheme; in addition, in the combination Q1+G1, Member States may have to incur the cost of approving certification methodologies proposed by programme developers or of recognising the certification methodologies applied by private certification schemes.

·Certification schemes would face some administrative costs to apply for recognition to the competent public authority (Member States under G1 or the Commission under G2); they may also face adjustment costs under option Q1 (adjustment of their certification methodologies to the EU criteria).

Overall, the carbon removal certification initiative should generate only minimal administrative burdens to businesses compared to the baseline, because the initiative does not introduce new significant administrative requirements and it is of a voluntary nature.

The “One-In-One-Out” principle means that newly introduced burdens from EU legislation should be offset by removing equivalent burdens in the same policy area.

Finally, under the packages that include option Q2, the Commission develops certification methodologies on the basis of systematic expert consultation, which guarantees the participation of relevant stakeholders in the development of certification methodologies and taking into account the latest state of knowledge and experience, in line with Better Regulation rules.

The certification framework would also entail some costs for public authorities in the Member States. Under the combination of options Q1 and G1, the Member State may have to incur the cost of approving certification methodologies proposed by programme developers (if they set up a public certification scheme) or of recognising the certification methodologies applied by private certification schemes (if they delegate the control role to private schemes); in either case, there is a risk of a high number of methodologies to be approved or recognised, including for more complex carbon removal activities for which mature certification rules do not yet exist, and the related costs would be repeated in each Member State. The cost of recognising certification schemes is relevant for Member States under the packages that include option G1 (where this recognition is responsibility of the Member States).

The framework will also affect the way that certification schemes conduct their business and could create some administrative costs, mainly of three types: the development/adjustment of the methodologies, the application for recognition of methodologies, and the application for recognition of certification schemes. The first and second cost categories only apply under the packages that include Q1 (Q1+G1 and Q1+G2), where certification schemes develop their own methodologies. Under these packages, existing schemes would have to adjust their methodologies to the EU certification criteria, which should entail minimal adjustment costs for certification schemes that already have many best practices in place. Conversely, under the packages that include option Q2, new certification schemes would benefit from the existence of standardised methodologies developed by the Commission as this will save them the costs of developing their own methodology. In addition, under packages including option Q1, existing schemes would face some costs related to adjusting their procedures and standards and applying for recognition of their methodologies: these costs would be larger in package Q1+G1, where this process is managed by the Member States, because of the risk of multiple application procedures. Finally, in all packages, certification schemes would apply for recognition of their rules and procedures according to the Transparency criteria. Synergies are possible with certification schemes that are already active in related but different certification activities, especially in packages that include option Q2: when Q2 is combined with G1, certification schemes operating in the area of organic farming labelling can expand their operations to the field of carbon farming, and when it is combined with G2, synergistic opportunities arise for EU-wide certification schemes operating in the area of certifying sustainable biomass under the Renewable Energy Directive.

In terms of sectoral competitiveness and the functioning of the internal market, option Q1 provides a slight improvement with respect to the baseline because of the QU.A.L.ITY certification criteria based on best practice, and option G1 brings the benefits of decentralised recognition procedures for smaller and regional certification schemes (e.g. no language barrier, closer contacts with the administration); however, a package of these two options could give rise to many different methodologies recognised according to different procedures, which would not play in favour of well-functioning internal market. Options Q2 and G2 are better in this respect, because they ensure (respectively) a unified set of certification methodologies and a harmonised recognition process favouring the cross-border operations of larger certification schemes. Thus, the packages including one of these two options provide for more harmonisation, while the package including both performs best in terms of the functioning of the internal market.

Option Q2, where the Commission leads the development of certification methodologies in consultation with experts, it will be possible to prioritise those carbon removals which have the highest positive impact on the climate and the environment. Therefore, packages including option Q2 are better suited to more quickly deliver the positive climate and environmental impacts of the framework.

The impacts on innovation and rural areas are not discussed in this section because they do not change significantly across the policy options. This section focuses on those impacts that depend on the choice of the policy options, as described in more details in sections 6.3 and 6.5.

The fourth and last objective is to harmonise certification rules and minimise transaction costs for operators (i.e. ensuring that the operator can easily move from one type of financing to another). This is less easy when many different certification methodologies exist (as in packages that include option Q1). This risk will be mitigated if the Commission develops standard methodologies that integrate information requirements and guarantees needed in different financing contexts.

The third objective is to ensure the transparency and reliability of certification processes, which can increase trust in certification activities. All packages deliver on this objective by creating some public guarantees about the quality of carbon removals. However, if the Commission recognises certification methodologies and/or certification schemes instead of the Member States (as in packages that include option G2), the recognition process will be carried out in the same way and based on the same criteria for all applications, which would improve trust in the system. In addition, if the Commission develops the certification methodologies giving priority to the highest potential for mitigation and sustainability (as in packages that include option Q2), this could create a more stable and predictable policy framework which would also have a positive impact on trust.

The second objective is to deliver certification methodologies that are tailored to each type of carbon removal solution. Again, all packages deliver on this objective. If the Commission develops the methodologies (i.e. packages that include option Q2), then these will be tailored to specific carbon removal solutions, starting from those which are already mature in terms of certification best practices and that provide the highest sustainability co-benefits. However, those options that rely on several certification schemes for the development of the methodologies (i.e. packages that include option Q1) may be better able to tailor their methodology not only to a specific type of carbon removal solution, but also to the specific geographic or socio-economic context where such activities take place.

The first objective of this initiative is to promote best practices to certify high-quality removals, and thereby provide guidance on how to address the four certification challenges related to quantification, additionality, long-term storage, and sustainability. In this respect, all packages bring about an improvement with respect to the baseline, because the initiative will set out certification criteria underlining the future development of certification methodologies. Yet, guidance will be more effective under the packages that include option Q2, where methodologies are developed by the Commission in consultation with the relevant experts and stakeholders: these will provide a common approach on how to translate these criteria into operational protocols, providing more comparability and consistency compared to packages that include Q1, where certification schemes can propose their own methodologies.

These policy packages are illustrated in Figure 3 , which also summarises how they compare in terms of their effectiveness to achieve the specific objectives, their respective key impacts (efficiency) and their coherence with other policy initiatives and instruments, as also explained in the rest of this section.

·Q2+G2: the Commission (together with experts) develops the methodologies and then checks that certification schemes correctly apply them to certify operators. This is similar to the governance model for certifying sustainable bioenergy under the Renewable Energy Directive: here, the criteria and rules defining the sustainability of bioenergy are set in the Directive and in its delegated/implementing acts; the Commission recognises private or public certification schemes after assessment of the scheme’s internal rules and governance against the EU criteria and rules.

·Q2+G1: the Commission (assisted by an expert group) develops the certification methodologies and the Member States have the primary responsibility for enforcing compliance by operators through a public certification scheme or by recognising private certification schemes. This model is similar to the one of the Organic Farming Regulation, where the Commission directly establishes the certification rules; based on these rules, Member States’ competent authorities can either certify organic farms themselves (as “control authorities”) or delegate this role to private “control bodies”.

·Q1+G2: certification schemes develop their own methodologies and then apply for recognition of their methodologies and operations to the Commission; this model is similar to CORSIA, where a supranational organisation (ICAO) assesses whether existing certification schemes and their methodologies are compliant with a set of international certification criteria.

·Q1+G1: Member States create their own public certification scheme and develop their own methodologies, or approve certification methodologies proposed by programme developers in compliance with the EU criteria (similarly to the functioning of the French “Label Bas Carbone”); alternatively they may also recognise private certification schemes with their own methodologies that comply with the EU criteria, and delegate the control system to them.

Conduct of business, public authorities. Under option G1, there is a risk of duplication of work if the same certification scheme applies for recognition in several Member States, which could increase total administrative costs for both businesses and public authorities and discourage cross-border scale-up (especially if different Member States have different control systems and recognition procedures). Under G2, the administrative costs related to recognition processes would be smaller, both for certification schemes and for public authorities, as duplication of applications in different Member States would be avoided. Option G1 would also entail some costs for Member States authorities in terms of reporting regularly to the Commission about the results of the controls carried out and the measures taken in case of non-compliance.

