State of Play of EU CDR Policy

The EU has built significant policy infrastructure for CDR in recent years, including a certification framework, infrastructure targets, emerging demand mechanisms, and growing public finance support. However, these frameworks have developed unevenly. The conditions under which CDR projects are certified, permitted, and built are advancing. Yet, while voluntary carbon markets have developed relatively mature market infrastructure, the public mechanisms needed to integrate certified removals into compliance systems, regulated claims frameworks and wider demand creation remain underdeveloped.

This guide brings together the individual policies analysed in Carbon Gap’s Policy Tracker to show how the policies governing each stage of the CDR system interact and where gaps between them emerge.

It is organised around five policy stages:

• targets,
• standards and enablers,
• MRV and certification,
• market access and demand, and
• finance, and deployment

each of which corresponds to a distinct set of regulatory conditions that CDR projects must navigate. Between them, these five stages trace a path from the policy signals that justify CDR investment through to the market conditions that determine whether certified removals can generate revenue. Figure 1 maps the key instruments across these five stages, classified by how directly each one governs or affects CDR activity.

Although this guide focuses primarily on EU-level policy, deployment conditions also vary significantly across Member States. Differences in geology, infrastructure, land use, industrial capacity, permitting systems, and national policy choices shape how different CDR approaches develop across Europe.

Throughout the guide, the distinction between permanent CDR (methods such as DACCS and BECCS that store CO₂ geologically) and temporary CDR (land-based approaches such as carbon farming and peatland rewetting) is important. These two categories face different regulatory requirements, different infrastructure needs, and different market conditions, and the policy frameworks governing them have developed at different speeds. Where this distinction matters, it is addressed within each stage rather than treated separately.

What is the target setting stage?

Climate targets establish the foundational policy mandate for CDR. They define the scale and role of removals within the EU’s climate strategy and, in doing so, shape the signals received by developers, investors, and policymakers. Without clear targets, there is no durable long-term policy signal for CDR.

The design of targets determines how CDR is positioned in policy. Whether targets distinguish between emissions reductions and removals affects whether CDR is treated as a distinct contribution or integrated within net emissions accounting. In the EU, the target architecture is primarily framed in net terms, combining emissions reductions and removals, while only partially differentiating between removal types. By grouping emissions reductions and removals under a single net target, the current framework risks treating removals as a second-order priority, as they must compete with cheaper emissions reduction options for policy attention and investment. The lack of dedicated removal targets can delay the long-term planning and policy support needed to scale carbon removals by 2050.

How is target setting addressed in EU policy?

The European Climate Law is the anchor of EU climate policy. It sets binding targets of at least a 55% net greenhouse gas emissions reduction by 2030 (compared to 1990 levels) and climate neutrality by 2050. It also sets a 90% net reduction target by 2040. Because all three targets are framed in net terms, emissions reductions and carbon removals contribute to a single headline objective. This structure is particularly relevant for the 2040 target, which confirms a role for carbon removals but does not specify their expected contribution. The implementation package of the 2040 target, the EU’s post-2030 climate policy framework, expected by the end of 2026 will clarify what role carbon removals will play in reaching this target.

The LULUCF Regulation provides the clearest differentiation of emissions and removals within the current framework. It sets a binding EU target of 310 Mt CO₂e net removals from the land sector by 2030, with binding national targets and reporting obligations for Member States. As the EU’s primary accounting framework for land-sector removals, it embeds temporary, land-based removals within the climate architecture. A flexibility mechanism allows Member States to use surplus land-sector removals under LULUCF toward compliance with the Effort Sharing Regulation (ESR), which sets binding national emissions reduction targets for sectors such as transport, buildings, and agriculture. The mechanism is capped at 225 Mt CO₂e across 2021–2030 but has not been utilised due to declining land-sector removals.

