🚿 Could CDR be the EU ETS' safety valve?

🇪🇺 This timely new Ariadne dossier (Frank Best, Michael Pahle, Darius Sultani Claudia Günther, Malte Herten, Jörn Constantin Richstein, and Professor Ottmar Edenhofer, 2026) seems to have drowned in the whole SBTi noise. Yet it is one of the best analyses I have seen to date on why CDR is truly needed for the long-term effectiveness of the EU Emission Trading System.

📈 It starts with an assessment of what could happen to ETS prices, especially if CCS and green hydrogen deployment fall behind schedule. The result: we could hit as much as €490/t in 2035 and €798/t in 2045.

🤔 Then, it looks at what amount of CDR would be needed to stabilise costs at a lower base?

➕ CDR would be added as a cap-expansion to contain price spikes without weakening the cap itself.

📉 The key finding: relatively small volumes go a long way. Just 40 Mt/yr phased in gradually from 2030 cuts the price increase from +77% to +27%. Aiming for 80 Mt/yr fully offsets the delay.

💸 Perhaps the most striking result: prices start falling before CDR formally enters the market, because forward-looking participants adjust their banking behaviour in anticipation.

🪨 The authors call out that integration Biochar Carbon Removal (BCR) could significantly help to achieve this effect, given its competitive, lower CDR prices compared to other methods. Side note: I would question some of the academic cost estimates used in the paper but the overall argument holds true even with real industry price data.

🌐 Interestingly, the paper also touches on international credits and Article 6, but only as a fall back option in case domestic measures don’t work out, e.g. insufficient supply.

🏭 Finally, the paper also calls for using a bigger share of ETS revenues to be spent on decarbonisation, including CDR - something Raphaël Cario and I will actually be publishing a paper on very soon.

👀 Check out the full paper here: https://lnkd.in/dXB8K-ZZ

💪 Overall, this feels like one of the most compelling arguments I have seen to date on why and especially how CDR can help guarantee the long-term stability and effectiveness of the ETS.

🙋🏻 What’s your take? Any gaps in this analysis or things that stand out to you?

Follow the conversation