A new step in the European carbon market: The European Commission wants to make permanent carbon removal part of the EU Emissions Trading System (EU ETS).

A new step in the European carbon market: the European Commission wants to make permanent carbon removal part of the EU Emissions Trading System (EU ETS).

For a long time, carbon credits and removals were primarily the domain of voluntary climate offsetting. Now we are seeing an increasing regulated demand emerge. CORSIA creates a compliance requirement for the aviation sector. Article 6 establishes an international framework for carbon credit trading between countries.

And now, on top of that, there is the European proposal to link permanent removals - including Direct Air Capture and BioCCS - to the EU ETS starting in 2030. The proceeds from 250 million additional EU ETS emission allowances between 2031 and 2040 will then be used to purchase permanent carbon removal.

Undeniably, the carbon market is moving toward greater regulation, higher quality standards, and an increasingly compliance-driven demand. As a result, the quality of carbon credits (including additionality and suitability) and the methodology of the projects are becoming increasingly important.

For investors, the question is no longer whether the carbon market is growing, but which carbon credits meet the new quality requirements and are therefore eligible for regulated demand.