EUU, Alm.del - 2021-22 - Bilag 518: Høringssvar vedr. Certification of carbon removals

Europaudvalget 2021-22
EUU Alm.del Bilag 518
Offentligt

The Danish Government’s response to the European Commission’s

call for

evidence for an impact assessment concerning certification of carbon remov-

als

I. A trustworthy certification framework for carbon removals has a high poten-

tial to facilitate additional funding for the green transition in the EU

Substantial removals of CO

from the atmosphere are needed to reach Member

States’ individual climate targets, the

EU’s

climate target for 2030 of reducing net

greenhouse gas emissions by at least 55 pct. compared to 1990

as well as the EU’s

objective of reaching climate neutrality by 2050.

As most recently shown by the Intergovernmental Panel on Climate Change (IPCC)

in its Sixth Assessment Report (AR6),

carbon removal and sequestration is a key

element

in scenarios that limit warming to 2 °C or 1.5 °C globally by 2100. However,

deployment of negative emissions technologies, such as bioenergy with carbon cap-

ture and storage (BECCS) and direct air CO

capture and storage (DACCS) is cur-

rently limited. For nature-based measures, such as afforestation and peatland resto-

ration, there is a general lack of incentives for private landowners to adopt practices

that increase carbon sequestration. According to the IPCC AR6 report, a political

commitment to formally integrate carbon removals into existing climate policies is

required to accelerate research, development, and demonstration, as well as to in-

centivise deployment.

As an essential first step,

the Danish Government agrees with the need of a com-

mon, trustworthy EU standard for the certification of nature-based as well as

technological carbon removals.

If properly designed, a common certification

framework could facilitate additional funding from private and public sources to sup-

port the green transition.

First, the framework could support this objective by providing a robust and trustwor-

thy

alternative to standards used on the voluntary carbon markets

today. Im-

portantly, voluntary carbon credits are entirely decoupled from Member States’ EU

and national climate targets. Nonetheless, with the rise of private net-zero commit-

ments, voluntary carbon markets have a great potential for facilitating additional pri-

vate funds for carbon removal projects. At the same time, however, the general cred-

ibility of voluntary carbon credits is uncertain, in part due to low perceived or actual

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EUU, Alm.del - 2021-22 - Bilag 518: Høringssvar vedr. Certification of carbon removals - EU rules

quality of monitoring, reporting and verification (MRV). A common certification stand-

ard for carbon removals in an EU context could help establish trust in the voluntary

carbon markets and engender additional carbon sequestration to the benefit of the

climate. Additionality, permanence, leakage, MRV, biodiversity and environmental

safeguards are key elements of a credible EU certification system.

Secondly, the framework could allow for an

effective design of national and EU

policies

to incentivise carbon dioxide removal in a market-based manner. If proven

credible, certification of nature-based removals based on reliable MRV could be an

important cornerstone for national and EU carbon farming policies in the future, which

are much needed in order for Member States to implement the increased ambition

of the proposed revision of the LULUCF Regulation. Likewise, certification of tech-

nological removals could contribute to market-based financing of negative emissions

projects. Additional private funding of BECCS or DACCS facilities through the sale

of voluntary carbon credits could reduce the need for public finance for deploying

carbon capture and storage (CCS).

Denmark notes the plans for rapid employment of in particular BECCS and BECCU

to achieve ambitious national 2030 climate targets in a number of Member States.

Denmark further notes that Commission proposals on a revised LULUCF Regulation

as well as revised sustainability criteria for biomass in the RE Directive will improve

the accounting of forest carbon stock losses in the EU Member States linked to e.g.

BECCS, as well as improve the overall sustainable production of biomass.

Finally, a certification framework may have the potential to make way for an

integra-

tion of carbon removals with the EU Emissions Trading System

(ETS) in the

longer run. Integrating LULUCF removals would require a substantial revision of the

current accounting system in order to ensure environmental integrity and to avoid

double counting. The Commission is encouraged to explore this perspective in its

Impact Assessment so as to spur a dialogue on the future EU climate architecture.

The different potential uses of a certification framework could imply a need

to plan

for different stages of implementation.

For example, specific challenges related

to nature-based removals (such as the complexity of measurement, permanence and

baseline setting) should not impede a rapid development and implementation of a

corresponding standard for technological removals. Namely, the Danish Government

sees merit in immediately preparing for

integrating negative emissions in the EU

ETS

as a means to provide cost-effective incentives for reductions and negative

emissions, bearing in mind the sustainability of the specific projects. Apart from ac-

celerating deployment of negative emissions technologies, integrating negative

emissions in the EU ETS ensures that this system remains viable, effective and rel-

evant as fossil fuels are phased out over time. In order to provide clarity for market

actors and governments, it is of high importance that the Commission is clear in its

communication about how it expects to apply the certification framework at different

stages over time.

