The International Carbon Action Partnership (ICAP) has published a new thematic brief that explores the current state of carbon dioxide removal (CDR) inclusion in select emissions trading systems (ETSs).
The inclusion of CDR in ETSs is considered a key policy lever that could provide a stable framework for scaling carbon dioxide removal efforts to globally climate-relevant levels.
While this inclusion would help enhance compliance flexibility and trigger a much-needed demand for CDR, it will also require further answers on integrity, emissions reversals, and maintaining effective decarbonization pathways.
To that end, the ICAP publication examines the current practices across selected ETSs, providing an organized overview in tables that compare the landscape in terms of factors such as the general approach towards this idea, eligibility, quantitative limits, reversal and permanence provisions, and other relevant elements.
Places like Australia, California, Canada, China, Korea, New Zealand, and Québec already allow for the use of nature-based removal units towards ETSs, including activities like afforestation, reforestation, and improved forest management.
Lately, policymakers seem to be signaling an interest in potentially counting engineered CDR towards ETSs, with systems such as the EU ETS and the UK ETS engaging in policy discussions in this direction.
The ICAO brief shows that to date, most ETS experience with CDR pertains to domestic CDR from forestry, outside the scope of the ETS, from domestic crediting programs, and subject to limits.
When it comes to eligibility, all the ETS systems considered in the brief except for the UK one accept units from forest-related activities, with the UK government expected to make a decision on this matter.
Other protocols in the considered selection include soil carbon, blue carbon, and mangroves, with protocols for BECCS and DACCS under development.
Relevant: Massive Investments Needed To Scale Carbon Removal: AlliedOffsets Report
All the ETS systems covered in the brief accept domestically generated units, while Korea stands out as the only one to accept international ones. Additionally, all systems, except for New Zealand, have CDR activities outside the ETS scope, generating credits via domestic programs.
In regard to quantitative limits, places like California, China, Korea, and Québec impose a 10% limit on compliance obligations, while Canada’s limit is 75%, and Australia and New Zealand allow unlimited use of CDR in the ETS.
The ICAO brief depicts a wide diversity across the other factors considered in this analysis, and the comprehensive deep dive can be accessed here.
Read more: Gold Standard, Global Green Growth Institute Forge Alliance Тo Strengthen Carbon Markets