For permanent CDR, the Net Zero Industry Act (NZIA) provides the closest equivalent policy signal, but from an infrastructure rather than a removal perspective. It identifies carbon capture and storage (CCS) as a strategic technology and sets a target of at least 50 Mt of CO₂ injection capacity per year by 2030, which is directly relevant to methods such as DACCS and BECCS. However, CDR is not recognised as a standalone category under the NZIA, meaning that its relevance is captured indirectly through CCS rather than through dedicated removal targets or support.

Implications for CDR

For permanent CDR developers and investors, the absence of a separate removal target means the EU framework still does not specify how much permanent CDR is expected, how it should be disaggregated from other removal types, or how it will be used within compliance systems. This gap leaves the implied demand signal difficult to translate into bankable revenue certainty. Without these targets, a permanent CDR developer can model neither the volume the EU expects nor the price at which removals will be valued, which limits the current project pipeline to those backed by public grants or advance purchase agreements rather than conventional project finance. By comparison, renewable energy developers can look to the Renewable Energy Directive and generally infer the capacity need, the implementation timeline, and the compliance obligation to meet the EU’s renewable energy targets. A permanent CDR developer cannot yet do the equivalent from the existing target architecture.

The NZIA highlights how permanent CDR is being integrated into industrial decarbonisation policy primarily through shared infrastructure needs, rather than through dedicated deployment or demand frameworks. This framing means the policy signal for permanent CDR currently comes from storage capacity targets rather than from removal volume targets, which shapes how projects are evaluated and financed.

Temporary CDR currently operates within a more developed policy framework through LULUCF, where binding national targets establish clearer links between policy, reporting, and land-sector performance. However, accountability under the framework sits primarily with Member States, while delivery depends on landowners and land managers, who often face limited direct incentives to increase removals or maintain land carbon sinks. The LULUCF’s current national target structure does not address this gap between where policy accountability sits and where behavioural change is needed.

The EU’s post-2030 climate policy framework, alongside the 2026 ETS review, will shape how removals are integrated into the EU climate architecture and whether clearer long-term demand signals emerge for both permanent and temporary CDR.

What is the standards and enablers stage?

This stage covers the regulatory and physical foundations of CDR deployment. It includes (1) the conditions under which projects are developed and permitted, (2) infrastructure such as pipelines, transport networks, and storage sites that enables certain removal methods to operate at scale, and (3) the standards governing how CO₂ is defined, measured, and transported. Together, these form the enabling conditions that determine whether CDR projects can be developed and whether they can connect to the wider carbon management system.

Requirements at this stage differ depending on the type of CDR. Because permanent approaches require capture, transport, and geological storage that are not yet available at scale across most of Europe, infrastructure remains the key factor in shaping where and how these projects develop.

How are standards and enablers addressed in EU policy?

In the EU, differences between temporary and permanent CDR are reflected in a combination of certification, infrastructure, and sectoral legislation, which together shape how CDR projects are developed and deployed.

The Carbon Removal and Carbon Farming Regulation (CRCF) is the entry point for any CDR project seeking certification. To qualify, an activity must demonstrate net removal benefit, long-term storage, sustainability, additionality, and be based in EU territory. The CRCF distinguishes between carbon farming, carbon storage in products and materials, and permanent carbon storage, each with its own requirements. Because certification is a prerequisite for market access, the CRCF’s eligibility rules are the primary regulatory filter at this stage. The first delegated act on certification methodologies for permanent carbon removals was adopted in early 2026, with additional methodologies for other CDR types under development.

For projects pursuing geological storage, including DACCS and BECCS, the CCS Directive adds a further regulatory layer. Operators must obtain a storage permit, demonstrate financial security before injection begins, and maintain continuous site monitoring, with liability remaining for a minimum of 20 years post-closure before transferring to the Member State. However, it was designed with industrial CCS in mind, and questions remain about whether its provisions are fully adapted to the characteristics of CDR projects.

