Recently, the European Union is studying whether to include carbon credits in its carbon market, a move that could reopen the offsetting use of its carbon credits in the EU carbon market in the coming years.
Previously, the European Union banned the use of international carbon credits in its emissions market from 2020 due to concerns about cheap international carbon credits with low environmental standards. Following the suspension of the CDM, the EU adopted a strict stance on the use of carbon credits and stated that international carbon credits could not be used to meet the EU’s 2030 emissions reduction targets.
In November 2023, the European Commission proposed the adoption of a European-produced voluntary high-quality carbon removal certification framework, which received provisional political agreement from the European Council and Parliament after February 20, and the final bill was adopted by a final vote on April 12, 2024.
We have previously analyzed that due to various political factors or international institutional constraints, without considering recognizing or cooperating with existing third-party carbon credit issuers and certification bodies (Verra/GS/Puro, etc.), the EU urgently needs to create a missing carbon market component, namely an officially recognized EU-wide carbon removal credit certification mechanism framework. The new framework will produce officially recognised definitive carbon removals and integrate CDRS into policy tools. The EU’s recognition of carbon removal credits will lay the groundwork for subsequent legislation to be incorporated directly into the existing EU carbon market system.
As a result, at a conference organized by the International Emissions Trading Association in Florence, Italy, on Wednesday, Ruben Vermeeren, deputy head of the European Commission’s EU carbon market division, said: “An assessment is being made as to whether carbon credits should be included in the scheme in the coming years.”
In addition, he made it clear that the European Commission must decide by 2026 whether to propose rules to add carbon removal credits to the market. Such carbon credits represent the elimination of carbon emissions and can be generated through projects such as planting new CO2-absorbing forests or building technologies to extract carbon dioxide from the atmosphere. The credits available for offsetting in the EU carbon market include adding removals to existing carbon markets, or setting up a separate EU removal credit market.
Of course, in addition to self-certified carbon credits within the EU, the third phase of the EU carbon Market officially sets aside a usable framework for carbon credits generated under Article 6 of the Paris Agreement, and makes it clear that the recognition of the Article 6 mechanism depends on subsequent progress.
Vermeeren concluded by stressing that the potential benefits of increasing the amount of carbon market removals in the EU include that it will provide industries with a way to address final emissions that they cannot eliminate. But he warned that promoting the use of carbon credits could discourage companies from actually reducing emissions and that offsets could not replace actual measures to reduce emissions.
Post time: Apr-26-2024