Sectoral competitiveness and the functioning of the internal market. Under option G1, Member States would be in charge of ensuring the correct implementation of the certification framework. The decentralised nature of this option would address some possible barriers for certification schemes, such as language differences or the difficulty in taking part in EU application processes. However, this option would be less effective in ensuring a level-playing field, as different Member States may establish different control systems and recognition procedures. Under option G2, certification schemes recognised by the Commission would be able to operate everywhere on the EU territory, which would therefore be more appropriate for larger, international certification schemes (including new entrants), and work better in terms of promoting the internal market.

Participation. Thanks to the Transparency criteria, the EU certification framework can level up the quality of the internal administration of certification schemes and make information more easily accessible to stakeholders and other certification schemes.

Public authorities. While the specific administrative costs under the two Governance options will be discussed in the next section, a more indirect and positive impact of the Transparency criteria for registries will be the availability of better and more granular data on carbon removals which can improve the quality of national GHG inventories and hence the effectiveness of climate policy making.

Innovation and digital economy. The rules to harmonise registries of carbon removal certificates, and in particular the requirements to ensure transparency of information and to avoid double counting, will be more effectively implemented through the use of digital technologies. This can spur the uptake of innovative technologies such as block-chain.

Conduct of business. The Transparency criteria may create some new or additional administrative costs for operators and certification schemes, depending on the extent to which these requirements are already complied with in the baseline, especially in terms of regular verification. As explained in section 5.1.3, the majority of the large and well-established certification schemes already perform well in terms of transparency, and therefore complying with these requirements would not entail any significant adjustment cost for these certification schemes. However, no comprehensive overview exists for the level of transparency of smaller certification initiatives or new entrants. In addition, a set of harmonised rules to run registries may increase the costs of this activity but could also help in performing double-counting checks more effectively than in the baseline. Large certification schemes have already in place good quality registries, while smaller schemes can rely on third-party managed registry systems that offer registry capacity for relatively low prices.

Sectoral competitiveness and the functioning of the internal market. Operators will benefit from more inter-operability regarding the rules and procedures of publicly recognised certification schemes, which will give them easier access to different types of financial opportunities linked to carbon removal activities. A harmonised regulatory environment will also benefit certification schemes by providing public guarantees to help them signal their quality, and will create new business for certification bodies which will be required for the verification of the carbon removal activities.

Climate and environment. The establishment of the Transparency criteria aims to create more trust in carbon removal certification, which will indirectly contribute to increasing demand for carbon removals and, accordingly, their supply. It will also ensure a higher quality of carbon removals overall. Therefore, it can be expected that the Transparency criteria can indirectly have positive effects on the climate and, through enforcement of the sustainability criteria, the environment.

Participation. The process to develop the methodologies will be more inclusive of the relevant stakeholders under option Q2. Under this option, the Commission would rely on the consultation of relevant experts in alignment with Better Regulation guidelines.

Public authorities. The choice between options Q1 and Q2 also implies different costs for public authorities. Under Q1, there would be potentially many certification schemes that would need recognition of their methodologies by the relevant authority which, depending on the choice between G1 or G2, could be national competent authorities or the Commission. The number of methodologies implementable within Europe has been growing over the past 5 to 10 years. For example, McDonald et al. (2021) identified a long list of 42 removals methodologies from 11 schemes, which was a selection, and not an exhaustive list. The extent to which new methodologies may be submitted for approval remains uncertain. However, it can be expected that the number of methodologies will continue to grow, also because the establishment of the EU certification framework is anticipated to result in increased demand for removals certification. While the common certification criteria would ensure some level of harmonisation amongst these methodologies, the potentially high number of methodologies submitted for recognition under Q1 could represent a high workload for authorities. Under option Q2, instead, the Commission would bear the cost of developing the certification methodologies with the support of the relevant experts. The process would minimise the costs of methodology development by exploiting synergies with existing legislation and procedures.

Conduct of business. Under option Q1, the entry costs for new certification schemes related to developing new methodologies would be slightly reduced thanks to the guidance provided by the certification criteria. Existing certification schemes would need to adjust their methodologies to take into account the EU certification criteria. A recent review reveals that several existing certification schemes already adopt some best practices to implement the QU.A.L.ITY principles, but the overview is quite heterogeneous, and no scheme already performs well against all criteria. Therefore, most existing certification schemes would face some one-off adjustment costs, and possibly some ongoing implementation costs if the revisions to their methodologies entail new elements (e.g. more accurate monitoring, new environmental safeguards). They will also face one-off and ongoing administrative costs associated with applying for the recognition that their scheme’s methodologies and procedures are in line with the EU certification framework. Instead, under option Q2, a benefit for new certification schemes is the avoidance of the cost of developing new methodologies, as they can simply adopt the methodology developed by the Commission. Another advantage with respect to Q1 is that they application procedure to be recognised by the relevant public authority would only concern the scheme’s internal rules and procedures (i.e. compliance with Transparency criteria) and not the recognition of the methodologies. Certifying projects according to the Commission’s methodologies may create some one-off adjustment costs and possibly ongoing implementation costs as under option Q1.

Sectoral competitiveness and the functioning of the internal market. The choice between policy option Q1 and Q2 will have an impact on the extent to which the initiative creates a level-playing field for the European market. Option Q1 could encourage the development of local or regional methodologies, which could address some specific circumstances (especially with carbon farming), but the resulting diversity of approved methodologies for the same carbon removal activity would maintain a certain level of confusion which could discourage the uptake of carbon removal solutions. On the other hand, option Q2 would give more direct guidance for the certification of carbon removals to underpin a well-functioning internal market and provide methodologies for the more mature carbon removals solutions, so that these can rapidly scale-up across the Union.

Climate and environment. Under policy option Q2, the Commission decides which methodologies will be developed first based on, among other criteria, their potential for environmental co-benefits (see Box 5 ). Thus, carbon removal activities that have the highest potential for triple-win solutions (climate, environment, socio-economic benefits) will be prioritised. Policy option Q1, where certification schemes develop methodologies and submit them to the relevant public authority for recognition, gives more power to the certification schemes to decide on the development sequence. As certification schemes will be guided by their own interests, it is not guaranteed that those methodologies with the highest positive impact on climate and environment will be prioritised under policy option Q1.

Even if the revenue from carbon farming can provide additional revenue to the farmer, it is unlikely to constitute a primary source of income. Experience from carbon farming projects shows that improved agricultural land management can generate a carbon benefit equivalent to 1t to 2t of CO2 per hectare that can currently be rewarded at a carbon price of 15 to 40 € per tonne of CO2 in emerging schemes that specifically target high-quality carbon removals . Under these assumptions, a farmer can expect an additional revenue of approximately 50 €/ha/year, to be compared to a potential 1440 €/ha revenue from soft wheat production in 2021 or the average 297 €/ha/year income support from the CAP that an EU young farmer could receive (with substantial variation across Member States). The higher carbon sequestration potential from afforestation of 5t to 10t of CO2 captured per hectare can generate an annual average of 250 €/ha for the first 30 years, with lot of uncertainty regarding the fluctuation of the carbon price during this long period.

Rural areas and food security. In the specific case of carbon farming, certification can be expected to contribute towards new business opportunities and economic diversification in rural areas, and to ensure long-term food security through better soil quality and resilience, in consistency with the objectives of the Farm to Fork Strategy. The core priorities set out in the EU Long-Term Strategy for Rural Areas, and in particular the flagship initiative on building up carbon sinks by investing into rewetting wetlands and peatlands, will be complemented by the emergence of carbon removals certification. The process of monitoring and verifying carbon removals activities will also create new economic opportunities within rural communities, i.e. new types of high-quality jobs and new sources of income for rural economies. The high-profile and transparent nature of carbon removals certification should allow for experiences to be readily shared across operators within the EU, fostering knowledge transfer and driving innovation across the Union’s agricultural communities. Potential negative effects on rural communities relate to the fact that higher demand for land-based carbon sequestration may increase competition for land, especially in the case of afforestation and rewetting of organic soil, thus threatening food security, as underlined by several organisations responding to the Call for Evidence. To deal with these impacts, the certification criteria to address potential sustainability impacts will promote activities that have no negative impacts on food security at Union level and recommended to build collaboration arrangements with rural communities.