The transport of CO₂ from removal projects to storage sites will be governed by the CO₂ Market and Infrastructure Framework, an emerging EU legislative initiative to build a coordinated system of CO₂ transport and storage infrastructure, including pipelines, shipping networks, and geological storage sites. Its design will play an important role in determining whether CDR projects can access this infrastructure at scale and, consequently, whether they can operate and expand. The framework is also expected to play an important role in determining whether CO₂ of different origins – fossil, biogenic, and atmospheric – can access shared infrastructure on equal terms, and what interoperability and CO₂ stream purity standards will apply.

International agreements heavily shape how cross-border CO₂ transport and storage infrastructure develops. Globally, the London Protocol, which prohibits marine dumping unless explicitly permitted, sets the rules for transboundary transport and offshore geological storage. Regionally, conventions like OSPAR build on this by setting specific environmental conditions for offshore storage in distinct sea basins, such as the North-East Atlantic.

For biomass-based removal methods, the Renewable Energy Directive (RED) adds a further layer of conditions. Under these rules, biomass must meet strict biodiversity standards and is actively steered away from low-value energy uses toward higher-value applications. These rules can affect which biomass sources BECCS projects can access and, indirectly, their cost. The RED’s renewable energy targets also support the expansion of low-carbon energy supply, which energy-intensive methods such as DACCS rely on to deliver net removals. However, although BECCS removes CO₂ from the atmosphere, these negative emissions are not currently counted toward key EU climate targets under the EU ETS, ESR, or LULUCF. This omission creates a disconnect between support for deployment infrastructure and recognition of removals within the EU’s core climate accounting frameworks.

Implications for CDR

Standards and enablers shape CDR deployment through three interacting conditions: permitting, infrastructure access, and technical standards.

If CCS Directive storage permits take several years to secure and the CO₂ infrastructure framework is still in legislative development, early-mover projects face a sequencing problem: certification under the CRCF may be achievable before the physical infrastructure to operate is in place. This gap between regulatory readiness and infrastructure readiness is a practical constraint on deployment timelines.

Permanent CDR projects depend on infrastructure that is not yet available at scale across most of Europe. Access to CO₂ transport networks and geological storage is therefore likely to shape where projects can develop and which Member States become early deployment hubs. The CO₂ stream purity and interoperability standards that emerge from the CO₂ Market and Infrastructure Framework will be particularly consequential. If atmospheric or biogenic CO₂ cannot be transported through the same networks as fossil CO₂, permanent CDR methods may face a structural infrastructure barrier that is independent of their certification status.

Project developers must navigate multiple overlapping frameworks covering certification, permitting, storage regulation, infrastructure access, sustainability criteria, and energy supply. In practice, a BECCS developer seeking CRCF certification must simultaneously satisfy the CRCF’s additionality requirements, the CCS Directive’s storage permit and liability provisions, RED sustainability criteria for biomass sourcing, and secure access to CO₂ transport infrastructure that does not yet exist in most Member States. No single regulatory pathway coordinates these requirements, which means CDR deployment depends not on any one policy but on how multiple frameworks interact.

What is the MRV and certification stage?

This stage covers the systems that determine how carbon removals are measured, verified, and translated into certified units. It includes the methodologies, monitoring processes, and verification standards that underpin the credibility of CDR across the value chain. In practice, MRV is a prerequisite for market participation, since without robust measurement and verification, removals cannot be certified, traded, or used to support climate claims.

Policy sets the requirements that MRV systems must meet, and those requirements directly determine what projects must demonstrate to qualify for certification. If a methodology requires continuous monitoring of electricity inputs, as might apply to DACCS to verify that energy use is genuinely low-carbon, projects must invest in the systems needed to meet that standard. More demanding requirements increase the rigour and credibility of certified removals, but also raise participation costs, which can be prohibitive for smaller projects or land-based approaches with variable carbon outcomes. As a result, MRV requirements are not purely technical choices, they are policy choices with real consequences for which CDR methods can participate and at what scale.

How is MRV and certification addressed in EU policy?

