Series of articles Carbon Management: How are captured emissions accounted for?

With the European climate neutrality targets for 2050 firmly in place, carbon management is moving into the focus of sustainable environmental practices. The challenge is not only to reduce emissions, but also to effectively manage unavoidable emissions. This requires the use of carbon capture technologies that enable either underground storage (Carbon Capture and Storage – CCS) or integration into a closed carbon cycle (Carbon Capture and Utilization – CCU). This series of articles provides an overview of carbon capture technologies, possible utilization of CO₂, storage methods, transportation options and political efforts in the context of carbon management.

Contents of the article series

Explanation of terms and basics
How are captured emissions accounted for?
How can CO₂ be captured?
CCU – How can CO₂ be utilised?
CCS – How can CO₂ be stored?
How can CO₂ be transported?
What framework conditions need to be considered?

Figure 1: The carbon cycle with identification of the balancing of CO2 emissions.

Negative emissions through CO₂removal

As soon as CO₂ is permanently removed from the atmosphere, it is called “net negative emissions”. On the one hand, this can be achieved by direct capture from the atmosphere with subsequent storage (DACCS). In addition, capture during combustion of biomass, for example in biomass power plants, with subsequent storage is considered negative emission, as the biomass has already bound CO₂ from the atmosphere during its growth. Sustainable land use methods, such as reforestation or carbon sequestration in the soil, also ensure CO₂ removal from the atmosphere, as long as the bound CO₂ does not escape back into the atmosphere [4].

For a total balance of CO₂ emissions, it is important to count only additional and long-term removed CO₂ amounts as negative emissions. For this purpose and to avoid double counting, CO₂ removal must be uniformly certified. The CO 2 certificates can then be purchased by companies to offset existing emissions. The trade in CO₂ certificates can therefore provide a monetary incentive for the removal of CO₂.

Certification of CO₂removal

There are various voluntary standards and certification programs, such as the Verified Carbon Standard (VCS) and the Gold Standard, which define criteria according to which CO₂ removals are verified and certified. Projects with CO₂ removal that meet these standards can issue certificates that correspond to the removed CO₂ amounts [5].

To ensure a EU-wide uniform standard for the certification of CO₂ removals, the EU Commission is currently working on a draft for an EU certification framework. Here, the quality criteria for the certification of CO₂ amounts, the rules for verification, as well as the rules for the operation of the certification system are defined. In addition to BECCS and DACCS, CO₂ storage in long-lived products and CO₂ removal by climate-efficient agriculture are also taken into account [1]. To ensure clear benefits for the climate through CO₂ removal, quality characteristics are defined based on the storage duration of the measures. The geological storage of BECCS and DACCS must last at least several centuries, while for the binding of CO₂ in long-lived products a minimum storage duration of 35 years applies. As long-lived products, only wood products and building materials are initially eligible for certification, while the inclusion of other long-lived carbon storage products is weighed by the Commission as part of the review of the regulation [1]. For certification, the binding of CO₂ in long-lived products must be monitored throughout the entire life cycle, including the end of its life. In the event of CO₂ release during the monitoring period, compensation must be made by storing an equivalent amount of CO₂. At the end of the monitoring period, the bound CO₂ is considered to be released into the atmosphere and the corresponding units are deleted in the certification register. Upon deletion of the certificate, the operator must pay a fine that corresponds to the carbon costs of the carbon amount released into the atmosphere. For CO₂ removal by BECCS and DACCS, permanent storage is assumed, so the validity of the certificate has no expiration date [1].

Markets for CO₂ certificates

There are two market segments for the trade in CO₂ certificates: The compliance market is based on binding climate protection targets of industrialized countries. The voluntary CO₂ market serves the voluntary compensation of greenhouse gas emissions.

Voluntary CO₂ markets are markets where actors such as companies, organizations or individuals can voluntarily buy or sell certificates for the compensation of greenhouse gas emissions. By compensating, the actor takes responsibility for his ecological footprint, which can help to achieve an environmentally friendly image, competitive advantage and achievement of its own climate goals. The CO₂ certificates are usually transferred over-the-counter via service providers such as atmosfair, myclimate or Primaklima. The voluntary purchase of CO₂ certificates cannot, however, compensate for emissions for the achievement of mandatory climate protection targets such as the Paris Agreement.