According to the World Bank, the combination of innovative approaches and increased data availability is expected to overcome several serious challenges facing current MRV approaches, by enabling more frequent monitoring of carbon stocks, decreasing the time needed to generate estimates (potentially from months to weeks), decreasing the uncertainty of estimates, standardizing estimates to render them comparable at different scales, and providing spatially-explicit estimates to facilitate straightforward attribution. The implementation of these technologies is a crucial step to enable the digitisation of the MRV system. The EU, through enhancing the quality requirements of removals certification, can help to lead the way in developing and demonstrating advanced digital monitoring and reporting tools and methodologies, building upon the Union’s long track-record in climate innovation.

Furthermore, more stringent criteria on monitoring quality will spur research and innovation to enhance the available monitoring techniques. Developments in digital monitoring and reporting will be key to unlocking confidence, reliability and efficiency in land-based sequestration solutions. In the EU, remote sensing technology (e.g. the Earth observation systems under Copernicus) and uses of cloud computing systems and artificial intelligence to support interpretation and translation of systems such as the Copernicus Land Monitoring System (e.g. for real-time changes in land use activities, vegetation state, and coupling with climate and weather data etc) will likely be critical to lowering the cost and improving the accuracy of nature-based removals monitoring. The quantification of removals through soil carbon restoration, for example, will likely require the use of multiple tools to interpolate soil carbon stock changes between highly discrete sampling sites, and the use of predictive models to estimate changes of carbon stock under differing conditions. The use of remote sensing data to calibrate these predictive models against vegetation cover and weather conditions will likely prove vital to the effective scale-up of certification for these types of activities.

Innovation and digital economy. Increased certification activities can help spur innovation in the field of carbon removals. Europe hosts several key global carbon removal demonstration sites (e.g. EU-funded BECCS at Stockholm district heating plant; Project Drawdown for enhanced rock weathering in Germany; Orca DACCS project in Iceland) which already involve many leading EU research institutes. Many more such demonstrators are also in the planning. In particular, multiple research efforts are focussed on advancing our understanding of the efficacy, fate and behaviour of several emergent carbon removal solutions (e.g. enhanced rock weathering; ocean alkalinity enhancement; oceanic CO2 removal). The commercialisation pathway and the policy perspective offered by certification can help these research activities accelerate innovation towards market deployment.

Many operators that provide carbon removals are small or micro-sized enterprises, and it is important that this be taken into account into the development of the certification methodologies. The proposed certification methodologies include some approaches to facilitate the participation of SMEs (especially in the area of carbon farming), such as: use of remote sensing technologies to decrease the burden of monitoring and reporting for individual operators; possibility of simpler verification procedures (e.g. for small-scale businesses); building on existing legal requirements to avoid duplication of approaches; participation into specific carbon removal programmes pooling the risk of carbon reversals but also providing advices to the farmer on how to increase at the same time carbon storage and economic benefits. As this initiative is considered highly relevant for SMEs, a more detailed analysis of impacts on SMEs (“SME test”) can be found in Annex 11.

Conversely, an operator who is currently with a certification scheme which does not require stringent quantification will experience higher costs, that should however be compensated by a higher price of the certificate thanks to the higher trust in the quality of the generated carbon removals. Annex 3 demonstrates that if the global carbon removal price could be estimated around 4 €/tCO2 in 2021, marketplaces with high-quality carbon removals propose carbon removal certificates at a price that can reach 20 €/t to 70 €/t or more.

Conduct of business. It is important to note that this initiative will be voluntary for both the operators and the certification schemes. This being said, if these actors do participate in the framework, they may incur adjustment costs, depending on the way they were conducting their business in the baseline. Annex 3 indicates that, while the absolute monitoring and reporting costs are subject to uncertainty, such costs are expected to remain the same under the EU certification framework for schemes that already implement the identified best practices. These costs can decrease for similar or better monitoring results if the EU framework promotes the adoption of promising digital monitoring and modelling technologies in replacement of traditional sampling (see below).

These assessments entail some uncertainty, however, and it is difficult to quantify more precisely the impact of voluntary EU certification rules on the development of the market for carbon removals. The expectation of benefits relies on the assumption that the market will need to scale up over the next years from a low level (see section 5.1) and that demand will be primarily driven in the next years by the financing decisions of private and public actors, including financing of carbon farming by food and biomass companies and Member States (to fulfil their LULUCF targets), and synergistic EU policies in the areas of food systems, agriculture and forestry, biodiversity, corporate sustainability reporting, circular bioeconomy and the Innovation Fund. As shown by existing projects, carbon removals produced in the EU are more expensive than the typical emission reduction credits that can be found on the voluntary carbon markets. There will likely be some competition from less expensive certificates from outside the EU, but the rising demand for high-quality carbon removal certificates can create a profitable business case around more expensive carbon removal certificates of higher quality. Furthermore, as explained below, it is not expected that carbon removals certified according to future EU standards will be significantly more expensive than those from current high-quality projects.

Finally, the improved quality of certification will also benefit the users of the certificates, such as the companies in the food and biomass processing industry who will be able to show their consumers and investors their improved climate performance in a reliable way.

·Certification bodies will have positive benefits arising from increased demand for certification services. Certification schemes and certification bodies who are already active in the fields of organic farming labelling or sustainable biomass certification could expand their business and include the certification of carbon removals in their offer.

·Certification schemes would see increases in revenues arising from increased registry activities; the main actors on the market, Verra and Gold Standard, make 72% to 89% of their revenues from registry and issuance fees (see Annex 3).

·Higher demand for carbon removal certificates will create additional revenues for operators (i.e. the providers of carbon removals). The voluntary carbon market has grown at significant pace in recent years. Over the period 2013 to 2018, average traded volumes stood around 68 MtCO2 per year, whereas the period 2018 to 2020 traded volumes more than doubled to on average 130 MtCO2 per year. These volumes look set to double again through 2021/2022 with an increasing role for carbon removals. As discussed in section 2.2.4, other actors – food and biomass companies or public authorities – show also an increasing interest in financing carbon removals.

Sectoral competitiveness and functioning of the internal market. The improved comparability of carbon removal certificates across different schemes and types of carbon removal activities will lead to better price signals and decrease the likelihood of low-quality carbon removal certificates. Several stakeholders have stressed in their contribution to the Call for Evidence that reliable and comparable criteria will create legal certainty and a business case for investment in these technologies, strengthening the market and enabling a scalable industry. These developments are expected to boost the demand for carbon removals and for certification services, which will create economic benefits for all certification actors:

The sustainability criteria and indicators can draw on an evolving set of EU legislation. For instance, applying selected minimum sustainability requirements from the Taxonomy climate delegated act would ensure that the planting of tree monocultures, or any other forestry activity with a significant negative impact on biodiversity, will not be certified. To keep administrative burden low and ensure policy consistency, it will be important to rely on existing indicators and criteria that can be easily monitored.

Environment. By setting clear sustainability criteria that include minimum requirements for the environment (e.g. in relation to biodiversity status and trends, soil quality, water quality, nitrogen balance, and other ecosystem services) and disclose information about them, land managers will be incentivized to adopt more climate-friendly management practices that improve biodiversity, soils quality or water management. According to many stakeholders that submitted input to the Call for Evidence , these win-win synergies should be encouraged for carbon removals to effectively contribute to the interconnected climate and biodiversity crises.

