Integrating carbon dioxide removals into emissions trading

Together with colleagues at the Grantham Research Institute, B-CCaS Director Luca Taschini has been exploring what the emerging carbon dioxide removals market implies for a live policy question many are working on: whether, when, and how removals should enter compliance carbon markets.

Using a consolidated dataset covering carbon dioxide removals across methods and geographies, Luca and colleagues show that delivery remains extremely limited, prices are still several multiples above UK and European Emissions Trading System allowance prices, and estimated learning rates are very low.

These facts matter directly for Emissions Trading System integration design, and the research is examining what follows from them: how to sequence integration in a way that preserves Emissions Trading System credibility while enabling scale. This includes the role of bridging instruments (like Carbon Contracts for Difference), supply-securing arrangements (for example off-takes), and governance choices that determine whether the system can move from voluntary contracting to credible, scalable compliance use.

Read the policy report: Carbon dioxide removal prices and the challenge of emissions trading system integration