COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Sustainable Carbon Cycles
Date: 2021-12-15
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU environmental policy, European forestry policy, carbon capture and storage, carbon neutrality, climate change, common agricultural policy, farming sector, greenhouse gas, maritime economy, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.12.2021  COM(2021) 800 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Sustainable Carbon Cycles {SWD(2021) 450 final} - {SWD(2021) 451 final}  
 
 
1  CARBON CYCLES 

Carbon is the atom of life, of our societies and economies. Carbon is in human DNA. Half the 
weight of the food we eat is carbon. Transforming limestone and iron ore into the cement and 
steel of our cities involves processing carbon. Organic chemistry exploits the uniqueness of 
carbon to produce highly complex molecules for the pharmaceuticals, chemicals, plastics and 
advanced  materials  of  our  daily  life.  Carbon-based  fossil  fuels  have  powered  our  homes, 
factories  and  vehicles  for  more  than  a  century.    However,  emissions  from  fossil  fuel 
combustion,  industrial  processes  and  land  use  change  are  cumulating  in  the  oceans  and  are 
dramatically  increasing  the  concentration  of  CO2  in  the  atmosphere.  As  result,  the  global 
climate  is  warming,  biodiversity  is  disappearing,  oceans  are  getting  more  acid  and  extreme 
weather  events  are  becoming  more  frequent.  In  turn,  short-term  carbon  cycles  between 
vegetation and atmosphere are disturbed and sea levels are rising due to the impact of climate 
change on lands, forests, seas and  the cryosphere.  In some regions,  this  is  amplified by  the 
unsustainable  exploitation  of  natural  resources.  All  these  feedback  loops  accelerate  the 
climate and biodiversity crises and present direct threat to ecosystems functioning and human 
societies. 

Responding to the urgency for climate action highlighted in the successive assessments of the 
Intergovernmental Panel for Climate Change (IPCC), the European Union has set into law its 
objective of economy-wide Climate Neutrality by 2050. The European Climate Law1 requires 
that greenhouse gas (GHG) emissions and removals are balanced within the European Union 
at  the  latest  by  2050  with  the  aim  to  achieve  negative  emissions  thereafter.  The  European 
Union  has  also  set  the  goal  that  it  will  be  climate  resilient  by  20502,  to  withstand  the 
unavoidable impacts of climate change. 

To  achieve  such  ambitious  objectives,  we  must  establish  sustainable  and  climate-resilient 
carbon cycles through three key actions: 

  First and foremost, we need to drastically reduce our reliance on carbon, for instance 
by  improving  the  efficiency  of  our  buildings,  transport  modes  and  industries,  by 
reducing  our  primary  resource  consumption  and  moving  to  a  circular  economy,  and 
scaling  up  renewable  energy.  The  European  Climate  Law  firmly  sets  the  goal  of 
climate  neutrality  by  2050  and  our  long  term  analysis3  indicates  that  in  order  to  be 
climate neutral we must reduce by 95% the current use of fossil carbon energy in the 
EU  final  energy  consumption. This  decarbonisation  strategy  is  at  the  core  of  our 
existing  climate,  environmental  and  energy  policies  to  reach  the  2030  objective  of 
55% reduction in EU GHG emissions compared to 1990. 

  Second, we  need  to  recycle carbon from waste streams,  from  sustainable  sources of 
biomass  or  directly  from  the  atmosphere,  to  use  it  in  place  of  fossil  carbon  in  the 

1  Regulation  (EU)  2021/1119  establishing  the  framework  for  achieving  climate  neutrality  “European  Climate 
Law” (link). 
2 COM (2021) 82, Forging a climate-resilient Europe - the new EU Strategy on Adaptation to Climate Change 
(link). 
3 In-depth analysis in support of COM(2018) 773“A Clean Planet For All ” (link). 

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sectors  of  the  economy  that  will  inevitably  remain  carbon  dependent.  The  circular 
economy  and  the  sustainable  bioeconomy  sectors  can  address  this  objective  and 
should  promote  technological  solutions  for  carbon  capture  and  use  (CCU)  and  the 
production of sustainable synthetic fuels or other non-fossil based carbon products. 

  Third,  we  need  to  upscale  carbon  removal  solutions  that  capture  CO2  from  the 
atmosphere  and  store  it  for  the  long  term,  either  in  ecosystems  through  nature 
protection and carbon farming  solutions or in  other storage  forms  through  industrial 
impact  on  biodiversity  or  ecosystem 
solutions  while  ensuring  no  negative 
deterioration  in  line  with  the  precautionary  and  Do  No  Significant  Harm  principles. 
The  development  and  deployment  at  scale  of  carbon  removal  solutions  is 
indispensable to climate neutrality and requires significant targeted support in the next 
decade. 

The  European  Green  Deal  and  related  policies,  therefore,  aim  to  quickly  reduce  the  use  of 
fossil  carbon  and  phase  it  out  in  the  long  term.  The  remaining  carbon  required  for  the 
functioning  of  our  society  will  no  longer  come  from  fossil  fuel  extraction;  it  will  be 
sustainably  sourced  from  our  ecosystems  and  from  our  industries  thanks  to  innovative 
technologies.  

At the same time, current global climate action is not sufficient to maintain the atmospheric 
concentration  of  CO2  at  levels  compatible  with  the  objective  of  the  Paris  Agreement4. 
Scientific advice continues to show, with increasing urgency, that this concentration will have 
to  be  reduced  actively  in  the  future  to  limit  global  warming  to  1.5°C.  Moreover,  climate 
neutrality by mid-century  by all major economies  is  likely to  be only the first  step towards 
restoring  the  planet’s  climate  balance,  at  least  in  part,  at  the  end  of  this  century.  Carbon 
removals will need to play a growing role, and become the main focus of action after climate 
neutrality  is  achieved  and  when  negative  emissions  will  be  needed  to  stabilise  the  world’s 
temperature increase. Available solutions based on resilient natural ecosystems and industrial 
carbon capture and storage (CCS) should be deployed in an efficient and sustainable way that 
takes into account their specific characteristics. Carbon removals from both ecosystems and 
industrial  solutions  should  comply  with  strong  requirements  on  monitoring,  reporting  and 
verification  to  be  recognised  as  contributing  to  EU  climate  and  environmental  objectives. 
Irrespective  of  their  origins,  all  carbon  removals  need  to  be  accounted  in  full  transparency 
and  by  considering  criteria  such  as  the  duration  of  the  storage,  the  risk  of  reversal,  the 
uncertainty  of  the  measurement  or  the  risk  of  carbon  leakages  increasing  GHG  emissions 
elsewhere. 

Establishing  sustainable  carbon  cycles  in  the  EU  economy  and  ecosystems  is  a  long-term 
endeavour  that  nevertheless  requires  coordinated  action  now.  This  Communication  focuses 
on  the  short-term  actions  to  upscale  carbon  farming  as  a  business  model  incentivising 
practices on natural ecosystems that increase carbon sequestration (section 2) and to foster a 
new  industrial  value  chain  for  the  sustainable  capture,  recycling,  transport,  and  storage  of 
carbon  (section  3).  These  actions  will  all  contribute  to  the  mitigation  effort  of  the  Union 
either by reducing GHG emissions or by removing carbon from the atmosphere and pave the 

4 2021 UNEP Gap Report (link). 

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way for a policy of negative emissions in the future, with strong co-benefits for the Union’s 
ambition to reverse biodiversity loss and pollution. 

A fundamental step to make this possible is to put in place a regulatory framework for a clear 
and  transparent  identification  of  the  activities  that  unambiguously  remove  carbon  from  the 
atmosphere and can decrease the atmospheric CO2 concentration, therefore developing a EU 
framework  for  the  certification  of  carbon  removals,  based  on  robust  accounting  rules,  for 
high-quality  sustainable  carbon  removals  from  both  natural  ecosystems  and  industrial 
solutions  (section  4).  With  a  perspective  towards  climate  neutrality  in  2050,  therefore,  this 
Communication  should  also  start  a  reflection  towards  the  further  integration  of  carbon 
removals into the EU regulatory and compliance frameworks, post-2030, taking into account 
the scientifically validated methodologies. 