A potential risk is that the voluntary nature of the initiative could undermine its success and therefore its effectiveness in upscaling carbon removal solutions. As explained in section 5.3, it was judged more appropriate to start with a voluntary framework co-created in a step-wise fashion with experts, and any future shift to a mandatory framework will be based on the learnings of this voluntary phase. The uptake of the initiative can be encouraged by exploiting synergies with upcoming EU initiatives such as the Green Claims Initiatives, which can help to promote the EU certification framework as a valid way to substantiate green claims. The EU standards for corporate sustainability reporting will also contribute towards greater transparency from the side of companies using certificates, which will create more pressure on these users to only buy high-quality certificates. It will need to be further evaluated how these initiatives play together to inform the policy choices post-2030.

Based on these approaches to lower costs and increase uptake while ensuring the quality of the certificates, quantities of carbon removed from the atmosphere are expected to increase because of this initiative, thanks to the enabling effect of harmonised and cost-effective certification methodologies. Another indirect and positive effect on the climate is represented by the wealth of accurate information that will be created by certification, which will improve the understanding of the effectiveness of climate action and the quality of national GHG inventories. This will indirectly help national authorities to target support where it is most effective, with positive impacts towards climate objectives.

While the harmonised criteria improve comparability, they allow certification schemes and carbon removal operators to be more ambitious on certain criteria as requested by the financiers and uses of carbon removal, for instance in terms of baseline (e.g. increasing the ambition of the baseline level), or long-term storage (e.g. increase the duration of the commitment period). However, the underlying technical criteria (e.g. the type and level of details of the information to be provided, the certification processes) remain the same. This will make it easier for carbon removal providers to switch between different financiers with minimal transaction costs.

Tailored certification methodologies based on the QU.A.L.ITY criteria will enhance comparability. New certification schemes, or existing ones that want to expand their portfolio and cover new types of carbon removal solutions, can refer to a set of certification criteria (if Q1) or methodologies (if Q2) targeted to their needs, which will speed up the start of operations. Operators will have a clearer understanding of their business opportunities and the methodologies that they will need to follow, which will contribute to a decrease of uncertainty and risk-aversion that often holds back action in this field. The benefits of a harmonised regulatory framework in increasing uptake of carbon removal solutions was underlined by many businesses and companies that provided input to the Call for Evidence.

·In the case of carbon storage products, the main barrier is that, due to the complexity of certification, there is yet no consensus on methodologies to properly account for the temporary aspect of storage of carbon in products. A study conducted for the Commission found that wood-based construction products have a low market share in the EU and that, to scale these solutions, there is a need to both improve capacity along the whole value chain and to refine current assessment methods for the climate performance of buildings. Such assessment could follow a dynamic life-cycle approach, but this is particularly difficult because there are various actors involved in the value chain, and those that influence the rate of carbon removals (biomass producers) are different than those that transform biomass into a storage product (wood manufacturers), who are still different than those that have control over the longevity of the products (the owners of the building). In the case of Carbon Capture and Utilisation (CCU), the main barrier is of a financial nature: the cost of capture is still quite high and the processing of non-fossil CO2 into products often requires a lot of energy, but the final product in practice is often indistinguishable from its fossil fuel equivalent and it is therefore difficult to gain a competitive advantage. A recent metareview surveyed 26 policy reports on CCU covering the policy measures that are considered to be potential barriers or incentives for the development and deployment of CCU: most of these papers recommended policy measures such as public funding for R&D and for market upscale (which is available in the EU under the Horizon programme and the Innovation Fund) and inclusion of CCU technologies in the EU ETS (which was included in the proposal to amend the ETS under the Fit for 55 package); after these policy measures, the most recommended one was the development of standardised and transparent assessment methods. This initiative will address the barriers to carbon storage product certification by undertaking more work in this direction in the coming years.

B.A study on carbon farming carried out on behalf of the Commission found that the main barriers to uptake are: the financial burden (cost of management practices and uncertainty about revenues); lack of public trust in the reliability of voluntary carbon markets; concerns around environmental integrity, additionality or permanence; the unavailability, complexity or high costs of monitoring, reporting and verification systems; the insufficiently tailored training and advisory services. Participants to the Thematic Group on carbon farming organised by the European Network for Rural Development confirmed these findings and indicated that scaling these solutions requires (inter alia) better advisory services, lower costs of monitoring, reporting and verification, the recognition of the action of early movers, approaches to ensure the long-term storage of carbon, the development of different funding models (i.e. not only voluntary carbon markets), and awareness of the environmental co-benefits. The EU certification criteria will address these barriers by increasing trust and predictability on the outcomes of carbon farming practices and how they are certified and rewarded; enabling easier access to different funding opportunities through a harmonised certification process; promoting the use of remote sensing techniques to lower monitoring costs compared to on-site checks; defining the baseline as a benchmark based on standard practices (preferably set on remote sensing data), which will bring clarity, and recognise the performance of first-movers; creating certificates that are based on the different duration of carbon storage and clear liability rules; and providing common methodologies to disclose environmental and sustainability co-benefits.

A.Stakeholders interviewed in the context of a recent report by CarbonPlan agreed that the main barriers to scale permanent storage solutions are lack of public sector support and the high cost of these technologies, but they also converged on the idea that certification standards could play an increasingly important role as the market for this type of certificates grows. To promote these solutions, the certification criteria recognise that these carbon removals are additional (as these technologies are currently still too expensive to enter the market without financial support) and permanent (with the liability rules of the CCS Directive applying), which will give them a competitive advantage in terms of quality and facilitate their financing.

Currently, the mitigation potential of carbon removal activities is far from being fully realised due to many existing barriers. The main climate impact of this initiative is delivered by addressing these barriers, with the aim of increasing the uptake of carbon removal activities and achieving the goals set in the Sustainable Carbon Cycle communication, while ensuring the high-quality of these activities. These barriers are specific to the different carbon removal activities and will be addressed as follows:

·Long-term storage – the expected duration of carbon storage for which the operator takes liability, is clearly indicated and will allow for better risk-sharing arrangements (see Annex 8).

·Baseline and Additionality – the demonstration of the additionality of carbon removals is simplified by promoting a representative benchmark of standard practices; this will reward first-movers and avoid subjectivity that result from baselines that are based on project-specific scenarios (see Annex 7).

·Quantification – clear principles for the calculation of the carbon removal benefits of activities, in accordance with international standards, requiring a detailed breakdown of all removals and emissions attributable to the activity and robust monitoring fitting the different types of carbon removals (see Annex 6).

Climate. The main impact of this initiative on climate is the increased quality of certified carbon removals compared to the policy baseline. The QU.A.L.ITY criteria increase the clarity on the climate benefits of carbon removal activities and establish a higher standard for the development of methodologies:

As the market for certified carbon removals is currently at an early stage of development, the assessment of the options is primarily qualitative, based on the assessment of existing certification schemes, literature and expert reviews (see Annexes 3 to 11), and drawing from the analysis of the replies to the Open Public Consultation and the positions papers submitted to the Call for Evidence (see Annex 2).

Improved access to information for stakeholders by promoting transparency and by involving them in the development of the certification methodologies.

Economic diversification and new business opportunities in rural areas & improved soil productivity and resilience, but also possibly higher competition for land.

New monitoring techniques, new technologies and products to remove carbon, availability of digital data on carbon removals in open access registries.

Operators and certification schemes joining the voluntary framework may have to adjust their business model and their operations.

Co-benefits of carbon removal activities for other environmental objectives, while ensuring that no harm is done to these same objectives.

The potential to increase the uptake of carbon removal activities by decreasing entry costs while requiring a high level of quality.

The option to include the certification of emission reductions – such as from livestock management or use of fertilisers – in the framework was discarded because of the polluter-pays principle. In the EU climate policy framework, emission reductions are among others incentivised through the EU Emission Trading System, regulatory measures, such as the CO2 standards for cars, or national targets under the Effort Sharing Regulation. Following a recommendation by the European Court of Auditors, the Commission is currently undertaking a study that assesses policy options to apply the polluter-pays principle to emissions from the agricultural sector.

