CDR 2026 Policy Outlook

Welcome to the CDR Policy Scoop, where we unpack carbon removal policy in 13 minutes or less. My name is Sebastian Manhart. And I am Evel Tamme. Hi, Sebastian. How are you? Hi, Eva. Very good. How are you doing? Great. Thinking about the next year, right? We are getting to the end of 2025. We are talking now. It's 16th of December. So midway through December, I mean, there's not that much that will change our outlook, I would say, probably to 2026 over the next two weeks. So I'm...

Eager to get started. So as we did for our backwards looking episodes, when we talked about 2025, again, I was thinking about policy developments relevant to CDR. or also developments that are kind of governance-related and come up in a CDR context. And yeah, from my side, they're going to be more international and EU-focused. And you probably might have some insights also on country level. I don't know. I'm curious to find out.

Let's see how much matches and how much is difference. I think 2025, we had some things that were similar, but you had a lot of different aspects you brought in, which were some great success stories, I would say.

yeah i was surprised that we didn't have more overlap yeah i expected more overlap actually especially after having done the scoop for all of 25 with you but interestingly we still had very different perspectives so for next year if i kick us off One thing that I'm really excited about is to have the first publicly procured durable removal credit by government.

because we actually have never had that. And if anyone out there wants to correct me, please do. I've been asking around, but to my knowledge, no government has ever directly purchased a durable removal credit. The US wanted to.

They'd already selected their suppliers, but then that money got frozen. Canada wants to. I don't know when they're going to do it. Switzerland did something that some people say is procurement, but it really wasn't procurement. Denmark hasn't done procurement, although people point to it.

And Germany is going to do procurement. And again, the amount, 10, 15, 20 million, we'll see how much it is. But for me, just having kind of the German eagle stamped on a credit that they buy is going to be a big milestone for carbon removal. So they're going to be firsts? You think? I mean, who else? Well, we have the EU Buyers Club that is starting to take shape. Okay. And it depends. I mean, I would love that competition. Maybe by the end of 2026.

they'll get something done i mean who knows that's i know it's a optimistic view so what's the timeline for Germany. I mean, the money is allocated for 2026 and the department has all intentions to spend that money in 2026. So there's a lot to do because they need to design it. They need to run the tender. They need to.

then execute. Also from a legal perspective, there's a lot of questions, how does the government actually buy removals, right? It's not that clear, but they want to do all of that next year. I hope that the EU will beat them to it. I don't believe so. It is definitely going to be much harder to do it on the EU level compared to just one country, even if it is a large country. But why this is important, and again, this links to a lot of the conversations we've been having, right?

The governments won't buy any meaningful amounts of carbon removals now. They're going to be small amounts. So it's not about the amount, it's about what it means and about the trust that it conveys, right? And I think, especially in Germany, I talked to a lot of corporates in Germany, and there's a lot of corporates that either do things in the background or are standing on the sidelines. And I think it could actually make a big difference if the government...

And it's also across the CDR spectrum. It's not just direct air capture or something, right? And if they say, okay, no, actually, removals in general, we are behind. We think they're trustworthy. Here's 10 projects that we think pass the quality bar. That could hopefully unleash a couple of these corporates that are standing on the sidelines or not yet ready. Yeah. So I think it's going to be a big, big deal. Yeah.

Not on my list, but I guess it doesn't surprise me. But this is exactly what I was counting to hear from you, right? So for me, the first one would be...

the ETS integration of removals because in 2026, in the summer, we should see the commission proposal for how it will look like. There are diverging views in terms of how much demand ETS can... actually provides. I mean, if you look at Robert Hergland's posts or blog, he's not very sure that CBAM will deliver what it's supposed to, but not everyone. I think so, right? There are many that believe that CBAM actually will deliver and the price in the ETS keeps going up.

There's obviously the challenge with the price point. Removals are more expensive than currently the allowance price in the EU ETS. But then there's a question how we can combine things, stack different benefits and so on. But definitely it would be a milestone. And it's not the first compliance market that actually would be looking at having a role for Immobiles because some time ago I shared a report from ICAP.

National Carbon Action Partnership and they had mapped out quite a few other countries where removals play a role in their compliance market. But everyone is always looking at what the EU is doing with the EU ETS because this is a flagship emission trading system. globally, right? The role it has played over time on informing what others do has been monumental. Yes, the UK is a bit ahead when they look at their timing. And I think this is a situation where the EU is also going to look at

how the UK is approaching it. And, you know, there is this overall another looming development of linking the EU and UK ETSs. But I think having this signal that removals at least decks and backs to begin with, it seems to be. And BioJar. Seems not to be at the table for now. So these two would actually have access to a new source of demands.