2  CARBON FARMING AS A BUSINESS MODEL FOR HEALTHIER ECOSYSTEMS 

2.1  Role of carbon farming 

Sustainable land management  will be critical  in achieving the EU’s  2050 climate neutrality 
objective  as  it  will  increase  the  amount  of  carbon  captured  and  stored  in  plants  and  soils. 
While  forests  show  annual  net  carbon  removals  at  EU  level,  all  other  land  uses  such  as 
croplands,  grasslands,  wetlands  and  settlements  show  overall  annual  net  emissions,  with 
significant  differences  among  Member  States.  Moreover,  national  GHG  inventories 
submitted  to  the  UNFCCC  report  that  net  removals  from  terrestrial  ecosystems  in  the  EU 
have  been  on  a  declining  trend  over  the  last  decade,  largely  driven  by  the  deteriorating 
situation  in  forest  ecosystems.  Since  about  2013,  the  annual  removals  on  forest  land  have 
been decreasing at more than 12 MtCO2eq per year, a trend that emerged in a number of EU 
regions (to varying amounts). The change since 2013 is due to a mix of factors, as outlined in 
the  EU  Forest  strategy5  and  the  LULUCF  Impact  Assessment6  .  Solutions  are  available  to 
reverse this decline and to return quickly to past levels of net carbon removals well above 300 
MtCO2eq, but their deployment needs to be facilitated7.  

With  this  in  mind,  the  Commission  proposed  to  amend  the  LULUCF  Regulation  (EU) 
2018/8418  (‘LULUCF  proposal’)  by  setting  a  Union  target  for  net  annual  removals  of  310 
MtCO2eq by 2030, a level  last  seen in  2013,  and allocating targets  for each Member State. 
The  proposal  also  includes  the  aim  to  reach  climate  neutrality  in  the  entire  land  sector  by 
2035,  which  means  that  carbon  removals  in  terrestrial  ecosystems  should  balance  the 
greenhouse  gas  emissions  from  all  land,  livestock  and  fertiliser  use.  The  Commission 
proposal,  however,  does  not  establish  direct  incentives  at  the  level  of  the  land  managers  to 
increase carbon removals and protect carbon stocks. A system of incentives at land manager 
level would nevertheless leverage direct action on the ground. This Communication takes up 

5 Forest strategy (europa.eu) - (link) 
6 SWD (2021) 609, Impact Assessment accompanying the Proposal amending the “LULUCF” Regulation (EU) 
2018/841 (link). 
7 Such solutions are presented in the Staff Working Document SWD (2021) 450. 
8 Regulation (EU) 2018/841 on the inclusion of greenhouse gas emissions and removals from land use, land use 
change and forestry in the 2030 climate and energy framework (link). 

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the challenge of launching an EU carbon farming initiative as announced by the Farm to Fork 
Strategy9  and  reiterated  in  the  EU  Forest  Strategy  for  203010,  and  seeks  to  enable  the  key 
stakeholders in the land sector to play their decisive role in sustainable carbon management, 
on the pathway to climate neutrality. It will also contribute to the recovery of biodiverse and 
resilient nature across EU.  

Carbon farming as a business model 

Carbon  farming  can  be  defined  as  a  green  business  model  that  rewards  land  managers  for 
taking  up  improved  land  management  practices,  resulting  in  the  increase  of  carbon 
sequestration in  living biomass, dead organic matter and soils by  enhancing carbon  capture 
and/or  reducing  the  release  of  carbon  to  the  atmosphere,  in  respect  of  ecological  principles 
favourable to biodiversity and the natural capital overall. The financial incentives can come 
from  public  or  private  sources  and  reward  land  managers  either  for  their  management 
practices  increasing  the  storage  of  atmospheric  carbon  or  the  actual  amount  of  carbon 
sequestered. 

Recently, an increasing number of private carbon farming initiatives have emerged where the 
land  managers  sell  carbon  credits  on  voluntary  carbon  markets.  The  potential  for  carbon 
farming is significant and it is the right moment to scale up high quality supply at EU level11. 
Exploiting at best this potential requires removing barriers that could prevent a large scale lift 
off and ensuring adequate reward for the carbon credits generated. 

On  the  supply  side,  the  carbon  farming  credits  should  become  an  additional  “product”  that 
land managers can sell together with their traditional products such as food and biomass. On 
the  demand  side,  the  buyers  of  these  credits  could  be  economic  operators  within  the 
bioeconomy such as food  processing companies that want  to  reduce the carbon footprint in 
their  own  value  chains.  This  is  particularly  relevant,  as  food  with  low  carbon  footprint  can 
have  recognised  added  value  which  can  create  a  competitive  advantage  for  land  managers 
implementing carbon farming practices. Potential buyers of carbon farming credits could also 
be companies  and individuals  who want  to  financially contribute to  more climate action  on 
the land and to neutralise their own unavoidable emissions. 

Carbon  farming  would  be  a  new  source  of  income  for  land  managers,  who  could  in  many 
cases benefit at the same time from advantages related to an overall more fertile and resilient 
land.  Furthermore,  carbon  farming  practices  often  provide  co-benefits  on  biodiversity, 
enhance ecosystem services and help land managers being more resilient to climate change. 

It  is  nevertheless  crucial  to  ensure  that  credits  generated  through  carbon  farming  do  not 
undermine  other  mitigation  efforts  and  are  coupled  to  a  net  long-term  benefit  in  terms  of 
GHG emission avoidance. This needs to be very clear – climate neutrality in the EU needs to 
build on reducing GHG emissions and our efforts must focus on that. Carbon farming credits 
can  complement  those  efforts  and  help  address  those  situations  where  further  reduction  of 

9 COM (2020) 381, A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system (link). 
10 COM (2021) 572, New EU Forest Strategy for 2030 (link). 
11 In this respect see Technical guidance handbook - Setting up and implementing result-based carbon farming 
mechanisms in the EU (link) that assessed the potential of several existing initiatives. 

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GHG  emissions  is  no  longer  possible  at  reasonable  socio-economic  costs  and  additional 
climate action through carbon sequestration is possible. Several food and biomass companies 
have  set  themselves  climate  neutrality  targets  for  their  value  chains.  This  is  where  carbon 
farming becomes a very useful tool to contribute to the EU’s objectives of climate neutrality 
and halting biodiversity loss.  

Carbon farming practices 

The  potential  for  carbon  removals,  emission  reductions  and  protection  of  existing  carbon 
stocks varies according to bioclimatic conditions and, furthermore, strongly depends on site 
conditions  such as topography, soil type,  and past  and current  land use practices.  Although 
very  site-dependent  in  application,  the  following  are  effective  examples  of  improved  land 
management practices that result in the increase of carbon sequestration and in most cases in 
co-benefits for ecosystems and biodiversity12: 

  Afforestation  and  reforestation  that  respect  ecological  principles  favourable  to 
biodiversity  and  enhanced  sustainable  forest  management  including  biodiversity-
friendly practices and adaptation of forests to climate change;  

  Agroforestry and other forms of mixed farming combining woody vegetation (trees or 

shrubs) with crop and/or animal production systems on the same land; 

  Use  of  catch  crops,  cover  crops,  conservation  tillage  and  increasing  landscape 
features:  protecting  soils,  reducing  soil  loss  by  erosion  and  enhancing  soil  organic 
carbon on degraded arable land;  

  Targeted  conversion  of  cropland  to  fallow  or  of  set-aside  areas  to  permanent 

grassland; 

  Restoration  of  peatlands  and  wetlands  that  reduces  oxidation  of  the  existing  carbon 

stock and increases the potential for carbon sequestration. 

Co-benefits of carbon farming 

Carbon  farming  increases  carbon  sequestration  while  often  providing  important  co-benefits 
for  biodiversity  and  other  ecosystem  services.  An  illustrative  example  is  the  rewetting  of 
peatlands:  raising  their  water  table  has  multiple  benefits  as  it  contributes  to  reducing  CO2 
emissions, preserving biodiversity, providing ecosystem services linked to water purification 
and helping flood control and drought prevention, whereas trade-offs resulting from the loss 
of agricultural land could be addressed through support for paludiculture (farming under wet 
conditions). Carbon farming should also  preserve EU food safety and security and  ensure a 
just transition in the context  of EU enhanced climate objectives. Carbon  farming incentives 
should  then  contribute  to  give  financial  recognition  to  these  co-benefits.  This  was  also 
highlighted  in  the  new  EU  Forest  Strategy  for  2030,  which  promoted  the  setting  up  of 
ecosystem services payment schemes and the roll out of carbon farming practices under the 
Common Agricultural Policy and other public funding, as well as the various co-benefits of a 
carbon removal certification for private finance of carbon farming. 