The option to establish rules on how the certificates can be used by private and public organisations to report on their climate performance and to substantiate their climate-related claims was discarded, as this type of requirements would have largely overlapped with existing EU legislation. In particular, a Delegated Act on EU sustainability reporting standards will be published in June 2023; these standards will become a mandatory requirement for companies covered by the proposed Corporate Sustainability Reporting Directive, and will define how to report information about the climate footprint of an organisation. A draft proposal by EFRAG was submitted to public consultation in summer 2022, and included disclosure requirements on how to report on climate targets and on climate performance (e.g. requirement that undertakings do not include GHG removals, carbon credits or avoided emissions as means to achieve GHG emission reduction targets, reporting requirements on GHG removals in own operations and the value chain, GHG mitigation projects financed through carbon credits). The proposal for a Green Claims initiative will be adopted on the same day as the carbon removal certification framework and will aim to make environmental claims (including climate-related ones) reliable, comparable and verifiable across the EU, thus protecting consumers from the risk of greenwashing; the certification methodologies developed under the carbon removal certification framework should be designed in synergy with the provisions of the Green Claims initiative.

The option to establish a mandatory requirement on all EU operators that seek to certify carbon removals to do so in accordance with the EU framework was discarded. The Commission considered that more experience is needed in this novel and complex area before any effective mandatory requirement can be designed. In particular, before any mandatory use of the framework is proposed, the certification methodologies need to be already in place and tested. This initially voluntary phase will serve as a pilot phase during which operators and certification schemes can build capacity. Based on the lessons learnt, the Commission should undertake an evaluation and assess further policy options.

Under option G2, the Commission is the responsible public authority and the certification schemes recognised by the Commission could then be active across the whole Union. The EU recognition would be valid for a fixed number of years (e.g. five) and regularly monitored.

Under option G1, Member States are the public authority responsible for ensuring the credibility and integrity of certification schemes. Alternatively, under this option, each Member State may decide to establish a public certification scheme which would directly perform the typical functions of a certification scheme.

Depending on who is the public authority responsible for these three roles, two governance options will be assessed:

1.Recognising the certification schemes that comply with the Transparency criteria and that can therefore be used by operators to demonstrate compliance with the QU.A.L.ITY criteria and tailored methodologies;

In addition, public authorities can contribute to ensuring the credibility and integrity of certification schemes by:

The definition of these transparency criteria largely draws from existing experience with the certification of sustainable biomass under the Renewable Energy Directive. In that context, the Commission carried out a review of the certification schemes operating under the 2018 Renewable Energy Directive, which pointed to several good practice rules that are generally applicable to certification schemes operating in other fields.

·Robust registries: certification schemes shall duly maintain a public registry of validated and verified carbon removals and certificates. The certificates in the registry should include all relevant information needed to assess the quality of the certificate, to identify it (e.g. a unique tracking number) and to track its use. Registries should be inter-operable to help preventing double-counting.

·Third-party verification and certification: certification schemes shall ensure that information and data submitted by operators for verification of the generated carbon removals and certification of the carbon removal activities are subject to independent auditing. Certification schemes shall also ensure that the verification and certification activities are carried out by accredited certification bodies in a cost-effective way.

·Reliable rules and procedures: certification schemes shall be operated on the basis of reliable rules and procedures in order to ensure their capacity to check that operators comply with the QU.A.L.ITY criteria. In particular, these include internal management and monitoring, complaints and appeals management, stakeholder consultation, transparency and publication of information, approval and training of certification bodies, management of non-conformities, and management of registries.

·The certification of carbon storage in products is still in its infancy. While waiting for a more robust scientific consensus, no best practices can yet be identified. First, sophisticated quantification methods must be developed by experts and discussed with the relevant stakeholders. The 2022 Commission Work Program for CEN/CENELEC includes a mandate for developing a methodology to integrate carbon storage into LCA for construction materials.

·While certification methodologies have already been developed and rolled out at a larger scale for some carbon farming solutions (e.g. forestry, afforestation), others are still applied at a smaller scale (e.g. agro-forestry, peatland rewetting, soil carbon, biochar…). Besides the existing experience with certification, the choice of the specific carbon farming solutions to prioritise should be driven by the extent of the environmental and socio-economic co-benefits that these solutions can provide.

·BECCS and DACCS have a large mitigation potential, their certification can ensure robust MRV and, as shown in Table 2 , the QU.A.L.ITY criteria can largely build on existing legislation, but their economic feasibility is still a challenge. Thus, these methodologies can and should be built relatively quickly to attract investment.

Respondents to the public consultation shared their views on the time horizon for including specific carbon removal solutions in the certification framework: both carbon farming solutions (especially sustainable forest management) and industrial solutions (with some exceptions) were broadly supported for implementation as soon as possible. The three most frequently selected criteria to prioritise the methodologies were robustness of MRV aspects (54% of all respondents), potential for deployment at large scale (49%), and technical readiness and economic feasibility (45%). Another important criterion, due to its relevance for the EU Green Deal, are the potential environmental co-benefits (the most selected criterion among NGOs). Carbon removal solutions perform very differently against these criteria:

Under option Q2, the Commission will develop the methodologies in close consultation with an expert group that includes experts from the Member States, independent experts, and stakeholders. Q2 is the preferred option for the respondents to the public consultation: 64% of them believe that the methodologies should be established by public administration rather than private entities. The Commission will decide on the sequence and priority of the methodologies to be developed based on several criteria (see Box 4 ), in consultation with the expert group.

Under option Q1, the certification schemes will develop new methodologies or adjust their existing methodologies in line with these criteria and elements if they want to be recognised under the EU certification framework. The certification schemes are free to submit their methodologies at any time to the responsible public authority for recognition (see governance options G1 and G2).

The legal framework will set out these QU.A.L.ITY criteria; based on them, certification methodologies tailored to each specific carbon removal solution have to be developed:

Minimum requirements and indicators for co-benefits to be developed in close synergy with Sustainable Products Regulation and Construction Products Regulation.

Only carbon farming activities that provide a neutral or positive impact on the environment are eligible. The minimum requirements should go beyond mandatory legal standards, and can be inspired by relevant taxonomy criteria or best practices from private certification schemes. Disclosure of co-benefits can build on relevant EU legislation (e.g. biodiversity indicators from proposed Nature Restoration Law).

Annex 9 concludes that the inclusion of strong requirements on sustainability is necessary to tackle the climate crisis and the biodiversity crisis in a synergistic manner. While minimum requirements for co-benefits should be defined for carbon farming activities due to the strong potential for synergies, in the case of permanent storage solutions and carbon storage products relevant safeguards can build on existing legislation.

Goal: Incentivise carbon removals with higher co-benefits (including biodiversity, water quality, zero-pollution, circularity, or food security) through a balance between safeguards from existing legislation, disclosure of co-benefits, and minimum sustainability requirements.

To keep liabilities manageable for land managers, they can commit to carbon storage for a limited time period, during which they are liable for re-emission. The certificate expires at the end of the commitment period or can be prolonged. Land managers are also free to commit to a longer period upfront.

Operators are liable to compensate for any re-emission during the full period of carbon storage, with a transfer of liability foreseen at the cessation of the activities, as stipulated in the CCS Directive.

Annex 8 concludes that the choice of time-limited and renewable contracts for carbon farming activities can recognise the non-permanence of these practices and avoid land managers having to take a too long commitment that could discourage their interest in taking up these certification schemes, while at the same time providing incentives for the continuation of the carbon removal activities in order to obtain a renewal of the contract. In addition, thanks to the detailed rules of the CCS Directive on monitoring and liability for re-emissions, the EU framework can recognise the high quality of BECCS and DACCS and therefore simplify access to finance.

The baseline should represent the standard practices in comparable land parcels based on integrated datasets and remote sensing. Absent these data, baselines can be based on available best practices (based e.g. on EU legislation), historical averages of national, regional or project-specific data that should be corrected for data uncertainties and higher ambition than business-as-usual. Design simplified approaches to determine additionality.

As these are nascent technologies developed with the specific aim of removing carbon, the baseline can generally be set at zero removals, and the activity considered additional.

