The EU is about to become the world’s biggest carbon credit buyer
For years, the loudest voice warning companies about carbon credits was Brussels. Now Brussels wants to buy up to €50 billion of them.
On 17 July, the European Commission published its proposal for the biggest overhaul of the EU ETS since it launched. The EU wants to become a direct buyer of permanent carbon removal between 2031 and 2040. If this passes, it changes what carbon credits are. They move from a voluntary purchase to a regulatory asset.
Most of you do not participate in the EU ETS, yet this still affects you. In this issue I will explain what is proposed, where it gets tricky, and why every corporate buyer of carbon credits should pay attention now.
What the Commission proposed
The ETS review covers a lot: a slower cap reduction after 2030, free allocation extended to 2038, and international credits allowed from 2036. But the removals piece is the structural change.
From 2031, the EU would integrate permanent carbon removal into the ETS through a central purchasing facility:
- The Commission sells 250Mt of additional allowances (EUAs) between 2031 and 2040, plus a 10Mt contingency.
- The proceeds are used to buy domestic permanent carbon removal units and retire them.
- Only BioCCS and DACCS qualify at the start, certified under the EU Carbon Removal Certification Framework (CRCF).
- A review by end of 2034 will assess whether other methods, including nature-based removals, can join.
To put it in context, the entire durable removals industry has delivered around 1.6Mt to date. The EU is proposing to buy up to 250Mt in a single decade, going to roughly 48Mt per year by 2040.
The caveat: the proposal commits to a budget, not a volume. The EU sells 250Mt of allowances and spends the proceeds on removals. Whether the full 250Mt materialises depends on removal costs coming down towards allowance prices over the decade. Keep that in mind for point 3 below.
What Brussels is really saying
The money is only half the story. The proposal also takes a clear position on two questions that sustainability teams keep circling in their net zero planning.
First: removals are not a plan B. Within the cap, the Commission treats a tonne of permanent removal as doing the same job as a tonne of reduction. That undercuts a common internal objection, that buying removals is a lesser substitute for cutting emissions. Cut first, yes. But what remains needs removing, and the EU now treats that as equally legitimate climate action.
Second: removals are not a niche instrument for a shortlist of “hard-to-abate” sectors. In the proposal they cover residual emissions across the whole system, regardless of who emits them. If your company will still have residual emissions in 2040, and every company will, this logic applies to you.
Both positions echo where corporate guidance was already heading, from the Oxford Principles to SBTi. The difference: it is now regulators saying it, not just standard setters.
Why this matters if you are not in the ETS
Here're three reasons why it affects your procurement strategy:
The takeaway for corporates: if permanent removals are part of your net zero plan, and under SBTi they will need to be, the era of buying them cheaply and late is closing. Early offtakes and multi-year contracts secure both volume and price before the EU enters the market.
Timeline at a glance
- 17 July 2026: Commission proposal published
- Q1 2027: legislative finalisation targeted, after Parliament and Council amendments
- 2029: implementation regulations expected
- 2031: EU removal purchases begin (BioCCS and DACCS only)
- End of 2034: review of additional methods, including nature-based removals
- 2036: international credits enter the ETS, capped and quality-controlled
Bottom line
The same EU that wrote Europe’s anti-greenwashing rules is preparing to become the biggest carbon removal buyer in the world.
It is hard to call something greenwashing when Brussels is investing in it. For quality removals, the legitimacy question is being settled at the highest level, and carbon removal is on its way to becoming compliance-grade infrastructure. That is excellent news for supply, and eventually for cost. But it also means the deepest-pocketed buyer in the world is entering a market that corporate buyers have had largely to themselves. The proposal will change in negotiation. The direction will not.
If you want to stress-test how this affects your portfolio timeline, reply to this email.
📺 More from me on YouTube:
What does the EU’s new carbon removal certification actually change for buyers?
The CRCF introduces certification, a buyers club, and a link to the ETS. We unpack which pieces are real today, which are still years away, and what it means for sourcing removals in Europe.
Microsoft BECCS, SBTi’s 2030 timeline, and the EU CRCF Days — up to speed on all three?
The three stories that mattered most, in one tight episode. We break down what each one signals for carbon buyers over the rest of 2026.
Sources
- EU Commission publishes EU ETS review proposal - ICAP
- EU review opens door to carbon removals in ETS, confirms international credit use - Fastmarkets
- EU proposes historic €50b ETS carbon removal compliance market - Carbon Herald
- EU carbon market reform: the summer’s big overhaul - Homaio
- What the EU ETS proposal means for carbon removal - Isometric
- The EU ETS proposal, explained - cdr.fyi