12 SWD (2021) 450, Sustainable carbon cycles for a 2050 climate-neutral EU – Technical Assessment  

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Finally, carbon farming can be a key tool to implement other EU policies, such as: 

 

 

 

 

 
 

 
 

 

it  would  support,  among  other  things,  the  reforestation,  afforestation  and  forest 
restoration  activities  set  out  in  the  New  EU  Forest  Strategy  for  2030,  including  the 
planting of three billion additional trees;  
it  would  enable  nature-based  solutions  and  their  benefits  for  climate  adaptation,  as 
highlighted in the EU Strategy on adaption to climate change; 
it  would  provide  a  novel  business  model  to  land  managers  for  the  provision  of 
ecosystem services as supported by the EU Bioeconomy Strategy 
it  would  support  the  goals  of  protecting  and  restoring  many  carbon-rich  natural  and 
semi-natural ecosystems set out under the EU Biodiversity Strategy for 2030; 
it would increase the  alignment of CAP to climate and biodiversity objectives;  
it would support the restoration, rewetting and conservation of peatlands as included 
in the action plan of the Long-Term Vision for Rural Areas; 
 it would favour the objectives of the EU strategy to reduce methane emissions; 
it  would  support  the  vision  for  healthy  soils  set  in  the  new  EU  Soil  Strategy  and 
enhance soils’ contribution to stopping climate change; 
it  would  contribute  to  the  goals  of  the  future  Nature  Restoration  Law  to  recover 
biodiverse and resilient nature across EU land and sea  

2.2  Upscaling carbon farming 

Given the clear benefits of carbon farming, the Commission wants to accelerate its upscaling 
across  the  Union.  However,  there  are  several  barriers  to  a  widespread  uptake  of  carbon 
farming initiatives across the EU: 

 

financial burden resulting from the costs of carbon farming management practices and 
uncertainty about revenue possibilities;  

  uncertainty  or  lack  of  public  trust  in  the  reliability  of  standards  in  voluntary  carbon 
markets, in conjunction with concerns around environmental integrity, additionality or 
permanence; 

  unavailability,  complexity  or  high  costs  of  robust  monitoring,  reporting  and 

verification systems; 

 

insufficiently tailored training and advisory services. 

This Communication aims to address these barriers. Existing EU and national policies have 
already  several  tools  in  place  to  better  support  carbon  farming  practices  and  to  create  win-
win-win  situations  for  climate  action,  biodiversity  and  the  bioeconomy.  Nonetheless, 
knowledge and access to these opportunities should be facilitated and brought at the level of 
land managers. To that end, the Commission published a technical handbook13 that explored 
key  issues,  challenges,  trade-offs  and  design  options  of  this  business  model.  The  new 
Common Agricultural Policy (CAP) will have to play an important role in stimulating action 

13 Technical guidance handbook - Setting up and implementing result-based carbon farming mechanisms in the 
EU (link). 

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and in creating the enabling conditions for emission reductions, particularly from cultivated 
drained organic soils, as well as for carbon sequestration. 

2.2.1  Public funding to kick-start carbon farming  

Public funding under the CAP and other EU programs – LIFE, the cohesion funds, Horizon 
Europe14  –  can  support  the  upscaling  of  carbon  farming  by  funding  the  roll  out  of  the 
practices, as well as for example by covering additional costs related to monitoring, reporting 
and  verification  aspects,  or  by  financing  projects  that  improve  the  understanding  of  carbon 
farming  practices  and  fill  the  existing  knowledge  gaps.  Advisory  services,  knowledge 
exchange  or  information  actions  for  farmers  and  foresters  are  essential  to  the  uptake  of 
carbon farming and can also be financed under the CAP or through State aid.  

By reducing the financial burden related to costs inherent to carbon farming schemes, EU or 
national public funding significantly relieves the financial burden and reduces risks for land 
managers  that  enter  into  such  schemes.  Public  funding  is  therefore  key  to  complementing 
revenue possibilities from private markets, which will secure land managers’ interest in this 
business  model  and  build  confidence  in  carbon  farming  schemes.  The  Commission  will 
mainstream carbon farming in EU public support, especially promoting it in the national CAP 
strategic plans, whilst ensuring that there will be no double funding. 

Public funding opportunities for carbon farming 

Source of public funding 

Type of funding 

CAP 

LIFE Programme 

Cohesion Policy 

  Eco-schemes  and  rural  development  agri-
or 
environment-climate 
investments  can  directly  support  carbon 
farming practices 

measures 

  The  European  Innovation  Partnership  for 
agricultural productivity and sustainability 
(EIP-AGRI) 
land  managers 
cooperate and test new approaches 

helps 

  Support 

to  advisory  services  brings 

knowledge to land managers   

Focuses on pilot projects for the upscaling of 
carbon  farming  elements  (e.g.  three  new 
projects to start in 2021 on better monitoring 
tools;  existing  Carbon  Farming  Scheme 
the 
incentives 
project 
trading of removal certificates). 

to  enable 

testing 

Investments 
and 
e.g. 
conservation of peatland (also Just Transition 

restoration 

into 

14 See section 2.2.3 for funding opportunities under Horizon Europe. 

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State aid 

Fund) 

Cooperation across regions (INTERREG) 

  Possibility of result-based carbon farming 

schemes in agriculture and forestry 

  Incentive  payments  for  forest  ecosystem 
services  for  the  benefit  of  environment 
and climate 

  Support  to  carbon  farming  within  aid  for 
agri-environmental-climate  commitments, 
investments,  advisory  services,  research 
and development, cooperation 

2.2.2  Standardisation  of  monitoring,  reporting  and  verification  methodologies  for 

carbon farming 

The success of carbon farming in Europe will be judged on the quantity and longevity of the 
sequestration of carbon in plants and soils by enhancing carbon capture and/or reducing the 
release of carbon to the atmosphere. To upscale carbon farming successfully and to establish 
long-term  business  perspectives,  it  will  be  essential  to  standardise  the  methodologies  and 
rules  for  monitoring,  reporting  and  verifying  (MRV)  the  gains,  or  losses,  in  carbon 
sequestered.  Currently,  private  schemes  apply  very  different  benchmarks  and  rules  to  the 
carbon  credits  placed  on  the  voluntary  markets.  Without  a  high  degree  of  transparency, 
environmental integrity, and methodology standardisation, buyers will be hesitant about the 
quality of the offered carbon farming credits, land managers will find it difficult to estimate 
their potential revenues, policy makers will be reluctant to allow the use of such credits for 
compliance into the regulatory framework and it will be challenging to develop a successful 
market.  

The  Commission  intends  therefore  to  set  up  an  expert  group  on  carbon  farming  where 
Member  States’  authorities  and  stakeholders  can  share  their  experience  with  a  view  to 
exchanging and establishing best practices on carbon farming, in particular on improving the 
quality of carbon farming credits and MRV methodologies, to foster peer-to-peer knowledge 
exchange.  The  expert  group  would  also  support  the  Commission  in  monitoring  the 
development of carbon farming initiatives implemented by private or public bodies and their 
impact  on  emissions  reductions  and  carbon  removals  as  well  as  on  the  environment,  in 
particular biodiversity.  

Furthermore,  the  expert  group  would  also  assist  the  Commission  in  creating  a  better  link 
between  the  carbon  farming  initiatives  with  the  existing  and  proposed  policy  framework  at 
the  level  of  the  Member  States.  The  LULUCF  proposal  already  sets  a  governance,  policy 
thereby 
implementation  monitoring  and 
encouraging the design of national policies for carbon farming. More consideration needs to 
be  given  to  the  reflection  of  carbon  farming  initiatives  in  the  reporting  by  Member  States 
towards  their  net  removal  targets.  The  progress  of  such  initiatives  needs  to  be  recognised, 
thus  giving  value  to  carbon  farming  actions,  while  avoiding  double-claiming  in  national 
inventories and related reports, as well as ensuring a net contribution by the sector to climate 
neutrality. Synergies with Nature Restoration Law monitoring and reporting will be ensured.  

incentives  framework  for  Member  States, 

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Under  the  LULUCF  proposal,  Member  States  would  also  need  to  upgrade  their 
geographically  explicit  datasets  relating  to  carbon  baselines.  These  improvements  will  also 
firmly underpin the implementation of MRV in carbon farming schemes. 