Annex 7 looks at approaches to define a real, transparent, conservative, and credible baseline (beyond standard practice), that encourages ambition over time – in line with the Paris agreement – and broad participation. It also argues for the importance to demonstrate that carbon removal activities are additional from a regulatory and a financial point of view. The annex concludes that a standardised baseline, which reflects the market and regulatory conditions in which the carbon removal activity takes place, has many advantages: it is objective and robust, it rewards the action of early-movers, and it reduces the need for complex tests on financial and regulatory additionality.

Goal: Deliver removals beyond the standard practices and channel incentives where they are needed to take up or maintain a carbon removal activity.

More research and experience is needed to develop a dynamic life-cycle approach, identify the correct boundaries of the activity and recognise the temporary storage of carbon in long-lasting products.

The best available data and monitoring techniques should be in line with the Commission proposal for the LULUCF Regulation. To decrease costs and enable large participation, the full potential of remote sensing should be exploited.

The quantification should build on the scope of the LULUCF regulation. While increased non-LULUCF emissions due to the activity should be subtracted, decreases should be disclosed as a co-benefit.

The quantification can build on the methodologies already developed for the Innovation Fund (i.e. a life-cycle approach including direct and secondary emissions attributable to the carbon removal project).

Annex 6 analyses existing approaches to quantify carbon removals and concludes that the project boundaries should be set in a way that accounts for all removals and emissions attributable to the carbon removal activity, and that the climate benefit assessment of a carbon removal project should be conducted by comparing the net removals expected from the project activities to a representative baseline. In addition, the carbon removal project should provide a comprehensive monitoring plan describing in detail the procedures used for the measurement or the estimates of all GHG data and other information relevant to the project and the baseline, including a detailed breakdown of the emissions and removals attributable to the project.

The development of the certification methodologies will build on the best practices from existing certification schemes and EU legislation. The existing approaches for each QU.A.L.ITY criterion, their strengths and weaknesses, and the best practices have been extensively assessed in dedicated annexes (Annexes 6 to 9). The results from this analysis are summarised in Table 1 .

·Governance options: based on the Transparency criteria established in the framework, certification schemes will be recognised by either the Member States (option G1) or the Commission (option G2).

·Quality options: based on the QU.A.L.ITY criteria established in a legislative framework (Regulation), specific methodologies will be developed by either the certification schemes (option Q1) or the Commission (option Q2).

To achieve the general objectives stated in section 4.1, the EU will (i) develop a high-quality standard for carbon removals and (ii) ensure its enforcement. Accordingly, two sets of policy options will be assessed:

Finally, when it comes to the Transparency criteria, experience with the Renewable Energy Directive but also with the EU ETS confirm the need to have robust registries in place to track certificates to avoid double-counting. The rules to harmonise registries for carbon removal certification could build on these experiences. See Annex 10 for more details.

·Sustainability impacts. The proposal for a Nature Restoration Law defines a list of indicators to assess the improvement of agricultural ecosystems and forest ecosystems, with a duty for Member States to put measures in place to increase their trends at national level. . Once defined and developed, these indicators could be taken as a basis for the disclosure of co-benefits of carbon removal activities. The Taxonomy Regulation establishes six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. Relevant activities for carbon removal certification in the first Taxonomy Delegated Act (for the climate-related objectives) were forestry, restoration of wetlands, and underground permanent geological storage of CO2. The Taxonomy Do No Significant Harm criteria can inspire a general approach to exclude activities with a significant negative impact on sustainability. The sustainability criteria for biomass from the Renewable Energy Directive can be taken as a basis for sustainability safeguards for the biomass used for BECCS or for bio-based construction products. In the case of bio-based construction products, safeguards and co-benefit disclosure could also largely build on provisions from the Ecodesign for Sustainable Products Regulation185 and the Construction Products Regulation , which the Commission is proposing to revise . Finally, the Environmental Footprint method defines the recommended modelling requirements, data quality requirements, and life cycle impact assessment to be followed when assessing the environmental performance of products and organization. Such methods allow to identify co-benefits and trade-off between climate change and the other 15 impact categories.

·Long-term storage. For geological storage, the already mentioned CCS Directive establishes that the carbon removal project remains responsible for monitoring and reporting and liable to compensate for any re-emission, with a transfer of liability foreseen at the cessation of the activities.

·Additionality and baselines. The Common Agricultural Policy provides a set of regulatory requirements referring to different pieces of environmental legislation (called Statutory Management requirements) and of conditionality requirements (called Good Agricultural and Environmental Conditions, GAECs) that farmers must comply with in order to be eligible for income support; these can be of inspiration when establishing that carbon farming projects are additional from a regulatory point of view (for example that they exceed legal obligations and/or conditionality requirements).

·Quantification. The ETS Directive explicitly includes carbon capture and storage (CCS) solutions, and therefore CO2 captured, transported and stored according to the CCS Directive will be considered as not emitted. To this end, CCS should be quantified in accordance with a comprehensive methodology outlined in the Commission Implementing Regulation (EU) 2018/2066 on the monitoring and reporting of GHG emissions for the ETS (especially Articles 40 to 46 and Article 49 and Annex IV, Section 21). Based on these rules, the Commission has also developed detailed methodologies for the GHG quantification of BECCS and DACCS projects that apply to receive grants from the Innovation Fund, and requires successful projects to maintain records of measurements and annual reports. For carbon farming solutions and harvested wood products, the LULUCF Regulation provides a blueprint for accurate monitoring and reporting of carbon removals in line with IPCC guidelines and in synergy with biodiversity, renewable energy and adaptation policies. The rules encourage monitoring land use in a geographically-explicit way, at low cost and in a timely fashion, for example through digital databases and maps, combined with remote sensing, including the Copernicus Sentinel satellites or commercially available services.

An important consideration when creating a framework for the certification of carbon removals produced in the EU is to build on some elements that are already included in relevant EU legislation and that partially address the challenges identified as the first problem driver. It will be important to ensure consistency with this legislation so that synergies can be exploited and inconsistent legislation avoided. However, the current legislation does not provide a comprehensive framework for carbon removal certification: for instance, some relevant monitoring rules or indicators apply to the national level and not to the individual level or are of a voluntary nature. See Annexes 6 to 9 for more details.

Regarding the reliability of the certification process, the majority of the larger schemes score well on transparency: they have third-party verification, they submit their methodologies to peer-review and public consultation, they publish their certification methodologies and all the documents related to the verification and certification of the projects, and they have a public registry that identifies each certificate with a serial number. However, other best practices (such as the publication of withdrawn certificates and their final destination) are only followed by a minority. Current procedures to avoid double counting still rely on manually checking if the registries from other schemes include certificates from the same project. In the public consultation, many stakeholders indicated that certificates should include transparent information on the carbon removal provider, on the certificate owner, and on the use of the certificate with a view to avoid double counting (respectively the 5th, 6th and 7th most selected types of information in a list of 12). See Annex 10 for an overview of the best practices to ensure transparency.

·Sustainability. Existing schemes include more or less stringent prescriptions and tools to identify and to clarify how sustainability impacts are managed. Some schemes require the disclosure of additional co-benefits, as long as they can be monitored and verified, but very few certification schemes require to provide an assessment of the environmental and social impacts of the projects based on specific rules and monitoring tools. More typically, schemes may require identifying and mitigating risks of adverse side-effects on sustainability, or exclude activities that, despite their climate benefits, are likely to generate them. Avoiding potential negative environmental impacts and complying with sustainability principles was considered a less important challenge by respondents to the public consultation (ranked 7th out of eight), but it was considered an important criterion (especially by NGOs and EU citizens) when defining the types of removals that should be incentivised (ranked 4th).