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EUU, Alm.del - 2021-22 - Bilag 518: Høringssvar vedr. Certification of carbon removals - EU rules

II. Danish priorities on technical issues

For a certification framework to be credible, have environmental integrity and ensure

additional removals, a number of technical challenges must be resolved. The Com-

mission Impact Assessment should be transparent about the available options and

the trade-offs associated in this regard. Some of these challenges are generic to any

reliable carbon removal certificate, while others are specific to certain branches of

technologies. However, they should all be addressed regardless of the use of the

certification framework, as discussed above.

•

A common EU standard for carbon removals must

be clear on how addition-

ality is defined

and tested for. Particularly, the standard should be clear about

the legitimacy of privately funded voluntary carbon offsets contributing to na-

tional and EU climate targets. Additionality, meaning that the carbon removal

achieved by a project would not have happened regardless, is a defining con-

cept of any carbon removal standard. Demonstration of additionality may in-

clude identification of alternatives to the project activity, given legal and regu-

latory requirements, as well as investment analysis to determine whether the

project activity is likely to be financially attractive in the absence of carbon cred-

its. Despite the wide acknowledgement of the importance of demonstrating ad-

ditionality, there are substantial differences in how the concept is being inter-

preted and implemented in practice. The Danish Government believes that

credible voluntary carbon certification is an important tool for private actors to

make real contributions to the ambitious climate targets of their host countries,

whether or not the certificates are used for voluntary offsetting. For the EU to

achieve climate neutrality by 2050 and to become net-negative thereafter, the

voluntary efforts of private companies and individuals are key. In order to pro-

vide clarity for market actors, it is important that the Commission’s legal pro-

posal clearly define additionality within the context of a specific project rather

than political targets.

Furthermore, the need for

documenting additionality may vary substan-

tially

between projects. Consequently, it is important to limit administrative and

methodological burdens for project owners.

The framework should

encourage co-financing

of carbon removals so as to

mobilize private funds with a view to reducing the need for public support. It is

clear that project activities, which are fully subsidized or compensated by public

means, such as the Common Agricultural Policy, cannot be considered addi-

tional. Therefore, no voluntary offset claims should be made on the basis

thereof. However, where additional private finance is an important enabler of

project activities, carbon removal certificates could be a key instrument to in-

centivise private engagement. The Commission’s Impact Assessment should

evaluate models for how to determine the additionality of private involvement

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EUU, Alm.del - 2021-22 - Bilag 518: Høringssvar vedr. Certification of carbon removals - EU rules

and how to credit such additionality in terms of issuance of certificates in a fair

and transparent manner.

•

The framework should be

applicable to the full range of options for tech-

nological carbon removal.

Current efforts on technological options for carbon

removals focus primarily on BECCS from combustion processes. Other options

for CCS of biogenic CO

include CO

from fermentation processes (such as

biomethane production, wastewater treatment plants, and industrial fermenta-

tion) and from waste incineration of biogenic sources. DACCS is another option

for reducing the atmospheric concentration of CO

. Likewise, Denmark regards

biochar as having considerable potential for carbon sequestration in agricul-

tural soils. To promote a technology neutral approach, the Commission should

consider all forms of BECCS, DACCS and biochar sequestration in its legal

proposal.

A common EU standard must contain rules on how to account for

temporary

carbon storage.

For carbon removals to balance a given emission, the re-

moved carbon should be stored for a duration at least equivalent to the time

the emitted amount of CO

resides in the atmosphere. With respect to the vol-

untary carbon market, it is currently unclear how to value the benefits of tem-

porary storage

–

for example, 10 or 100 years of carbon storage

–

against true

permanent storage. This discussion is fundamental to answering the question

of how much temporary storage is needed for private actors to legitimately off-

set an emission and, thus, important to resolve to establish trust in the volun-

tary carbon market. The Commission is encouraged to analyse options for how

to account for temporary carbon storage in its Impact Assessment.

The Commission is encouraged to clearly define which

carbon farming prac-

tices

should be eligible for certification under the framework. In its impact as-

sessment, the Commission should examine the possibility of including carbon

farming practices that aim to protect carbon pools by reducing carbon emis-

sions. Particularly, rewetting of carbon rich soils has a great potential for re-

ducing CO

emissions and protecting carbon in agricultural soils and could be

considered within the scope of the framework. Furthermore, the Commission

should also examine the perspectives of certifying activities that aim to reduce

emissions of methane and nitrous oxide from agricultural activities.

Finally, the certification framework should take into account

fluxes of all

greenhouse gases

within project boundaries. For example, rewetting of car-

bon rich sols may reduce CO

emissions and increase net carbon sequestra-

tion but give rise to increased gross methane emissions. In order to ensure the

environmental integrity of EU carbon removal certificates, such fluxes must be

appropriately accounted for alongside removals of carbon from the atmos-

phere, in MRV as well as in baseline setting.

•

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