Carbon farming challenge  

Carbon farming  can support the achievement of the proposed  2030 climate target  of net 
removals of 310 Mt CO2eq in the land sector. To that end: 

  every land manager should have access to verified emission and removal data by 

2028 to enable a wide uptake of carbon farming; 

  carbon farming initiatives should contribute to the increase by 42 Mt CO2eq of the 
land sink that is required to meet the objective of 310 Mt CO2eq net removals by 
2030.  

The  adoption  by  farmers  and  foresters  of  standardised  monitoring  and  reporting 
methodologies  is  a  pre-condition  for  an  EU-regulated  market  for  climate  action  in  the  land 
sector  after  2030.  Taking  into  account  the  recommendation  by  the  European  Court  of 
Auditors  to  assess  the  application  of  the  polluter-pays  principle  in  agriculture,  the 
Commission will by December 2023 carry out a study to assess the potential of applying the 
polluter-pays principle to GHG emissions from agricultural activities.  

2.2.3  Improving  knowledge,  data  management and  tailored advisory services to land 

managers 

Providing  land  managers  with  improved  knowledge,  tools  and  methods  for  a  better 
implementation,  assessment  and optimisation of the carbon  benefits  is  key to  securing their 
engagement  in  carbon  farming.  This  is  particularly  relevant  for  European  small  farmers  or 
forest holders – and critical to scaling up action across the Union. These groups are not only 
implementing  policies  but,  if  appropriate  information,  training,  education,  upskilling  and 
reskilling, particularly in sustainability, are provided, they can be the engine of change of EU 
food systems.    

Several key datasets and tools are available through current systems and legislation. The CAP 
already  requires  geographically  explicit  monitoring  of  agricultural  parcels  and  provides  for 
regular  and  systematic  observation,  tracking  and  assessment  of  agricultural  activities  and 
practices through Integrated System (IACS) - notably the geospatial aid application used by 
the CAP beneficiaries - and the monitoring using Copernicus Sentinels (or other, equivalent) 
satellite  data.  Peatlands  and  wetland  areas  are  good  examples  of  where  progress  is  being 
made rapidly using remote sensing methods.  The Commission will continue exploring with 
Member States new ways to leverage the use of these tools and help address interoperability 
issues that may emerge.  

The  Agricultural  Knowledge  and  Innovation  System  (AKIS)  will  underpin  CAP  Strategic 
Plan  implementation  through  support  to  advisory  services,  knowledge  exchange,  training, 
information  actions  or  interactive  innovation  projects  for  farmers  and  foresters.  Through 

9 

 
 
  
 
 
AKIS, Member States will ensure advice and knowledge transfer on environmental aspects, 
thereby potentially facilitating carbon farming.  

On-farm  calculations,  moreover,  will  enable  land  managers  –  or  their  advisors  –  to  access 
carbon  farming  schemes  more  easily,  to  assess  carbon  sequestration  potentials  of  an 
individual  land  holding  and  to  optimise  strategies.  The  reformed  CAP  includes  the  Farm 
Sustainability  Tool  for  nutrients  (FaST)  –  a  digital  application  for  farmers  for  sustainable 
management of nutrients. The Commission is working on the integration of a module for the 
calculation of GHG balance at  holding level,  complementing the assessment of the nutrient 
balance. 

Today’s  forest  monitoring  builds  heavily  on  field  observations  acquired  in  national  forest 
inventories  and  in  a  few  cases  also  national  forest  soil  inventories.  While  some  Member 
States  explore  or  have  already  integrated  Earth  observation  in  their  forest  monitoring,  the 
capacity to retrieve coherent and harmonised forest-related information across the EU has not 
yet been explored.  

The key to accurate and cost-efficient monitoring of EU forests is to effectively link bottom 
up  approaches  of  ground-based  sample  plots  to  top  down  measurements  by  Earth 
observation.  Detailed  information  in  the  spatial  and  temporal  domain  will  be  essential  for 
carbon farming to assess the carbon sequestration at parcel level. In addition, the monitoring 
should  be  harmonised  across  the  EU  to  ensure  the  same  standards,  and  thus  the  value  of 
carbon removals,  in  all Member States.  The Commission  announced  in the New EU Forest 
Strategy  for  2030  that  in  2023  it  will  put  forward  a  legislative  proposal  on  EU  Forest 
Observation, Reporting and Data Collection, subject to an impact assessment. 

European Climate Pact 

The  European  Climate  Pact  can  also  help  promote  carbon  farming  initiatives.  The  Climate 
Pact  can  enable  a  direct  exchange  of  experiences  among  land  managers,  who  can  become 
Climate Pact ambassadors, to lead by example and raise awareness on carbon farming in their 
neighbourhoods and further, also via a dedicated social platform. By committing to a pledge, 
they can showcase benefits to their peers and that moving to carbon farming is feasible within 
a short period of time. Land managers may also commit to a joint pledge, for example with 
their municipality, on initiatives going beyond their plot of land. 

Fostering research and innovation 

Horizon Europe will continue to foster innovative approaches, in particular through  a major 
R&I  European  mission  to  promote  soil  health:  “A  Soil  Deal  for  Europe”15  ,  its  thematic 
Clusters16 and the European Innovation Council:  

  The Horizon Europe mission “A Soil Deal for Europe” aims to spur the transition to 
healthy soils by 2030, in line with Green Deal commitments for climate, biodiversity, 
zero  pollution  and  sustainable  food  systems.  Together  with  the  recently  launched 

15 COM (2021) 609 Commission Communication on European Missions (link). 
16  Cluster  6  'Food,  Bioeconomy,  Natural  Resources,  Agriculture  and  Environment'  and  Cluster  5  ‘Climate, 
Energy and Mobility’. 

10 

 
 
                                                 
European Soil Observatory and the new EU Soil Thematic Strategy, the mission will 
be part of a comprehensive framework to  address soil and land stewardship  at  large 
scale  across  land  uses.  Under  the  mission,  carbon  farming  has  been  identified  as  a 
“hotspot”  area  for  research  and  innovation.  Furthermore,  a  network  of  100  living 
laboratories and lighthouses planned under the mission, will serve to test, demonstrate 
and  upscale  solutions  for  carbon  farming.  The  soil  monitoring  component  of  the 
mission will support efforts for harmonised soil monitoring in Europe.  

  As part of the first work programmes of Horizon Europe, a demonstration network on 
climate-smart farming will be established to provide support to the implementation of 
carbon farming. 

  For  the  Horizon  Europe’s  next  programming  periods,  the  Commission  will  increase 
the  focus  on  carbon  farming  and  on  several  other  related  elements  across  calls  for 
projects.  A  particular  attention  will  be  given  to  the  potential  of  digital  technologies 
and  data  technologies  for  more  accurate,  cost  effective  and  efficient  estimates  of 
carbon  emissions,  removals  from  plants  and  soils  and  carbon  farming  practices. 
Coupled with in-field instruments and experience from the ground, those technologies 
will also help to adjust carbon farming practices for an optimization of environmental 
benefits. 

  The  European  Innovation  Council  (EIC)  supports  research 

in  breakthrough 
technologies  and  game-changing  innovations.  The  EIC  Accelerator  Challenge 
“Technologies for ‘Fit for 55’” supports the development and scale up of sustainable 
agriculture to  increase climate resilience, abate nitrogen and methane emissions  and 
increase carbon stock in the soil. 

 

In  the  New  EU  Forest  Strategy  for  2030  the  Commission  announced,  inter  alia,  the 
intention  to  develop  together  with  Member  States  and  stakeholders  a  “Planning  our 
Future  Forests”  research  and  innovation  agenda  and  to  support  the  evidence-based 
design  and  implementation  of  forest  restoration  strategies,  including  through  the 
planned research and innovation mission on soil health for forest soils.  

The contribution of up to EUR 1 billion of Horizon Europe will be combined with the 
complementary  private 
the  future  Circular  Bio-based  Europe 
Partnership  to  boost  innovative  and  resource  efficient  bio-based  materials  and 
products that have strong potential to substitute their fossil-based counterparts. 

investment 

in 

2.3  Blue carbon economy 

Marine ecosystems cover 71% of the planet although blue carbon17 mostly refers to  coastal 
ecosystems that can be most directly influenced by human activity: mangroves, tidal marshes 
and seagrasses. These ecosystems sequester and store large quantities of blue carbon in both 
the  plants  and  the  sediment  below.  Despite  being  neglected  in  blue  carbon  assessments, 
seaweed (e.g. kelp) forms the most extensive and productive vegetated coastal habitat, with 
high sequestration potential (around 25% of carbon sequestered in long-term reservoirs, such 
as coastal sediments and the deep sea18).  