·Long-term storage. Most certification schemes define a specific duration for the monitoring period of the project, which can last from 10 to 100 years, and the continuous storage of carbon removals is not guaranteed after this period. However, the issued certificates have no expiration date, thereby failing to fully recognise the non-permanence of some types of carbon removal solutions (see Annex 7 for more details). In addition, to cover the risk of early release of reversals, certification schemes create buffer accounts and allocate liabilities (imposing adequate redress and compensations) on the carbon removal supplier, the certification scheme or the user of the certificate. Providing sufficient guarantees for the duration of carbon storage and the prevention of reversals was considered the 3rd (among eight) most important challenge by the respondents to the public consultation. Regarding the way to best manage the risks of reversal, the most common response was to require risky removal solutions to be discounted or have a proportion of expected removals be stored in a buffer account; the second most popular response was to require multi-year monitoring plans at the outset of the certification procedure; the third most popular response was for certificates to be issued with specific durations (e.g. 5, 7, or 10 years), which could then be renewed.

·Additionality and baselines. There are different ways to define baselines, depending on whether the carbon removals are compared to the historical practice of the individual operator or with the standard practice of other operators under similar circumstances; there are also different approaches to ensure the ambition of the baseline, e.g. a discount on the historical level of emissions and removals, or the choice of an ambitious benchmark such as best available technologies or best performing activities. The key question is how to find the good balance between accuracy and ambition on the one hand, and lower costs and a broad uptake on the other hand. Most schemes adopt project-specific baselines, but these have shortcomings in terms of ambition, reliability, administrative burden and incentives for “first-movers” (see Annex 6 for more details). In terms of additionality, only few certification schemes require both regulatory and financial additionality (they more often require just one of the two, or none) . In the public consultation, the challenge of setting appropriate baselines and demonstrating the additionality of removals was considered relatively less important than others, as it only ranked 6th in a list of eight challenges. Nevertheless, in a question specifically dedicated to additionality, 71% of respondents call for EU guidance on baseline and additionality criteria.

·Quantification. Despite the existence of comprehensive guidance on the necessary steps to establish quantification, monitoring and reporting protocols, there are still gaps in our ability to monitor, report and verify carbon removals via either direct observation or modelling techniques. The best practice when establishing the boundaries of certification is to carry out a life-cycle assessment to capture the total impacts of a given carbon removal activity, including related upstream and downstream emissions. Different approaches to establish the baseline are discussed below. Some certification schemes estimate the amount of carbon removals based on direct measurement, others rely on modelling, others do both, but methodologies differ in approaches to manage uncertainty (e.g. discounts, buffers, conservative assumptions), and the potential to use of remote sensing to increase the accuracy and lower the costs of MRV in the carbon farming domain is not yet fully exploited. Respondents to the public consultation put a great emphasis on this challenge. Ensuring precise, accurate and timely measurement for removals was ranked as the most important challenge regarding the integration of carbon removals in EU climate policies (this result was mainly driven by the replies of business associations and companies/business organisations). The robustness of MRV aspects was the most selected criterion defining the types of carbon removals that EU climate policies should incentivise. When asked what information the certification of carbon removals should disclose, respondents selected as the three top replies “Quantity of carbon removed”, “Type of carbon removals” and “Information on MRV processes”.

It is not only important to scale up carbon removal activities but also to ensure a growth path based on robust certification schemes that create trust in the quantity and quality of carbon removals. As explained in section 2, certificates are still associated with a large reputational risk if unreliable and non-transparent certificates are used as a means for “greenwashing”, and there is still a high degree of confusion about what classifies as high-quality carbon removals, as evidenced by the diversity of certification approaches. Stakeholder’s replies to the public consultation (summarized in Annex 2) provide an overview of the most salient quality gaps of the current approaches to carbon removal certification. Annexes 4, 6, 7, 8, 9 provide overviews and in-depths assessments of current approaches.

Annex 4 provides an overview of certification schemes that are active globally or in the EU.

Other local initiatives in the EU, run by either private or public actors, include Puro.earth from Finland, certifying 30 projects (of which 13 in Europe) dedicated to both industrial carbon removal solutions and carbon farming solutions, for a total removal potential of ~100 ktCO2eq; MoorFutures from Germany, dedicated exclusively to peatland rewetting and certifying two projects for a total mitigation potential of ~10-15 ktCO2eq; and CarboCert (Germany) and Kaindorf Humuszertifikate (Austria), both dedicated to CO2 removals in organic soils. In the UK, the Woodland Carbon Code certifies around 1000 projects for a total removal potential of around ~100 ktCO2eq. This overview does not include several local schemes and start-ups that have emerged recently and which could not be considered due to their small size or not yet available data. It can therefore be concluded that several national or local EU certification schemes have emerged in recent years, but that these are very specialised and cover small regions. Except Puro.earth, there is virtually no other scheme certifying industrial carbon removal solutions or carbon storage products. This provides a rationale for an EU certification initiative to encourage the scale-up of the activities of existing schemes and the entry of new ones.

Another national certification scheme is the Spanish Registro de Huella de Carbono, a public registry managed by the Ministry for the Ecological Transition. It covers both emission reductions projects in many sectors (2.057 projects) as well as carbon removal activities (166 projects, two thirds of which started in 2021, mainly af/reforestation and forest restoration). The registry asks operators to apply recognised methodologies and to be validated and verified by independent auditors. Once the project is verified, the Ministry records the certificates on a public registry. In addition, the Ministry gives a three-tier label to private companies that (1) compute their carbon footprint, (2) reduce their emissions and (3) compensate their remaining emissions by buying certificates from the registry.

An example of a certification scheme run by a national public authority is the Label Bas Carbone in France, which is managed by the French Ministry for Ecologic and Solidary Transition and jointly developed with the Ministry of Agriculture and Food, as well as external experts. It currently certifies 233 projects covering farming and forestry activities to both reduce emissions and increase removals; of these, the large majority (176) are individual carbon removal projects in the af/reforestation or forest management domains (total carbon removal potential: ~325 ktCO2), but there is also one large collective project (Carbon’Agri) gathering 300 individual livestock farms based on a methodology to certify emission reductions (total emission reduction potential: ~140 ktCO2). The Ministry has defined the basic certification criteria in a decree, and it convenes an ad-hoc, informal expert group to help the review and approve the methodologies submitted by programme developers and project operators. After third-party verification, the Ministry issues the certificates; French companies, public organisations or individuals can buy those credits but not resell them further.

There is little presence of European projects on voluntary carbon markets. For instance, the two biggest certification schemes in voluntary carbon markets, the Voluntary Carbon Standard and Gold Standard, have respectively registered only 11 and 4 projects as taking place in the EU, of which only 1 is specifically aimed at carbon removals. Thus, it is possible to conclude that currently the largest certification schemes in voluntary carbon markets have virtually no role in certifying carbon removals happening in the EU.In this context, a few national or local certification schemes have emerged in the EU that are solely or mainly dedicated to certifying various types of CO2 removals.

Finally, certification bodies (VVB) are third-party auditors that are often appointed by certification schemes to evaluate documentation at two stages in the certification cycle, and to issue certificates on behalf of the certification scheme. At the stage of project registration, these auditors perform an ex-ante project validation, i.e. an initial assessment of carbon-removing projects to evaluate the reasonableness of statements about the outcome of future activities. At the issuance of credits, they perform an ex-post verification of carbon removals, i.e. they audit the projects to confirm the quantified climate impact and ensure alignment with the scheme’s criteria.

·Issue removal certificates corresponding to the verified carbon removals (this could also be done by certification bodies on behalf of certification schemes), and record them in a registry system.

·Validate projects ex-ante and verify climate benefits ex-post; this is often delegated to third-party auditors called certification bodies (see more below).

·Establish certification criteria and develop the related certification methodologies. Often, certification schemes apply certification methodologies that are developed in a bottom-up fashion by external parties (often, the programme developers); in such cases, the schemes would establish a methodology approval process to check that the methodologies are aligned with the scheme’s criteria.