And I'm really looking forward to seeing that proposal take shape. There's so many, so interesting discussions, intellectual discussions taking place on how to manage the whole governance aspect of it. Great conversations I've been part of and heard. about so i'm really looking forward to it i mean there's a couple of things you mentioned i share that i have that on my list as well of course it's a big one when it comes to integration of removals in other compliance markets

It's something that I want to look more into because it's often I hear a lot kind of, you know, but it's already integrated in X. New Zealand. Yeah, but at the end of the day, in many cases, it doesn't really. make a difference right like because these compliance markets are not as mature as the EUs and the price point is even significantly lower usually. Yes. So I think all eyes on the EU, but also the EU is, last time I looked, I mean, there's around 35 ETSs, I think.

And the EU is 86% in terms of the size of all of them. So there's a reason why we're really looking at the EU first. My main question, I'd love to get your take, is what impact will that have on investor confidence? Because we get this proposal in July. It's almost a given that it will have some role for carbon removals. That was also the climate law, right? Like it will have a role. But then it will take another one and a half, two years until we have...

you know, hopefully a final agreement. So what impact do you think it will actually already have next year when we have the draft proposal? Well, it will give the political signal. And I guess it will clarify which removals will have that access in the first round and which don't. And also that means that it helps to set expectations and figure out what are the... other sources of funding to use if you cannot tap into the ETS for now.

But it's a huge step because of the governance aspect of it as well, like understanding from the policy design perspective. how to do it in a way that it would safeguard ets that has the main role of reducing emissions but at the same time helping the ETS, you know, with some of the elements that it will start finding more challenging over time. And I think just seeing that blueprint is going to be very important.

It will not have immediate impact on new offtakes emerging, I guess. But that's also not what I'm expecting of it, even when I brought it up here right now. It's a challenge, right? Because we're most likely talking about 2031 onwards when it comes to implementation. I don't know, maybe there's going to be some kind of a pilot phase, a topic that keeps popping up, right, in the 2040 target international create context as well.

I don't know. If that is the case, maybe the EU could even beat the UK in terms of timing. But let's see. I'm not expecting immediate impacts on Dream Mobile's market. But I'm expecting a lot of clarity that is currently like everything is kind of up in the air and we don't know exactly what to expect. And to which extent do you think the EU's decision around the governance of it could influence what other countries are doing?

I think a lot. I mean, there are, historically I've been part of kind of explaining how the EU ETS works to third countries and helping them to. develop their own systems. And I do know that it's not as straightforward when you tell that, well, this didn't work and this works, do this. They might still do the other thing that didn't work because they choose to do so.

But given the whole exercise of looking at all these different options, and as we have this already very well operating system that has a real... signal in terms of carbon price. How do we bring in removals without threatening it? It is bound to be super interesting also as other schemes around the world mature. and get more meaningful carbon price in there that they would want to safeguard. So I do think it's going to be something that will be looked at a lot. The same way that...

the way the UK will do it will also get a lot of attention for sure. Yes, and I'm realizing I haven't... We could spend the half hour only talking about this, but I'll keep us moving because otherwise I have more questions that I want to ask you on the ETS thing, but let's keep moving. One thing that I have here, which you already mentioned, is the rise of international credits.

And this is something that, I mean, we paved the way this year, right? And this was actually a really interesting development because a year ago, if you'd asked me what role international credits will play in achieving the EU's climate targets, I probably would have said not much. And then things changed. And next year is going to be a really critical year for what that actually means, right? Because what we have now is kind of these 5% of 1990, but it's super vague.

Yesterday, I looked at the provisional decision that came out of the trial log. I got the text and it's still so vague. We don't even know how many. We don't even know how many in which year. We don't know what a pilot phase means. We don't know what high integrity and high quality means. There's so much open, which means that someone will have to decide that. And if they don't come out with... that it will be left to the commission i imagine to determine a lot of these details

which are more than just details. And do you think that happens in 2026? I think so. Like from what I understood, at least, I mean, the commission is going to work on an impact assessment around these international credits, right? And I expected that at least the volumes would be set. by the other parties and not just by the commission. But I mean, it's actually a question to you. If they don't specify at this point volumes, who will? The commission?

I don't know, they'll have to clarify. Okay, because right now they didn't. Who else would it be? But I mean, out of the trilog text, out of the decision text, if it's not clarified there. Yeah, if it's not clear there, then the question is, well, I haven't seen the final text, but the question is, what kind of other...

specific secondary legislation there will be that has a mandate in that text and where these details could be elaborated further. But this will be super important. Because there is no way that the random stakeholder says, go here. the calculations, these are your numbers, go ahead and implement. That's not how the EU legislation works. But this is why, I mean, I don't know how far we'll get next year, but I think a lot of important decisions will be made that will affect CDR.

In terms of what credits, what mechanisms, how many removals potentially, if at all, right? All these decisions, I think there will be progress next year. I'm not sure if we will get decisions on this. That's why I also didn't have it on my list in 2026, because even the pilot phase of 2031 onwards is still quite far away. So there is no immediate urgency to clarify this right now.