17  Blue  carbon  is  carbon  sequestration  by  the  world's  oceanic  and  coastal  ecosystems,  mostly  by  algae,  seagrasses, 
macroalgae, mangroves, salt marshes and other plants and plant-like organisms. 
18 Krause-Jensen, D et al. (2016) Substantial role of macroalgae in marine carbon sequestration (link).  

11 

 
 
                                                 
The  main  challenge  is  the  degradation  of  blue  carbon  ecosystems  leading  to  the  release  of 
stored  carbon  into  the  atmosphere  and  the  reduction  of  the  potential  for  future  carbon 
removals.  Additionally,  there  is  insufficient  information  to  quantify  how  human  activity 
actually affects them, whether managing, damaging or regenerating those ecosystems. 

Several  projects  such  as  the  network  of  operational  marine  farms  for  regenerative  ocean 
cultivation19,  or  the  EU  project  MEDSEA20  that  estimated  the  economic  value  of  marine 
carbon  sequestration,  could  contribute  to  the  development  of  blue  carbon  initiatives.  The 
Commission is also looking at monitoring and reporting possibilities for carbon and nitrogen 
uptake, and their trade on voluntary carbon markets21.  

The following developments on blue carbon ecosystems could be envisaged: 

  Enhanced knowledge on identification of regions at risk; 

 

Investments  to  preserve  or  restore  habitats,  and  to  provide  solutions  to  enhance 
resilience and protection of EU coastal areas against climate change and biodiversity 
loss;  

 

Increased knowledge and data on blue carbon quantification; 

  Carbon  farming  through  nature-based  solutions,  for  example  on  coastal  wetlands  as 
well as seaweed and mollusk regenerative aquaculture22 and marine permaculture23.  

The development of blue carbon initiatives would lead to multiple co-benefits, such as ocean 
regeneration  and  oxygen  production,  food  security  by  bringing  algae-based  proteins  to  the 
market or new green and local job opportunities. 

19 Coordinated by the Danish NGO Havhost. 
20 funded by the European Commission under Framework Program 7 (link). 
21 Two studies funded by the European Maritime and Fisheries Fund (EMFF) to be started end 2021, i)Algae and Climate, 
and ii) Shellfish and Algae. 
22 By implementing new EU Sustainable aquaculture guidelines (link) and by developing a cross-cutting EU Algae initiative 
in 4th Quarter 2022. 
23  Marine  Permaculture is  a  form  of  mariculture  that  reflects  the  principles  of  permaculture  by  recreating  seaweed  forest 
habitat and other ecosystems in nearshore and offshore ocean environments. 

12 

 
 
                                                 
Key actions to support carbon farming 

In  order  to  upscale  carbon  farming  up  to  2030,  the  Commission  will  undertake  the 
following actions: 

  create  an  expert  group  on  carbon  farming  where  Member  State  authorities  and 
stakeholders can share their experiences in view of establishing best practices on 
carbon farming and on robust monitoring, reporting and verification;  

  provide  guidance  and  mainstream  dedicated  carbon  farming  funding  in  most 
relevant  EU policies and related tools  (such  as  the Common  Agricultural  Policy, 
LIFE,  cohesions  funds)  to  contribute  to  address  the  relevant  implementation 
challenges; 

  support  the  coordination  of  the  research  community  and  key  stakeholders  on 
developing,  testing  and  demonstrating  carbon  farming  practices  through  Horizon 
Europe clusters 5 and 6; 

  provide a digital carbon navigator template and guidelines on common pathways 
for  the  quantitative  calculation  of  GHG  emissions  and  removals  for  agricultural 
land managers; 

  carry  out  a  study  to  assess  the  potential  to  apply  the  polluter-pays  principle  to  

emissions from agricultural activities;  

  create  a  carbon  farming  group  within  the  Climate  Pact  social  platform  to  bring 
together  land  managers  to  encourage  them  to  become  Climate  Pact  ambassadors 
and feed the exchange on direct experiences; 

  create  living  labs  that  test  and  demonstrate  practices  for  carbon  farming  across 

various locations in Europe under the mission “A Soil Deal for Europe”. 

  promote and pilot blue carbon farming practices through some of the lighthouses 

of the Mission “Restore our Ocean and Waters”  

3 

INDUSTRIAL CAPTURE, USE AND STORAGE OF CARBON 

The  EU  consumed  approximately  one  billion  tonne  of  biogenic  (45%)  and  fossil  (54%) 
carbon  for  the  functioning  of  its  economy  in  201824.  The  carbon  is  used  to  provide  food 
(25%), energy (56%) and materials (19%) and only a very small fraction of the carbon used 
today  is  from  recycled  origin  (1%).  Beyond  decarbonising  its  energy  system  to  be  climate 
neutral  by  2050,  the  EU  will  also  need  to  rethink  its  sourcing  of  carbon  as  feedstock  for 
industrial  production.  Fossil  carbon  should  be  replaced  by  more  sustainable  streams  of 
recycled carbon from waste, sustainable biomass and directly from the atmosphere 

The EU climate-neutrality objective would require to capture between 300Mt and 500 Mt of 
carbon dioxide from those sources by 205025. The EU economy will use it for the production 
of  synthetic  fuels,  plastics,  rubbers,  chemicals  and  other  materials  requiring  carbon  as  a 

24 Carbon Economy - Studies on support to research and innovation policy in the area of bio-based products and services 
(link). 
25 SWD (2021) 450, Sustainable carbon cycles for a 2050 climate-neutral EU – Technical Assessment  

13 

 
 
 
                                                 
feedstock  even  when  a  complete  and  well-functioning  circular  economy  will  minimise 
the end  of life impact  of  these  products.  The  CO2  captured  can  also  be  stored  either 
permanently  in  geological  sites  or  in  new  long-lasting  products  to  provide  up  to  200Mt  of 
industrial carbon removals by 2050. 

Biogenic carbon will have an important role to  play in the construction sector by providing 
substitutes for conventional building materials which are able to store carbon for long periods 
of time.  

3.1  A sustainable bioeconomy 

As recognised in the Communication ‘Clean Planet for All’26, the bioeconomy contributes to 
achieving climate neutrality by reducing  fossil emissions through the replacement of GHG-
intensive materials and fossil fuels with bio-based materials and bioenergy, respectively. The 
climate  mitigation  benefit  of  bio-based  products  can  be  optimised  by  increasing  the 
proportion of material use (especially for long-lived products) in total biomass uses through 
the  application  of  the  cascading  principle  while  ensuring  that  land-based  removals  and 
biodiversity are maintained or enhanced.  

Increased  sustainable  long-term  storage  of  carbon  in  bio-based  products  will  contribute  to 
reach  the  net  carbon  removal  target  of  310  MtCO2eq  by  2030,  as  put  forward  by  the 
LULUCF proposal. To incentivise the development of more innovative and long-lasting bio-
products,  it is  further proposed to  enlarge the category of Harvested Wood Products  and to 
also cover innovative carbon storage products, such as bio-based material from biomass and 
natural fibres like flax, hemp and others. Improving the climate performance of buildings is 
an  opportunity  for  the  bioeconomy,  by  being  able  to  reduce  overall  emissions  of  the 
construction sector while storing substantial amounts of carbon, as set out in the Renovation 
Wave Strategy27 and the new European Bauhaus initiative28.  

There is, however, still no scientific consensus about methodologies to measure such storage, 
in  particular  concerning  its  duration.  Given  the  potential  trade-offs  as  well  as  synergies 
among  policies  that  create  additional  demand  on  the  use  of  biological  resources,  the 
Commission  will  carry  out  a  study  on  an  Integrated  assessment,  evaluating  the  impact  of 
national and EU Bioeconomy policies on land use29.  

