🧰 Is this one of the least-well known policy tools to scale carbon dioxide removal (hashtag#CDR)? 🧰

🏆 Integrating CDR into the EU’s Carbon Border Adjustment Mechanism (hashtag#CBAM) is increasingly looking like a win-win-win to me. It is also a topic I keep getting asked about yet seems to not be discussed widely. So time to dig in.

💶 CBAMs aim to prevent carbon leakage - emissions simply moving from a more to a less regulated jurisdiction - by imposing a carbon price on imports of carbon-intensive products. The idea is that no matter where a product comes from, the carbon price you will end up paying will be the same.

🏭 Europe’s CBAM will initially cover around 50% of all emissions regulated by the EU Emission Trading System (which in turn covers around 40% of all European emissions). Importers of goods to Europe will need to buy CO2 certificates equivalent to the price of the EU ETS allowances (hashtag#EUA).

⚔️ The CBAM is a double-edged sword:

✋ On the one hand, it is a powerful tool to ensure carbon pricing actually works, using the interconnectedness of our global economy to its advantage.

🤚 On the other hand, it can significantly hurt exports from low- and middle-income countries, potentially destroying entire industries affecting some of the world’s most vulnerable.

This is where CDR comes into play. Allowing CDR to be used to lower the emission footprint of these products can yield several benefits:

1️⃣ It would stimulate the creation of distributed, global CDR industries by providing significant monetary incentives.

2️⃣ It will provide a path for producers in the developing world in particular to keep exporting to Europe.

3️⃣ It will lead to CDR being scaled in geographies where it is faster, more cost-effective, and fairer to do than in the global north.

🪢 So how do we do it? 2027 will see a revision of EU’s CBAM. Article 7 (carbon accounting) in particular offers a clear place for the integration of CDR. By that time, the EU’s Carbon Removal and Carbon Farming (hashtag#CRCF) regulation will be up and running. How about tying CBMA integration to permanent removals certified by CRCF equivalent schemes only?

🏛 Doing so would create a clear use case for the CRCF and provide an incentive for countries around the world to adopt CRCF equivalent schemes, fostering regulatory harmonisation and increasing the overall integrity of the industry.

💭 What is your take? Am I just day dreaming here or is there substance to this?

Follow the conversation