The Carbon Removal and Carbon Farming Regulation is the foundation of the EU’s MRV framework. It sets methodology requirements, monitoring obligations, and third-party verification standards. It also establishes the basis for a Union Registry to track certified units and prevent double-counting, though its timeline and governance are still being defined. For permanent CDR, verification builds on established CCS monitoring techniques. For land-based methods, approaches are less mature, particularly for soil carbon, where measurement remains technically challenging and trade-offs between accuracy and cost have not been fully resolved.

The rules around climate claims in the EU are still developing. The proposed Green Claims Directive, which would have required companies to back up net-zero and carbon-neutrality claims, is no longer expected to proceed in its current form after the Commission signaled it would withdraw it.

MRV requirements also differ between temporary and permanent CDR. For land-based approaches, carbon storage can fluctuate over time due to environmental conditions and management practices, requiring monitoring systems that account for variability and reversal risk. For permanent CDR, measurement at the point of storage is more straightforward, but MRV systems must address the long-term integrity of storage and the conditions under which responsibility is maintained or transferred.

Implications for CDR

Methodologies for soil carbon remain less established than those for geological storage. As a result, land-based projects face a choice between waiting for methodologies to mature or certifying under approaches that may later be revised, creating uncertainty about the credibility of early certifications. Monitoring and certification requirements are also more resource-intensive for some land-based approaches, particularly where carbon outcomes vary over time and projects operate at smaller scale.

The narrowing of the CSRD’s scope means the pool of companies with a regulatory reason to understand and disclose their use of carbon credits has shrunk by roughly 80%. Combined with the Green Claims Directive not being taken forward, the EU currently has stronger rules for how removals are certified than for how buyers are required to account for them. This gap weakens the transparency infrastructure that would support informed demand for certified removals.

The CRCF Union Registry will play an important operational role in how certified removals are issued, tracked, and protected against double-counting, though its governance and interaction with different markets and reporting frameworks are still being developed.

Certification is currently the most developed part of the EU’s CDR architecture. However, certification alone is not sufficient to create a market. Its value depends on the strength of the demand-side and claims frameworks that receive what it certifies, and these remain less defined.

What is the market access and demand stage?

This stage covers how carbon removals generate revenue, including the mechanisms through which certified units are purchased and used. CDR projects depend on buyers – whether for compliance, voluntary commitments, or public procurement. Unlike other clean technologies, CDR produces a unit whose value depends on demand for carbon removal rather than a physical output such as electricity or heat.

In the EU, demand for CDR does not come from a single mechanism, but emerges from a combination of public funding, voluntary corporate action, and developing policy instruments. Understanding how demand is structured and for what purpose credits are purchased is important because different demand mechanisms create different incentives for different types of CDR.

How is market access and demand addressed in EU policy?

The EU ETS covers around 40% of EU greenhouse gas emissions and is the EU’s primary carbon pricing instrument. Carbon removals are not currently integrated as a compliance instrument; as a result, the ETS does not generate structured demand for CDR. The 2026 ETS review is expected to consider potential approaches for recognising permanent biogenic removals within the system, making it an important moment for CDR demand.

The EU Buyers’ Club, announced under the EU Bioeconomy Strategy in 2025, is an emerging mechanism intended to aggregate private-sector demand for CRCF-certified removals and carbon farming credits. By linking corporate demand to EU certification standards, it aims to provide more stable revenue signals for project developers and support early deployment. The initiative remains at an early stage, with its governance and operational model still under development.

In practice, voluntary carbon markets are decentralised markets where private actors voluntarily buy and sell carbon credits and remain the primary source of demand for CDR in Europe. Corporate demand within these markets operates across three distinct mechanisms, each creating different incentives for different types of CDR. Offsetting involves the purchase of credits to compensate for emissions outside a company’s value chain, typically to support a carbon-neutrality or net-zero claim. Insetting involves companies investing in carbon removal or emissions reduction activities within their own value or supply chain while counting the benefit against their own footprint without purchasing a tradeable credit in the same way. Contribution claims involve companies purchasing high-quality credits not to offset specific emissions but to contribute to broader decarbonisation, without making a direct neutralisation claim.