In  the  new  EU  Forest  Strategy  for  2030,  the  Commission  announced  it  would  develop  a 
standard,  robust  and  transparent  methodology  to  quantify  the  potential  climate  benefit  of 
construction  products  and  other  building  materials,  including  those  associated  with  carbon 
capture and utilisation. In this context, on the example of wood-based construction products 

26  COM  (2018)  773,  A  Clean  Planet  for  all  A  European  strategic  long-term  vision  for  a  prosperous,  modern, 
competitive and climate neutral economy (link).  
27  COM  (2020) 662,  A  Renovation  Wave  for  Europe  -  greening  our  buildings,  creating  jobs,  improving  lives 
(link). 
28 New European Bauhaus (link). 
29 The Bioeconomy Progress Report will assess the implementation of the Bioeconomy Strategy Action plan and 
European bioeconomies, providing an additional analysis on the need of policy coherence in the context of the 
European Green Deal and its various objectives. 

14 

 
 
 
                                                 
for  new  building30,  the  Commission  has  explored  the  relevance  of  life  cycle  assessment 
methodologies  for  a  reliable  and  verifiable  quantification  of  the  net  carbon  removals  via 
temporary  storage  in  construction  products.  Such  approaches  can  provide  additional 
information to support the elaboration of market-based schemes to reward construction actors 
for their carbon removals, as well as  other policy  frameworks, in particular those related to 
the climate performance of products.  

The Commission will support the development of scientifically sound methodologies with the 
objective of acknowledging carbon storage in all European frameworks related to the climate 
performance  of  products,  including  the  Construction  Products  Regulation31  and  the 
Sustainable Product Initiative32. The Commission will also consider the possibility to revise 
the  existing  rules  on  carbon  storage  accounting  in  the  EU  Product  and  Organisation 
Environmental  Footprint  (PEF/OEF)33  methods  and  harmonised  European  standards  for 
construction products34, once alternative tested methodologies are available. 

Beyond  the issue of  regulatory measures,  Horizon Europe  provides funding for research on 
the  benefits  of  the  transition  away  from  linear  fossil-based  systems  to  sustainable  circular 
bio-based  systems,  novel  feedstocks  for  biorefineries,  and  the  design  of  bio-based  products 
and  processes35.  Horizon  Europe  will  also  offer  opportunities  for  research  on  climate 
performance  and  the  whole  life  carbon  of  buildings,  including  under  the  European 
Partnership for People-centric Sustainable Built Environment (Built4People36), and in a range 
of  bio-based  materials  and  chemicals,  including  under  the  Circular  Bio-based  Europe  Joint 
Undertaking37. Going beyond the research stage, the Innovation Fund, which is financed by 
the  revenues  from  the  EU  Emissions  Trading  System  (EU  ETS),  can  support  innovative 
projects  that  replace  energy-intensive  materials,  such  as  cement  and  steel,  with  bio-based 
materials and products. 

3.2  Creating an internal market for capture, use, and storage of CO2  

Besides a sustainable bioeconomy, it is pivotal that the EU supports today the development of 
emerging  technologies  that  are  needed  to  achieve  climate  neutrality  in  2050.  Industrial 
projects have long lead times and project developers are often faced with scale-up challenges 
and  fierce  global  competition,  in  particular  in  the  energy-intensive  industries,  where  large 
amounts of products will have to be produced through new processes. 

Since natural resources are limited and the bioeconomy cannot provide all the carbon to fulfil 
the  energy  and  material  needs  of  a  climate-neutral  EU  economy  in  2050,  other  streams  of 
carbon should be developed to replace fossil carbon, including capturing  CO2 directly from 
the atmosphere, also called Direct Air Capture (DAC).  

30  Trinomics  (2021)  Evaluation  of  the  climate  benefits  of  the  use  of  Harvested  Wood  Products  in  the 
construction sector and assessment of remuneration schemes (link). 
31 Construction Product Regulation (link). 
32 Sustainable Product Initiative (link). 
33 Environmental footprint by the European Platform on Life Cycle Assessment (link)   
34  Harmonised European standards for construction products (link)  
35 Bio-based products and processes (link). 
36 Built4People (link). 
37 COM (2021) 87 establishing the Joint Undertakings under Horizon Europe (link). 

15 

 
 
                                                 
Another promising route is to turn the CO2 from a waste to a resource and use it as feedstock 
for the production of chemicals, plastics or fuels. Carbon dioxide as feedstock is today mainly 
used  in  the  production  of  urea  for  fertiliser  application  and  in  marginal  volumes  in  some 
specialised applications. Mastering the production of methanol from CO2 at reasonable costs 
would  pave  the  road  to  the  production  of  a  large  range  of  chemicals  such  as  ethylene  or 
propylene used for the production of plastics, coolants, and resins.  

The  permanent  storage  of  CO2  in  geological  formations  is  an  option  to  mitigate  industrial 
emissions and to remove carbon from the atmosphere when the CO2 is captured directly from 
the atmosphere – Direct Air Carbon Capture and Storage (DACCS) – or from the combustion 
or  fermentation  of  biogenic  carbon,  also  called  Bio-Energy  Carbon  Capture  and  Storage 
(BECCS).  Depleted  oil  and  gas  reservoirs  and  saline  aquifers  have  the  potential  to  store 
billion  tonnes  of  CO2  in  offshore  sites,  the  binding  of  CO2  to  basalt  rocks  or  other  carbon 
mineralisation  processes  being  other  options  potentially  deployable  at  large  scale.  The 
pyrolysis  of  biomass  to  biochar,  a  stable  solid  form  of  carbon  similar  to  charcoal,  can 
improve the properties of soils while storing carbon for the long term. 

38, the so called CCS Directive, establishes a 
The Directive on the geological storage of CO2
legal framework for the environmentally safe geological storage of CO2 by covering all CO2 
storage in geological formations in the European Economic Area, and the entire lifetime of 
storage  sites,  while  the  EU  ETS  Directive39  already  gives  a  price  incentive  for  permanent 
40 to take place. BECCS deployment should be approached in 
geological storage of fossil CO2
full  consideration  of  the  limits  and  availability  of  sustainable  biomass  in  order  to  avoid 
excessive  demand  of  biomass  for  energy  that  would  have  negative  effects  on  carbon  sinks 
and stocks, biodiversity and air quality. 

The EU has been supporting the development and deployment of CCU and CCS technologies 
for  many  years.  In  the  past,  Horizon  2020  has  supported  completing  the  industrial  carbon 
cycle  with  funding  for  research  on  carbon  capture,  use  and  storage  and  the  CCUS  Projects 
Network  for  knowledge  sharing.  Horizon  Europe  has  launched  calls  on  the  integration  of 
CCUS  in  industrial  hubs  and  clusters,  on  decarbonising  industry  with  CCUS,  on  the  cost 
reduction  of  CO2  capture,  carbon  negative  sustainable  biofuel  production  and  direct 
atmospheric carbon capture and conversion. Future calls of Horizon Europe will cover CO2 
transport  and  storage,  CCU,  DACCS  and  BECCS.  The  European  Innovation  Council 
Pathfinder  Challenge  “Carbon  and  Nitrogen  management  and  valorisation”  focuses  on  new 
biological, chemical, physical routes that integrate the capture, sequestration and/or recovery 
of  carbon  and  nitrogen  species  and  their  conversion  into  value-added  and  decarbonised 
commodities, chemicals, fuels and energy vectors. 

38 Directive 2009/31/EC on the geological storage of carbon dioxide (link). 
39 Directive (EU) 2018/410 amending Directive 2003/87/EC to enhance cost-effective emission reductions and 
low-carbon investments, and Decision (EU) 2015/1814 (link). 
40 CCS-biomass projects  with  a clear and verifiable climate benefit could potentially benefit  from recognition 
pursuant to Article 24a of the revised EU ETS Directive - Parliamentary question (link). 

16 

 
 
                                                 
Industrial Sustainable Carbon challenge  

Reaching  climate  neutrality  requires  capturing  carbon  from  the  atmosphere  for  storage 
and for use as substitute to fossil carbon. This Communication puts forward the following 
aspirational objectives and the Commission will engage in a dialogue with stakeholders in 
relevant  fora,  and  work  together  towards  a  cost-effective  and  environmentally  sound 
achievement: 

  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; 

  At  least  20%  of  the  carbon  used  in  the  chemical  and  plastic  products  should  be 
from  sustainable  non-fossil  sources  by  2030,  in  full  consideration  of  the  EU’s 
biodiversity  and  circular  economy  objectives  and  of  the  upcoming  policy 
framework for bio-based, biodegradable and compostable plastics. 