And you know, most of it, we're talking about 2036 to 2040. So there's still plenty of time to establish these rules, but let's see. Let's see. Definitely very interesting conversations that will now start popping up. Some great reports coming out, I'm sure, like looking at different options. Because we saw these all kinds of different numbers and options circulating already when the...

current 2040 targets proposal was being discussed and basically that will all continue. Just now we have something already locked in, but many other details are still yet to be determined. So what else is on your list? Well, coming back to the CRCF, as I did in my 2025 recap, 2026 should be the year when we see maybe the first certified credits under CRCF.

And that would be a huge milestone. I had that too. We will have methodologies already for permanent removals. And during 2026, I'm quite sure also for carbon farming. So we'll have at least six methodologies. by the time we have already the first creating schemes approved and so on. So again, I'm surprised that this process has... stayed and we are assuming that also in 2226 it really stays on the path, is not delayed, and we actually...

We'll probably end up, it just depends when the first project starts and how quickly the first credits could be certified and then issued, but it would be a milestone, right? I mean, it's a framework for the domestic voluntary government market in practice. But yeah, we call it the certification framework under which you can issue credits. So who will buy these credits? Yeah, who will?

I don't know, EU Buyers Club. Already in 2026. That would be the dream. Well, if you look at the official communication. The Commission is aiming to work on the Buyer's Club in the next six months of 2026. So by the summer, we should have, I would assume, a lot more clarity than we have today. And so why couldn't we?

by the end of May 26, already have some credit spots. What reputation do you think the CSCF will have among buyers? A positive in the sense that, oh, great, we want to get our hands on them or we don't want to touch it? I mean, the fact that it's the EU stamp of approval definitely has some credibility. But then again, we had our conversation with Lambert Schneider recently, who outlined how the EU's framework actually doesn't meet.

all the criteria under Paris Agreement creating mechanism, for example. So there is... There's still some question marks. And by the way, 2026, isn't it also a year when we'll have the first review of the CRCF? Oh yeah. Now that I think of it, I didn't put it on my list. Same, I should have. So while we are certifying the first credits that will hopefully then be issued as well.

we're already starting to review and improve. Interesting. True. No, I also had definitely the first CSEF units or credits on my list. I'm really curious how quickly the... appointment of the certification schemes or approval of the certification schemes will go. And if there will be projects ready to go through this process already, I think 2026 is a stretch. I can see that going into 2027. I think there are projects already eyeing this certification, and there are those ready to certify.

If everything is in place, I think it will start moving relatively quickly. The question is the demands, in my view, as well. The big question mark, because we don't have an obvious use case between now and 2031. And it's weird because the CSCF is still often referred to as this voluntary certification scheme, right? But then if we really think about it, but the main use case is really the ETS right now, right? But this is a really common...

Blueprint, if you look at the development of carbon markets in general, because now we have a lot of voluntary credits being used for compliance in many different settings. Think of Coursera, for example. Even under Article 6, you know, basically if the country is buying credits to achieve or be more ambitious in their own climate targets, it's essentially using...

these credits for compliance, and these credits could come from voluntary standards. Also, if you think about 6.2, right, it's mostly used these days. There are countries that have carbon taxes against which you can use voluntary market credits. I mean, this whole market is getting more and more conversed anyway. So yes, I always called it out, like, why are we calling it a voluntary...

market if in practice the obvious new use case we all know about is actually for compliance. But I think what is the main difference is that if it would be compliance markets removals ideally would be just within the scope of the ETS. But they're not within the scope. The whole point is that the removal credits will in the future

Like they can be used within the ATS, but you don't have to use them if you don't want to. So yeah, that's the way forward that was chosen. Or like will be chosen, we assume, right? In 2026. On a very different topic.

Do you see more Article 6.2 agreements for durable removals being struck next year? Or do you think the countries will kind of sit on the sidelines and just wait it out a little bit longer? I mean... I don't see that this is going to be something that has a lot of traction. Maybe just to showcase here and there something, but I don't see it going mainstream in any way under 6.2.

And under 6.4, we don't even have any methodologies for durable credits. So I don't think anything... Maybe there will be methodologies submitted and approved in 2026. I'm not sure. I also don't expect much to happen under the Peckham for dropper removals in 2026. Not on my list. I mean, in Europe, individual member states wouldn't do these agreements. This would happen at the European level, at the EU level, right?