The most important example of a compliance market is the European Union Emissions Trading (EU-ETS). This covers emissions from the energy, industry and aviation sectors, for which a limited number of emission certificates (emission quantities) are issued. As shown in the upper graph in Figure 2, the number of issued emission certificates is reduced annually until no certificates are issued in 2050 [6]. In addition, the allocation of free emissions for the emission-intensive industry will be reduced from 2026 and abolished by 2034 [7]. Especially for emission-intensive industries, these decisions increase the urgency for emission reduction. In addition to energy efficiency measures, electrification and the use of climate-neutral energy sources, CO₂ capture at the site can be an important contribution.

Figure 2: Maximum number of CO2 certificates issued in the EU-ETS until 2050 (top), the reduction in CO2 certificates issued free of charge (middle) and the CO2 price in the EU-ETS (bottom) [6] [7].

CO₂ emissions that are captured at the industrial site “for the purpose of transport and geological storage” [2] (CCS) are eligible in the EU-ETS. The emission certificates that were allocated to the company (i.e. those that they are entitled to, but were avoided by CO₂ capture) can therefore be sold and thus offer a financial incentive for CCS technologies [3]. Here, both the capture, the transport, and the storage are subject to strict monitoring requirements to identify possible leaks. The capture of CO₂ of fossil origin with subsequent long-term geological storage are therefore considered neutral emissions in the current legal framework of the EU-ETS, provided that no leaks occur. Emissions of biogenic origin are rated with the emission factor 0 in the calculation and are therefore also accounted for neutrally.

The planned EU certification for negative emissions, for example for the storage of captured biogenic CO₂ (BECCS), is intended to provide a monetary incentive for additional CO₂ removal. The certificates can then be sold on the voluntary CO₂ market. However, there is currently no provision for the integration of the certified CO₂ removal into the ETS directive.

More Information

Literature

[1] Bericht über den Vorschlag für eine Verordnung des Europäischen Parlaments und des Rates zur Schaffung eines Unionsrahmens für die Zertifizierung von CO2- Entnahmen (Bericht EU-Zertifizierung von CO2- Entnahmen). Ausgefertigt am 2023-11-03; Straßburg: Europäisches Parlament, 2023.

[2] Gesetz über den Handel mit Berechtigungen zur Emission von Treibhausgasen (Treibhausgas-Emissionshandelsgesetz – TEHG). Ausgefertigt am 2011-07-21, Version vom 2021-08-10; Berlin: Bundesrepublik Deutschland, 2021.

[3] Altrock, Martin: Rechtliche Rahmenbedingungen für Carbon Capture and Storage (CCS) in Deutschland – Gutachten. Brussels, Belgium: Bellona Europa AISBL, 2022.

[4] Erlach, Berit: Was sind negative Emissionen, und warum brauchen wir sie?. Akademienprojekt „Energiesysteme der Zukunft” (ESYS), 2022.

[5] Carbon Mechanisms. In https://www.carbon-mechanisms.de/grundlagen/grundlagen-der-kohlenstoffmaerkte . (Abruf am 2024-02-11), Berlin: Bundesministerium für Wirtschaft und Klimaschutz (BMWK), 2024.

[6] Der Europäische Emissionshandel. In https://www.umweltbundesamt.de/daten/klima/der-europaeische-emissionshandel#teilnehmer-prinzip-und-umsetzung-des-europaischen-emissionshandels . (Abruf am 2024-02-11), Dessau-Roßlau: Umweltbundesamt (UBA), 2023.

[7] Klimaschutz: Einigung über ehrgeizigeren EU-Emissionshandel (ETS). In https://www.europarl.europa.eu/news/de/press-room/20221212IPR64527/klimaschutz-einigung-uber-ehrgeizigeren-eu-emissionshandel-ets . (Abruf am 2024-02-11), Brüssel: Europäisches Parlament, 2022.