  5Mt  of  CO2  should  be  annually  removed  from  the  atmosphere  and  permanently 

stored through frontrunner projects by 2030  

The Innovation Fund is the world’s largest funding programme for the deployment at scale of 
innovative low-carbon technologies. It is financed by the EU ETS revenues and is currently 
expected  to  provide  financial  support  of  around EUR  25  billion  over  the  period  2021-2030 
(based on a carbon price of EUR 50/tCO2). The goal is to help businesses invest in innovative 
clean  technologies,  including  CCU,  CCS  and  carbon  removals,  and  thereby  reinforce 
European  leadership.  The  proposed  new  Climate,  Energy,  and  Environment  State  aid 
Guidelines  further  enable  Member  States  to  provide  support  to  close  the  financial  gap  for 
CCU, CCS and carbon removal projects.  

In  order  to  speed  up  commercialisation  of  innovative  technologies,  the  Commission  has 
proposed to increase the size of the Innovation Fund and to include the possibility of carbon 
contracts for difference (CCD) in the revised EU ETS Directive. The next practical step while 
awaiting  the  agreement  on  the  proposal  will  be  an  in-depth  analysis  of  the  possible  design 
options and implementation modes.  

Regulatory  changes  in  the  near  future  will  further  benefit  first  movers  who  deploy  CCU 
technologies. The Commission proposal for ReFuelEU Aviation41 should ensure demand for 
synthetic  fuels  based  on  CCU  and  advanced  biofuels  and  complement  the  proposal  for  a 
revised Renewable Energy Directive, which sets a sub-target for renewable fuels from non-
biological  origin.  The  Commission  proposal  for  a  revised  EU  ETS  Directive42  sets  out  the 
basis to avoid the double counting of emissions when synthetic fuels based on CCU are both 
produced and consumed in activities covered by the EU ETS. In addition, the proposal for a 
revised  EU  ETS  Directive  creates  an  incentive  for  capturing  and  utilising  emissions  to 
become permanently chemically bound in a product so that they do not enter the atmosphere 
under normal use. 

41  COM  (2021)  561,  Proposal  for  a  regulation  on  ensuring  a  level  playing  field  for  sustainable  air  transport 
(link). 
42 COM (2021) 552, Proposal for a Directive amending Directive 2003/87/EC (link). 

17 

 
 
 
                                                 
However,  the  lack  of  sufficient  capacity  for  transport  and  storage  of  CO2  can  become  an 
important  bottleneck  in  the  use  of  these  technologies  as  infrastructure  needs  to  undergo 
lengthy permitting processes and may not advance due to uncertainties related to cross value 
chain risks. The transport network needs to connect the current and future CO2 sources with 
the  available  CO2  storage  sites  and  production  sites  consuming  CO2,  to  track  the  carbon 
flows, and to take into account possible local public concerns. An open-access infrastructure 
ensures competition between different transport and storage operators and will thereby help 
drive down cost and allow CO2 capture operators to choose between different options for the 
transport, use or storage of CO2. The development of CCUS hubs, where many CO2 emitters 
can  benefit  from  a  common  infrastructure,  and  an  open-access  transport  network  for  CO2 
across national borders will be critical because not all Member States have access to suitable 
storage  sites.  The  Commission  will  study  the  cross-border  CO2  infrastructure  deployment 
needs at EU, regional and national level until 2030 and beyond, involving all relevant public 
and private stakeholders. 

The  Connecting  Europe  Facility  (CEF)  under  the  TEN-E  Regulation  provides  funding  for 
targeted  infrastructure  investment  of  European  importance,  including  CO2  transport 
infrastructure. In the 2020 call for proposals, several CO2 transport projects were successful. 
The CEF will also be a key funding instrument for CO2 infrastructure in the future. 

The  Commission  intends  to  facilitate  the  development  of  a  competitive  CCUS  market  by 
taking  stock  of  the  existing  knowledge  base  and  engaging  with  all  the  relevant  industrial, 
public and civil society stakeholders. The CCUS Forum in October 2021 has already been a 
first successful step and will be held each year from now on. To facilitate further the uptake 
of  CCS,  the  Commission  envisages,  on  the  basis  of  technological  progress  and  stakeholder 
feedback,  to  update  the  four  Guidance  Documents  from  2011  that  assist  stakeholders  to 
implement the CCS Directive43.  

Industrial  installations  capturing  CO2  for  utilisation  or  storage  must  also  properly  monitor, 
report and account the quantity and origin of the CO2 they process. The EU needs an efficient 
system  for  the  traceability  of  captured  CO2  that  can  track  how  much  fossil,  biogenic  or 
atmospheric CO2, respectively, is transported, processed, stored and potentially re-emitted to 
the atmosphere each year. This will allow a differentiation between industrial solutions that 
permanently  remove  carbon  dioxide  and  those  that  store  the  carbon  for  shorter  periods  or 
without a net decrease of the CO2 concentration in the atmosphere.  

Such system, duly considering the existing legal framework of the EU ETS and its rules for 
the monitoring and reporting of emission, would provide the foundation for the certification 
of  industrial  carbon  removals  in  the  upcoming  EU  regulatory  framework  presented  in  the 
section 4. The certification framework will facilitate the purchase of carbon removal credits 
by  private  or  public  buyers.  Carbon  removal  projects  can  increase  their  viability  by 
combining  the  grants  from  the  Innovation  Fund  with  the  revenues  from  the  sale  of  carbon 
removal  credits,  whereby  any  double  funding  has  to  be  duly  avoided.  The  experience  with 
carbon removal projects under the Innovation Fund would provide important feedback for the 

43 Implementation of the CCS Directive (link). 

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development  of  the  certification  of  industrial  carbon  removals  and  their  possible  further 
regulatory treatment in the longer term. 

Key actions to support industrial capture, use and storage of CO2 

In  order  to  upscale  industrial  solutions  for  the  capture,  use  and  storage  of  CO2,  the 
Commission will undertake the following actions: 

  Further  develop  a  standard,  robust  and  transparent  methodology  to  quantify  the 
climate  benefit  of  sustainably-produced  wood  construction  products  and  other 
building materials with carbon storage potential; 

  develop  methodologies  and  carry  out  an  integrated  EU  bioeconomy  land-use 
assessment,  with  the  aim  of  ensuring  consistency  of  aggregated  national  and  EU 
policies and targets, and provide technical assistance to Member States to carry out 
national assessments in support of their bioeconomy policies.  

  better support industrial carbon removals with the Innovation Fund;  

  Horizon  Europe  calls  will  continue  supporting  industrial  CO2  capture,  transport, 

use, and storage in its next work program (2023/24);  

 

launch a study on the development of the CO2 transport network;  

  update the guidance documents for the CCS Directive, covering risk management, 

monitoring, and financing;  

  organise an annual CCUS forum. 

4  A REGULATORY FRAMEWORK FOR THE CERTIFICATION OF CARBON REMOVALS 

To reach the climate neutrality objective of the EU Climate Law, carbon removals will have 
to  be  fully  integrated  into  EU  climate  policy.  By  2050,  each  single  tonne  of  CO2eq  emitted 
into  the  atmosphere  will  have  to  be  neutralised  by  a  tonne  of  CO2  removed  from  the 
atmosphere. The establishment of a regulatory framework, centred on a legislative proposal 
for the certification of carbon removals44 will therefore be an essential stepping stone towards 
this  goal.  Any  future  policy  choice  (in  the  post-2030  legislative  cycle)  to  allow  carbon 
removals  in  EU  compliance  frameworks  would  need,  as  a  necessary  precondition,  a  sound 
and  reliable  definition  of  carbon  removals  providing  guarantees  in  terms  of  environmental 
integrity. A certification mechanism should first focus on solutions taking place in the Union 
that remove CO2 from the atmosphere with sufficient guarantees on the storage duration, on 
measurement quality, the management of risk of reversal or risk of ‘carbon leakage’ inducing 
GHG  emissions  elsewhere.  This  is  important  for  the  achievement  of  EU  domestic  climate 
neutrality.  The question of the “validity” of carbon removals taking place outside the Union 
is also important, but it presents  greater complexity, in particular with regard to monitoring 
and  verification  issues;  it  can  only  be  effectively  addressed  once  the  Union  has  a  domestic 

44 The Commission will propose an EU regulatory framework for the certification of carbon removals by end of 
2022 (link). 

19 

 
 
 
                                                 
regulatory  framework  for  carbon  removals  against  which  activities  taking  place  elsewhere 
can be benchmarked. 

