The PIK study is published in FinanzArchiv
(sustainabilityenvironment.com) – The EU wants to focus a lot on the CO2 removal to achieve the goals of reducing emissions. But for carbon removal to be real and not a way to delay the transition, we need a European carbon central bank. Brussels must look above all at the economic dimension of carbon capture and storage to avoid nasty surprises in the future. This is supported by a study by the Potsdam Institute for Climate Impact Research (PIK) published in FinanzArchiv.
On 6 February, the European Commission (provisionally) set the new interim target of 2040 emission reductions. Within 16 years, the EU will have to cut its greenhouse gases by 90%. However, this is a percentage based on net emissions. Some 8% of the greenhouse gases to be reduced, in fact, according to the EU executive will have to be addressed through the removal of carbon.
The strategy for industrial CCS, published on the same day, speaks volumes. By 2030, EU CO2 capture and storage capacity must reach at least 50 million tonnes per year (Mtpa). The expected volumes reach 280 Mtpa in 2040 to rise to 450 Mtpa by mid-century.
According to the PIK, this goal is achievable and above all effective only if due importance is given to two factors: laws are needed suitable for a “titanic” enterprise like this, and we must be sure that the captured CO2 remains stored for a long time. Today many credits issued by carbon removal projects are considered waste paper precisely because they do not ensure the effectiveness of removal over time. Using the economic lever to push industrial players to move in the right direction is an inevitable step, concludes the PIK.
“Eliminating carbon as the second pillar of climate protection will cost us a lot of money in the second half of the century – estimates range from 0.3 to 3% of global economic output,” says Ottmar Edenhofer, director of PIK and co-author of the study. The key? Linking European subsidies to continued CO2 extraction.
What does it take for the EU to hit the jackpot with CO2 removal?
Just as regulators, through the carbon market system (ETS), make CO2 emissions more expensive to limit their negative consequences, they “should subsidize” the removal of CO2. “As a basic principle for minimizing costs, the price for permanently removing and storing one tonne of CO2 should be equal to the price for the emission of one tonne of CO2 into the atmosphere” explains Max Franks, PIK researcher and co-author of the study.
But this has to be done with very clear boundaries. Linking the scale of subsidies to the time that the carbon removal technique ensures that CO2 remains trapped. In this way, the seemingly cheaper options, such as reforestation or carbon sequestration in agricultural land, “can therefore become significantly less attractive than, for example, air filtration systems with permanent underground storage”, ie carbon dioxide removal (CDR) technologies.
Four key levers underlined by the PIK study: the quantitative control of net emissions, the regulation of liability for non-permanent removals, financial support for the expansion and innovation of carbon removal and certification of suppliers. For the first two tasks, the study proposes a European Central Carbon Bank, plus two additional authorities for financing and quality control.