🔓 How much CDR could the EU ETS integration unlock?

💶 That is the billion euro question. A new study sheds light on this, and the numbers are big: 68-86Mt/year of durable CDR demand, easily >€10b/year.

🇪🇺 We are just 1-2 months away from the European Commission’s proposal on how CDR is to be integrated into the world’s largest emission trading system. I’ve seen a number of opinions on the potential impact on such an integration.

📄 However, to my knowledge, this is the first peer-reviewed paper modelling the exact demand this integration would unlock for CDR.

💱 Darius Sultani et al. (2026) “How the EU can utilize its carbon market to scale up carbon dioxide removal” provides the first quantitative assessment of its kind. It assumes CDR and ETS Emission Allowances (EUAs) to be fungible, so marginal abatement cost equals marginal removal cost.

📈 There is also no ETS2 merger, no UK ETS linkage or Article 6 flows - all of which would increase the volume.

🤔 Under full integration, the EU ETS could incentivise 68-86 Mt CO₂/yr of combined BECCS+DACCS by 2050, stabilising around ~60 Mt/yr post-2050 in the default scenario. This number seems significantly higher than what I have been hearing.

🔎 Note that this only covers 25-40% of the CDR volumes ESABCC (2025) deems necessary for 2050 (range of 233-256 MtCO₂/year by 2050). 

📊 Integration roughly halves post-2050 EUA prices vs. a no-CDR counterfactual, with DACCS acting as a de facto "pressure valve" once learning-driven cost reductions materialize, strong cost-containment arguments for the long-term viability of the ETS. 

🚩 One gap worth flagging: biochar carbon removal (BCR) isn't modelled. Given its lower costs and established CRCF methodology, inclusion would likely push volumes higher. The paper's caution around biomass sustainability risks is fair but applies equally to BECCS and does not seem like a reason to leave BCR out altogether?

🏛️ The authors also provide some excellent policy proposals, from a three stage integration (MRV/CRCF -> partial integration -> full integration) to a concrete proposal to transition the ETS to a Removal Trading System (RTS) post 2040.

👏 Overall, a really insightful study. Congrats to the authors and hopefully just the first of many on this specific topic. Full paper accessible here: https://lnkd.in/ew-TtacM

🙋🏻 What is your take? Do you share the author’s optimistic take or what assumptions do you disagree with?

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