The  certification  framework  development  should  ensure  the  transparent  identification  of 
carbon  farming  and  industrial  solutions  that  unambiguously  remove  carbon  from  the 
atmosphere sustainably. Robust monitoring, reporting and verification of carbon removals at 
the  level  of  individual  land  holdings  (section  2)  or  through  the  industrial  capture,  transport 
and storage of CO2 (section 3) is a necessary prerequisite to ensure their authenticity, as well 
as to minimise the risk of fraud and errors. Certification is therefore a pre-condition for any 
sound regulation of – and enhanced uptake by – market-based carbon removal solutions.  

This  certification  nevertheless  faces  a  number  of  challenging  technical  issues.  Carbon 
removals  are  at  risk  of  uncontrolled  re-emission  (so-called  non-permanence)  and  specific 
measurement difficulties (leading to uncertainty of estimates). With regard to carbon farming, 
moreover, existing certification frameworks deploy a wide variety of approaches to quantify 
the amount of carbon removals which are generated compared to standard land management 
practices  (additionality),  and  for  the  determination  of  co-benefits  for  bio-diversity.  Lack  of 
standardisation is a further major barrier to the expansion of the voluntary carbon market. 

The accounting and certification rules should therefore set scientifically robust requirements 
in  terms  of measurement quality, monitoring standards, reporting  protocols and verification 
means. This framework should moreover ensure environmental integrity and prevent negative 
impacts  on  biodiversity  and  ecosystems,  especially  when  concerning  resource  or  energy 
intensive industrial solutions.  

The credibility of the accounting and certification framework will also depend on its effective 
implementation.  Preference  should  be  given  to  a  transparent  process  for  the  definition  and 
updating  of  the  accounting  and  certification  rules.  Various  options  exist  for  a  governance 
framework  involving  public  authorities  and  private  bodies  to  support  its  implementation, 
ranging from a single, centralised EU system through to a more decentralised structure. The 
administrative costs, including those related to the monitoring, reporting, and verification of 
carbon  removals,  need  to  be  kept  manageable.  The  use  of  state-of-the-art  digital  solutions 
should allow for a cost-efficient and market-friendly implementation.  

The  Commission  will  pay  particular  attention  to  the  involvement  of  stakeholders  in  the 
preparation  of  the  legislative  proposal  and  the  accompanying  impact  assessment.  Among 
other actions, the Commission will launch a call for evidence to strengthen the Commission’s 
understanding of carbon removals and key issues for their  accounting and certification, and 
will organise a conference to bring together representatives from academia, business sectors, 
public organizations, NGOs and civil society to exchange views on the EU-wide certification 
concept. 

The next few years should see the scaling up of carbon removals – be it in the land sector or 
in industry – as well as gaining market and regulatory experience, in particular with regard to 
improvements  to  monitoring,  reporting  and  verification.  Carbon  farming  and  industrial 
projects  that  invest  in  carbon  removals  today  should  have  a  prospect  of  a  future  robust 
accounting  and  certification  framework  that  ensures  comparability  and  environmental 
integrity, and recognition of the action started already on the ground.  

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The accounting  and certification framework should, moreover, be consistent with  other EU 
policy initiatives, such as the future Directives on Sustainable Corporate Governance and on 
Corporate  Sustainability  Reporting.  The  framework  could  thereby  enhance  reporting 
transparency  by  companies  on  their  climate  targets,  as  well  as  the  Sustainable  Product 
legislative  initiative,  where  it  could  help  to  demonstrate  and  encourage  carbon  storage  in 
long-lived products.  

At Glasgow, Parties agreed to finalise the Rulebook of the Paris Agreement and to establish, 
under Article 6, a robust and comprehensive accounting framework for international carbon 
markets.  All  activities  taking  place  in  this  context  will  have  to  rely  on  ambitious  baselines 
approaches  and  to  respect  environmental  safeguards.  Being  a  pioneer  in  the  regulatory 
certification of carbon removals will make the EU the trailblazer. This will provide a global 
inspiration for designing, under Article 6, robust and ambitious methodologies aligned with 
the objective of the Paris Agreement.  

Key actions towards the legal proposal for a certification of carbon removals 

On  the  way  towards  an  integration  of  carbon  removals  in  EU  climate  policy,  the 
Commission will undertake the following actions: 

 

launch  a  Call  for  Evidence  to  strengthen  the  Commission’s  understanding  of 
carbon removals and key issues for their accounting and certification (early 2022); 

  organise a conference to exchange on sustainable carbon cycles and the upcoming 
legislative proposal for the certification of carbon removals (first quarter 2022); 

  propose  an  EU  regulatory  framework  for  the  accounting  and  certification  of 

carbon removals (end 2022); 

  establish  an  EU  standard  in  monitoring,  reporting  and  verifying  GHG  emissions 
and carbon removals at farm and forest holding level as well as for captured fossil, 
biogenic or atmospheric CO2 that is transported, processed, stored and potentially 
re-emitted to the atmosphere each year; 

  organise regular exchanges with other jurisdictions on carbon removal accounting 

and certification.  

5  CONCLUSION 

In  order  to  reach  climate  neutrality,  greenhouse  gas  emissions  will  have  to  be  reduced 
drastically and rapidly while carbon removals will have to be increased and further integrated 
into EU climate policies. With this Communication and consequent actions, the Commission 
wants  to  kick-start  and  upscale  carbon  removal  across  the  EU  by  addressing  the  current 
implementation challenges:  

  Utmost attention needs to be paid to the quality and credibility of carbon removals in 
the  land  sector  as  well  as  in  industrial  sectors.  As  in  the  case  of  any  new  business 
model, building trust will be crucial. This is why the Commission will develop a new 
framework for the certification of carbon removals in 2022, underpinned by an impact 
assessment and an open  public consultation.  A certification mechanism will provide 

21 

 
 
 
 
more  clarity  on  the  quality  of  carbon  removals,  and  ensure  their  environmental 
integrity.  It  will  address  the  lack  of  standardisation  of  existing  frameworks  and 
contribute to a level playing field.  

  The  land  and  bio-economy  are  crucial  for  achieving  sustainable  carbon  cycles.  The 
Communication  proposes  concrete  actions  how  to  better  reward  land  managers  for 
reducing emissions and increasing removals based on a credible business model that 
aims for high environmental integrity and avoids any kind of greenwashing. EU and 
national public funding can significantly relieve the financial costs and risks inherent 
to carbon farming. In particular, funding under the Common Agricultural Policy will 
be key to provide land managers with improved knowledge through targeted advisory, 
data  and  monitoring  services.  The  Commission  therefore  calls  on  Member  States  to 
integrate  carbon  farming  into  their  proposals  of  their  national  CAP  strategic  plans 
which  will  be  in  place  in  2023.  The  public  funding  will  complement  the  private 
funding that can come from the revenues generated through the sale of carbon credits 
or  through  incentive  contracts  with  food  and  biomass  processors  who  promise  a 
climate-neutral supply chain to their clients and investors. 

  While  drastically  reducing  the  use  of  fossil  carbon,  the  EU  economy  will  need  to 
capture  CO2  and  use  it  as  feedstock  for  the  production  of  fuel,  chemicals  and 
materials that still require carbon. Industrial solutions storing CO2 for the long-term 
can  generate  carbon  removals  when  the  CO2  is  captured  from  the  atmosphere.  To 
kick-start  and  upscale  industrial  capture,  use,  and  storage  of  carbon,  a  credible  and 
reliable monitoring and tracking of the CO2 captured, transported, used and stored by 
its  fossil,  biogenic  or  atmospheric  origin  is  essential  and  key  to  the  certification  of 
carbon removals. The EU ETS Innovation Fund, as one of the world’s largest funding 
programme for innovative low-carbon technologies, will support businesses to invest 
into carbon use and removal technologies, and thereby reinforce European leadership. 
To fully realise the potential of the new carbon industry, a transport network needs to 
connect the CO2 sources with the CO2 storage sites and production sites consuming 
CO2.  The  Commission  will  study  the  cross-border  CO2  infrastructure  deployment 
needs and continue to provide funding through the Connecting Europe Facility (CEF). 

Making carbon cycles sustainable is an urgent necessity for the humanity. This process needs 
to be accelerated and it must be credible. With the Green Deal as the EU’s growth strategy, 
carbon removals should also become a new business model. 

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