Then, certification schemes provide a set of rules and procedures to certify operators. Typically, the following actions need to be performed:

First, operators are defined as those who carry out carbon removal activities, i.e. companies implementing industrial removal solutions or land managers implementing carbon farming solutions, and who seek certification for these activities. These project operators, especially in the carbon farming domain, are often SMEs; therefore, it may be difficult for them to directly access the opportunities offered by certification schemes, because of lack of skills or time. This has created a demand for intermediary operators (called programme developers in this Impact Assessment) who aggregate multiple projects, support them in obtaining certification, and usually take a share of the revenues linked to the certificates.

To minimise the transaction costs for providers of carbon removals when navigating through different certification schemes, an EU governance process should be established to harmonise as much as possible the rules and procedures of certification schemes operating in the EU framework. The certificates should transparently carry all the core information needed to access financing opportunities of different types (e.g. both net and gross climate effect, a granular breakdown of emissions and removals), while certification schemes shall be allowed to go beyond the EU standard (e.g. more ambitious baseline, longer commitment periods, higher frequency of audits) to differentiate themselves, including on specific aspects that are more relevant for the uses of the certificates they issue.

To address the need to ensure the reliability of certification processes, the framework should provide public guarantees that certification schemes are capable of enforcing the four QU.A.L.ITY criteria, rely on third-party independent auditors to certify their projects, and manage registries of good quality to avoid double-counting. These guarantees would increase trust in certification schemes for carbon removals.

To address the diversity of carbon removal solutions (even within the same family of solutions, in particular within the carbon farming domain), the framework should include specific certification methodologies that are tailored to each type of carbon removals, while being aligned with the four QU.A.L.ITY criteria. The respondents to the public consultation clearly indicated that the Commission should allow different types of certificates depending on the characteristics of the carbon removal solutions (55%).

To harmonise the way in which the four certification challenges identified above are addressed, the framework will promote existing best practices through the establishment of four certification criteria (under the acronym QU.A.L.ITY): QUantification, Additionality and baselines, Long-term storage, and sustainabilITY. The shortlisting of these four QU.A.L.ITY criteria follows a general consensus about what constitutes high-quality certification according to most existing certification methodologies analysed in the study supporting this Impact Assessment, as well as by the main international references for GHG accounting such as the GHG Protocol, the ISO Standard 14064-2, and the draft Core Carbon Principles proposed by the Integrity Council for the Voluntary Carbon Market.

These actions are necessary to trigger action and to build any future policy in this area, in view of the need to remove hundreds of MtCO2 per year to achieve the 2050 climate neutrality objective set in the European Climate Law and the environmental objectives of the European Green Deal. A very large majority of the respondents to the public consultation (89%) agreed that establishing a robust and credible certification system for carbon removals is the first essential steppingstone towards achieving a net contribution from carbon removals in line with the EU’s climate neutrality objective. The introduction of a certification of carbon removals based on robust, solid and transparent carbon accounting was also one of the measures proposed by the Conference on the Future of Europe.

To address the first problem (i.e. the difficulty to assess and compare the quality of certified carbon removals), this initiative aims to create a certification framework to ensure the high quality of carbon removals in the EU. To address the second and the third problem (i.e. the lack of trust and the barriers to access finance), this initiative aims to establish an EU governance system to recognise certification schemes that correctly apply and enforce the EU quality framework in a reliable and harmonised way across the Union.

A European framework would be more appropriate than national initiatives in addressing the difficulty to assess the quality of carbon removals. Such framework would create a level-playing field and a fair internal market for the certification of carbon removals, enhancing comparability and trust. A patchwork of national initiatives in this area would only exacerbate the problem rather than solving it.

Climate change is a trans-boundary problem. Its effects are global, irrespective of the location of e.g. sources of greenhouse gas emissions. Therefore, these challenges cannot be solved by national or local action alone, since individual action is unlikely to lead to optimal outcomes. Coordination at the European level enhances climate action and can supplement and reinforce national and local action effectively; EU action is justified on grounds of subsidiarity, in line with Article 191 of the Treaty on the Functioning of the European Union.

The proposal is based on Article 192(1) of the Treaty on the Functioning of the European Union (TFEU), which gives the Union the right to act in order to achieve objectives of its policy on the environment. The objectives of the Union policy on the environment as defined in Article 191(1) of the TFEU include, inter alia, preserving, protecting and improving the quality of the environment; a prudent and rational utilisation of natural resources; and promoting measures at international level to deal with regional or worldwide environmental problems, in particular combating climate change.

Each of these uses places more importance on given certification elements. For instance, in voluntary carbon markets the focus is exclusively on the net climate effect resulting from an additional activity, whereas in the other contexts the ‘gross’ climate effect of the activity is also an important piece of information (e.g. for corporate reporting and public funding it is important to know the total amount of emissions and removals that result from the activity). While reporting or labelling approaches would seek aggregate information on the net climate effect within large boundaries (e.g. Life-Cycle Assessment), a more granular breakdown of GHG emissions and removals by sources and pools would be necessary to ensure consistency with national GHG inventories (e.g. in the case of public funding, or if certificates retired in voluntary markets are subject to corresponding adjustment in the host country). Finally, the frequency of audits and verification must be on a yearly basis to be included in corporate sustainability reports whereas it can be carried out less frequently in other cases.

·Voluntary labelling approaches can also build on the information provided by the certificates. This brings new revenues to carbon farming producers or producers of carbon storage products via the price premium that they can charge with respect to competitors.

·The inclusion of sustainability in corporate reporting and in contractual arrangements also creates an important use case for carbon removal certificates. For instance, companies in the food sector may require primary suppliers to improve their climate performance to reduce their “scope-3 emissions” from purchases; as a consequence, primary producers receive a price premium on the basis of certified climate-friendly practices. Financial institutions that want to achieve a climate-neutral portfolio are increasingly offering impact financing to projects and companies (e.g. linking the financial conditions of equity or loans to the achieved climate performance).

·Certification is also increasingly important to support carbon removals via public policies and initiatives. The Union and Member States are already implementing policies to provide incentives to carbon removal practices via public subsidies (e.g. Common Agricultural Policy), public procurement (e.g. reverse auctions to buy carbon removals, contracts for difference), and public funding (e.g. Innovation Fund that supports a BECCS plant in Stockholm). In the longer term, the Union may develop new policies to better integrate incentives for carbon removals into its policies. Certification can help to make these policies increasingly result-based and effective.

The Article 6 of the Paris Agreement, including corresponding adjustments, will need to be implemented within the EU and require the establishment of a Paris Registry. This will provide a clear framework enabling alignment of accounting standards for any credit traded on international carbon markets, irrespective of whether it is about emissions reductions or carbon removals.

Article 6 has yet to be implemented, and the processes for adjustment and alignment are not elaborated. It is not in the scope of this initiative to assess and design options for “corresponding adjustments” in national inventories related to trading of carbon credits in international or voluntary carbon markets. The vast majority of carbon credits traded today come actually from emissions reductions and not carbon removals.

In the context of international and voluntary carbon markets, there has been significant discussion for many years as to how to avoid double counting of emissions and removals, and reconcile levels of offsetting with Paris Goals – irrespective of whether a credit is based on emissions reductions or carbon removals. Article 6 of the Paris Agreement proposes that a “corresponding adjustment” should be made in the national inventories to address double-counting of credits, and that baseline levels need to be aligned with national targets and strategies and goals. The applicability of adjustments, and alignment with Paris goals in other contexts, including in voluntary markets and towards voluntary targets, is currently much debated, but is ultimately dependent on the nature of the claim being made by the user.

·In voluntary carbon markets, companies that have made climate neutrality pledges buy carbon removals to compensate emissions. To avoid the risk of mitigation deterrence, they should only finance an amount of carbon removals corresponding to the quantity of their unavoidable emissions (“offsetting”). Alternatively, companies may also finance carbon removal projects without any offsetting claim (“result-based financing”) or can use certificates to demonstrate a contribution to national targets (“contribution claims”). In these contexts, it is important that the certificates carry all the information that is needed to perform a corresponding adjustment in case compliance with article 6 of the Paris Agreement is required (see Box 3 ).

There is a wide variety of ways to use carbon removal certificates. To date, the most common use of certificates