Depends on which purpose. I mean, for carbon removal specifically in this case. I mean, Sweden has many deals under 6.2, right? Because one thing, the EU's NDC and its ambition, but then... Some countries, like you think about Sweden, Finland, have set their own climate targets that are more ambitious and they want to use Article 6 for that part.

where they kind of overachieve compared to what they would have to under the EU's target. Next one I have here is COP. And for me, COP, I've got high expectations for next year because I feel that this year... CDR didn't go mainstream and didn't kind of positively blow up at COP, but it made a lot of...

steps towards it. We had the great episode, right, with Chris Sherwood and with Chris Nidal on the CDR Pavilion, but also the action agenda on how CDR was implemented in different parts of the action agenda. of how, you know, by scientists, you and Rockstrom kind of mentioned it as a key element for COP. And I felt that, yeah, we were kind of on the edge, but didn't fully break through. But if I imagine kind of a continuation of where we were this year.

at cop i could imagine that next year maybe could go mainstream and so this is one thing that again just looking to the crystal ball i could imagine happening next year You're right in terms of the foundation that will be laid now over the next 12 months. It's more likely to get something kind of more meaningful or stronger for immobiles, but I wouldn't. assume in the formal negotiations but in the adjacent space of initiatives and elections. Let's see.

I didn't put it on my disk, by the way. At what point do you think CDR can make it kind of into final declarations, into kind of more high level? Well, I mentioned it, I think, also in our previous conversations here in the scoop. The thing is that... removals are implicitly included anyway. And I think for some people, specifically calling out removals here and there.

would then opening up that, well, why don't we also mention electrification? Why don't we mention, you know, different technologies? Because suddenly you start kind of cutting out the different ways of doing climate change mitigation and listing them.

don't list them doesn't mean that they're not there so the easiest is just mention mitigation and you know you know what are the solutions to actually achieve mitigation or to mitigate climate change and removals are you know in that list what else do you have in your end if we haven't made it through the whole list yet so i have one that you probably don't have but i think that's going to be also very important and that's the

EU CO2 transport and market package that will come out in the summer 2026. I think it's structurally very important, especially for engineered removal, especially for DAX and BECCS. Because eventually this will decide whether permanent removals can actually reach storage sites at scale and on fair terms. It's tricky. How so? Well, because...

Being able to transport your CO2 through somewhere to get to the storage is actually a complex process with very complex agreements between different parties. The fact that there is a pipeline doesn't necessarily mean that they can fit in your CO2 or that you even can put your CO2 in there. And if there is no pipeline, you are stuck with other options, potentially just shipping or tracking or rail. Having a framework that allows a fair access also for CO2 from CDR projects is huge.

What we're expecting by 2050 is that based on the JRC data, the EU would need between 15,000 to 19,000 kilometers of CO2 pipelines to rebuild out. That's big. Although the US in the last decade has been able to build out 3,000, so you can do quite a bit in one year as well. And we need an EU-wide network.

We need a harmonized way how this all will be implemented and run. So many complex decisions to be made on this because we have a lot of cross-border transport as well. You don't necessarily have... removal project next to a storage site. That's the problem.

everyone relies on the transportation yeah i'm following this discussion in germany yeah and they have these plans i mean there's no money yet for it but they have these plans of all these pipelines they want to build out and but my question to you is basically how does what This act that you're describing for next year that you're excited about, how does that link to what's happening at member state level when it comes to the build out of transport networks?

Well, some member states are already building out some of it, which is a bit of a challenge because then we may need to make sure that it's compatible with how it will be eventually built out on the EU level. But yeah. It's everything, how the whole market is run. There's just a lot of specific, also very technical details on the quality. Aesthetical specifications for the CO2, like what actually can be transported to where.

Because it's not only happening in one place in one country. It might have to cross one border, maybe more borders. So everything has to be compatible. And what's the name of this? There's going to be a legislative proposal. Is that it? Yes. Yes. And what's the name? CO2 transport and market package, I think. And when do we expect this? I think it's in the beginning of summer. Was it June or July 2026? Cool. Excellent. Wonderful. Exciting. One thing I notice, if I have...

remembered it right, is that almost everything, with the exception of COP we discussed, was Europe-focused right now. I had other things like SBTI final, ISO and the zero standards in my potential afterthought list, but... True. But for me, it was because I focused on the EU and we'd already talked about Article 6 to some extent also in the 2025.

But it's an interesting one because I thought, I did think about it. I was like, is there something specific? I mean, for example, in Japan, the GX ETS League is becoming compulsory in 2026, right? And that's great. That's big, big news. And I'm sure we're going to cover it, but it didn't make kind of my top five.

in terms of impact that I expect on CDR. But yeah, maybe next year we'll definitely make sure to give voices as well. And we've got episodes planned on Canada as well, right? California. So we'll make sure to cover those regions as well. Yeah. But yeah, this was great. A lot of exciting stuff for next year. A lot of things to work on. Yeah, 2026 will not be boring for your mobiles. Lots is happening. Great. Thanks, Ebe. This was fun. Thanks. Have a nice rest of the year. You too. Bye-bye. Bye.

Bye.