CO₂ Value Europe has released a new position paper outlining the key priorities of the Carbon Capture and Utilisation (CCU) community for the upcoming revision of the EU Emissions Trading System (ETS). The paper addresses crucial issues such as the accounting of non-permanent CCU products, the potential inclusion of waste incineration in the ETS and how carbon removals are addressed under the ETS framework.
Our recommendations are built upon a set of core principles:
🔵 EU ETS rules must be revised to better support non-permanent CCU using captured ETS CO₂, beginning with a clear distinction between fossil emissions and process emissions under ETS.
🔵 Current regulations unfairly disadvantage using captured carbon in products compared to virgin fossil feedstocks, undermining investment in sustainable, circular technologies.
🔵 Future ETS rules should actively incentivise the use of captured CO₂, recognise CCU as a legitimate form of carbon recycling, and support carbon circularity, particularly for hard-to-abate sectors aiming to reduce their reliance on fossil resources.
One specific area of focus in our position paper is the proposed inclusion of the Waste-to-Energy (WtE) sector in the ETS. WtE plays a unique role in managing non-recyclable municipal waste while producing local energy, activities that result in unavoidable emissions. In this context, CCU presents a viable solution to help the sector reduce emissions, particularly when adapted to local conditions and smaller-scale installations. However, under the current regulatory framework, captured carbon has no clear advantage over fossil carbon, weakening the business case for CCU. While including WtE in the ETS could help level the playing field, stronger incentives are needed to make CCU deployment viable in this sector.
We also make the case that carbon removals are a must to reach net-zero objectives, but should not replace emission reductions.
In summary, our key recommendations to the European Commission are as follows:
🔵 The ETS revision must favour captured carbon over fossil feedstocks; legislation must not reward virgin fossil carbon more than sustainable alternatives.
🔵 If WtE is included in the ETS, clear and targeted incentives must be introduced to support CCU adoption in a sector with limited decarbonisation levers.
🔵 All carbon accounting approaches come with trade-offs; any chosen method should include mechanisms to ease the regulatory burden on newly obligated parties.
🔵 Revenues from ETS allowances must be ring-fenced to fund the transition of hard-to-abate sectors, building on the precedent for the aviation sector.
🔵 Carbon removals should be incentivised under a dedicated system, separate from the ETS, before an eventual merge once the systems converge.
Read our position paper here.
