In a Nutshell

What is the Governance Regulation?

The Governance of the Energy Union and Climate Action Regulation (Governance Regulation) is the EU’s central tool for coordinating climate and energy objectives at Member State level. It establishes a common framework for planning, reporting and monitoring progress towards Member States’ climate and energy objectives, including commitments under the Paris Agreement and the UNFCCC. Rather than setting targets itself, the Regulation ensures that Member States collectively deliver on agreed EU goals.

How does the Governance Regulation work in practice?

The Regulation operates through a structured planning and reporting cycle, requiring Member States to prepare ten-year National Energy and Climate Plans (NECPs), which set out how they intend to meet their energy and climate objectives. Member States must also produce national long-term strategies (LTS) and submit regular progress reports to the European Commission.

The Commission then assesses collective progress and can issue recommendations where ambition or implementation is insufficient. At EU level, progress is tracked through regular reporting, including the annual State of the Energy Union report, which reviews Member State performance, implementation of NECPs, and overall alignment with EU climate and energy targets.

How does carbon removal fit into the Governance Regulation?

The Regulation shapes how Member States plan, report and are held accountable for the components that make up their net climate targets. While it includes reporting requirements for LULUCF, covering land-based removals such as forests and soils, it does not include structured planning or reporting requirements for permanent carbon dioxide removal (pCDR), such as DACCS, BioCCS and other emerging methods.

The Regulation is currently undergoing a legislative revision, which could amend the planning and reporting requirements that Member States must follow, including whether permanent carbon removal is explicitly required in NECPs. The review provides an opportunity to integrate pCDR into NECPs, as it aims to strengthen long-term planning, align national strategies with net emissions targets, and turn NECPs into investment frameworks, creating a natural entry point for carbon removal pathways that are currently not systematically included.

What’s on the Horizon?

• Q4 2026: The European Commission is expected to publish a proposal to revise the Governance Regulation, following the ongoing impact assessment process and stakeholder consultations.
• 2026–2027: The proposal will be negotiated by the European Parliament and Council. This phase will be critical in shaping whether and how carbon dioxide removal is integrated into planning and reporting requirements.
• Stakeholder engagement opportunities: While the public consultation closed in March 2026, stakeholders can still engage through:
  • Outreach to Member States and EU institutions during negotiations.
  • Participation in expert groups and policy discussions.

Deep Dive

Why the Governance Regulation revision matters for CDR

The current Regulation was designed primarily around emissions reduction targets, which is reflected in its planning and reporting architecture. The NECP template requires Member States to plan for GHG emissions reductions, renewable energy, energy efficiency, energy security, and interconnection, but has no equivalent requirement for permanent carbon removal. A specific role for industrial carbon removals was introduced in the EU’s 2040 target under the revised European Climate Law, creating a misalignment whereby the framework governing national climate planning does not yet reflect the full architecture of the targets it is intended to deliver.

The Governance Regulation sits at the intersection of several key EU climate instruments. NECPs must reflect Member State obligations under the Effort Sharing Regulation and the LULUCF Regulation, while its monitoring framework supports compliance across both. The ongoing revision is expected to align national planning more closely with the EU’s 2040 climate target and the broader post-2030 policy architecture, as reflected in the Call for Evidence, which frames the revision as a means of supporting EU progress towards the 2040 target and climate neutrality by 2050.

The Call for Evidence also links revised NECPs to the next Multiannual Financial Framework (2028–2034), reflecting the Commission’s objective of turning NECPs into investment-oriented plans that help direct public and private funding. If planning requirements for permanent carbon removal were introduced in a revised Regulation, this investment dimension could provide an important mechanism for directing financing towards CDR deployment and infrastructure.

Taken together, the Governance Regulation provides the overarching framework linking EU-level climate targets with national planning and investment at Member State level. How the revision addresses carbon removal will therefore shape whether pCDR becomes a planned and financed component of national climate strategies across the EU.

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