Early last month, the European Parliament approved a regulation for a certification framework for permanent carbon removals, carbon farming and carbon storage in products. The regulation provides key definitions and a framework for how EU states are to develop a certification program. Some of the key elements of the regulation include:
- Establishing parameters for expected duration of various types of carbon storage, including clarifying that “permanent carbon removal” means “a duration of several centuries.” Carbon farming and the incorporation of carbon into products are not inherently “permanent carbon removal” – carbon removed and stored by these methods are considered released into the atmosphere at the end of the monitoring period (at least 35 years), unless that monitoring period is prolonged through a new certification of the activity or the carbon is stored permanently. In addition, units using different methods must all be distinct from each other.
- The risk of reversals (the premature release of carbon into the atmosphere) will be a factor in issuing certifications.
- Projects must determine the net carbon removal benefit by assessing whether the carbon removals exceed greenhouse gas emissions associated with the implementation of that activity or process. “For instance, in the case of permanent carbon removals that inject carbon underground, the amount of permanently stored carbon should exceed the energy-related greenhouse gas emissions from the industrial process.”
- Certification methodologies will be established by the EU that comply with the regulation’s “quality criteria” (Articles 4 to 7).
- Independent third-party auditing will be carried out by certification bodies, including an initial certification audit before project start up and periodic re-certification audits at least every five years.
- Fraud is explicitly mentioned as a risk and where such a concern is raised, the EU Commission will investigate the claims. Further, “each certification scheme recognised by the Commission that has operated for at least 12 months shall submit to the Commission an annual report about its operations, including a description of any cases of fraud and related remediation measures, which covers the preceding calendar year.”
- Liability mechanisms for permanent carbon removals shall be consistent with the rules set out in Articles 17 and 18 of Directive 2009/31/EC; for permanently chemically bound carbon in products, consistent with the rules adopted pursuant to Article 12(3b) of Directive 2003/87/EC.
- By December 17, 2028, a registry for permanent carbon removals, carbon farming and carbon storage in products will be created and made public.
Something I noticed – the regulation emphasizes carbon farming, meaning “any practice or process carried out over an activity period of at least five years, related to the management of a terrestrial or coastal environment and resulting in the capture and temporary storage of atmospheric or biogenic carbon in biogenic carbon pools, or in the reduction of soil emissions.” Other forms of removal are mentioned, but it is clear the EU expects carbon farming to be the main removal method.
This regulation enters into force on December 17, 2024 (20 days after it’s publication in the Official Journal of the European Union).
Members can learn more about carbon removals here.
If you aren’t already subscribed to our complimentary ESG blog, sign up here for daily updates delivered right to you.