Demand within voluntary markets is currently concentrated in lower-cost, land-based removals supported by established methodologies. These differ from permanent CDR in terms of storage duration, which influences how they can be used across the three demand mechanisms. Permanent CDR is generally more aligned with long-term net-zero objectives, particularly in offsetting and contribution claim contexts, but higher costs and limited supply currently constrain its uptake. The CRCF is intended in part to address this constraint by providing a common EU-wide quality benchmark, helping buyers distinguish rigorously certified removals from lower-integrity credits. Its interaction with existing voluntary standards and certification schemes is still being defined.

Implications for CDR

The three demand mechanisms – offsetting, insetting, and contribution claims – create different incentives for different CDR types. Offsetting and contribution claims favour permanent, high-durability removals where the like-for-like principle applies most directly. Insetting pulls toward land-based and supply-chain-adjacent approaches. A project developer’s commercial strategy therefore depends not only on what they can certify but on which demand mechanism their buyers are operating under.

The EU does not yet have a dedicated compliance market for carbon removals. In practice, demand for CDR currently depends primarily on voluntary purchasing, public funding, and emerging policy mechanisms rather than binding compliance obligations. If the 2026 ETS review does not establish a pathway for integrating permanent removals, the EU’s primary carbon pricing instrument will continue to generate no structured demand for CDR, leaving the sector reliant on voluntary purchasing and public funding beyond 2030.

The EU Buyers’ Club reflects an emerging shift toward coordinated demand creation for CRCF-certified removals, though its operational model and relationship with existing voluntary markets are still being developed.

Demand remains one of the least developed parts of the EU’s CDR framework. While certification, infrastructure planning, and public funding are advancing, mechanisms for generating stable, long-term demand for certified removals are still emerging. This is the gap that most directly affects whether CDR can transition into a self-sustaining, commercially viable market.

What is the finance and deployment stage?

This stage covers how carbon removal projects are financed and deployed at scale. It includes the funding instruments, investment conditions, and policy frameworks that translate targets and demand signals into capital. Finance and demand are closely linked, they develop in parallel and mutually de-risk one another. Stable demand signals improve the bankability of CDR projects; available financing enables projects to reach the scale at which they can generate credible supply for buyers.

CDR projects require significant upfront investment and are characterised by evolving revenue models and limited commercial track records. These factors influence how projects access financing and the types of capital that can be mobilised. Early deployment is currently supported by a combination of public funding and emerging market-based revenues, and the EU provides a range of relevant instruments, though none are designed specifically for CDR.

How is the finance and deployment stage addressed in EU policy?

The Innovation Fund is the EU’s primary instrument for supporting large-scale CDR, financed through EU ETS revenues and projected to provide around EUR 38 billion between 2020 and 2030. In practice, CDR projects access the Fund through its support for carbon capture and storage technologies, which has concentrated funding in approaches such as DACCS and BECCS. CDR is not explicitly listed as a targeted funding category, and projects are evaluated under CCS methodologies, which increases administrative complexity and limits the range of removal methods that can access support. The 2025 call has a budget of EUR 2.9 billion; applications closed 23 April 2026.

For land-based removals, the Common Agricultural Policy is the primary public instrument, with a budget of EUR 386.6 billion for 2023 to 2027. Eco-schemes can support carbon farming in principle, though only a minority of Member States are currently using them for CDR purposes, and several have no measures in place to increase soil carbon storage at all. Alignment with CRCF requirements, particularly around additionality, remains an area of ongoing development; current CAP provisions do not consistently meet CRCF additionality requirements, creating a risk of double-counting between CAP-supported practices and CRCF-certified activities.

Infrastructure financing is available through the Connecting Europe Facility and the TEN-E framework, whose 2022 revision included CO₂ transport and storage networks as eligible infrastructure for the first time, opening a pathway for EU co-funding of cross-border CO₂ pipelines. Research and innovation support is provided through Horizon Europe, with a budget of EUR 95.5 billion for 2021 to 2027. Direct CDR funding has been limited and often indirect, though the Strategic Plan 2025–2027 highlights the need for more targeted support and a portfolio approach across all CDR methods and technology readiness levels.

The Industrial Decarbonisation Bank (IDB), announced under the Clean Industrial Deal, is in an early design phase and is expected to support low-carbon technologies including carbon management. If its financing instruments are designed to address the commercialisation challenges facing CDR, it could become an important source of support for permanent removals.

Implications for CDR

One of the key gaps sits in the middle of the deployment journey, where technologies are ready to scale but not yet generating the revenue certainty, offtake agreements, and bankability that private investors require. Most EU public instruments reduce technology or capital expenditure risk but do not fully solve for this commercial viability gap, which is where CDR needs the most support.

Early CDR deployment in the EU continues to depend heavily on public funding, particularly for permanent removals that lack stable compliance demand and established financing models. In the absence of stable demand signals, public funding acts as a bridge rather than a long-term solution.

EU funding for CDR remains fragmented across industrial, agricultural, infrastructure, and research instruments, with different removal types accessing different parts of the policy landscape. In practice, permanent CDR is currently financed primarily through industrial decarbonisation and CCS-related instruments, while land-based removals are more closely linked to agricultural and land management funding.

Alignment between public funding mechanisms and CRCF certification requirements is still developing, particularly for land-based removals. In practice, a farmer receiving CAP eco-scheme payments for carbon farming practices may find those same practices do not qualify for CRCF certification if additionality requirements are not aligned, meaning the revenue streams cannot be stacked and the business case weakens.

The IDB’s design choices on eligible technologies, financing instruments, and alignment with CRCF certification will determine whether permanent CDR can access a dedicated public financing pathway or continues to compete within broader industrial decarbonisation and CCS funding streams.

Across the five stages, policy maturity differs significantly. Targets are politically established but remain operationally broad. Standards and enablers are advancing through the CRCF and emerging CO₂ infrastructure frameworks, though physical infrastructure remains limited across most of Europe. MRV and certification is the most institutionally mature part of the architecture, but its link to the claims layer has been significantly weakened. Market demand remains comparatively less developed than certification and infrastructure, and other stages. Mechanisms for generating stable, long-term demand for certified removals are still emerging, and no dedicated compliance market for CDR yet exists. Finance is more developed than demand but less coherent than certification, with multiple instruments providing relevant support that does not yet add up to a deployment strategy.

These gaps reflect how CDR is currently embedded within frameworks designed for other purposes – industrial CCS, agricultural policy, corporate disclosure, and carbon pricing. In practice, this current structure means removals may be certified under one framework and supported under another, while still lacking clear recognition or use across compliance systems, claims frameworks, and markets. A certified removal that cannot be used in the EU ETS, falls outside emerging EU demand mechanisms, and cannot support corporate claims has limited pathways to demand within the current EU policy framework. This keeps it strictly as an asset within the voluntary carbon market.

Two broad priorities emerge from this analysis. The first is disaggregation: the EU framework still does not consistently distinguish between emissions reductions, permanent removals, and temporary land-based removals across different parts of the climate architecture. The second is greater coherence: stronger alignment is needed between certification under the CRCF and its treatment across instruments such as the EU ETS, the EU Buyers’ Club, corporate disclosure rules, and future demand mechanisms.

Both permanent and temporary CDR are expected to contribute to the EU’s climate strategy, but they are governed through different policy pathways and face different deployment conditions. Developing a more consistent framework for CDR will depend not only on expanding individual policies, but on improving how different parts of the system interact and ensuring that the instruments governing each stage are designed to work together rather than in parallel.