EU’s New Standard for Permanent Carbon Removals: A Turning Point for an Emerging Market?

In 2022, the Intergovernmental Panel on Climate Change (IPCC) concluded that deployment of CO2-removal technology was ‘unavoidable’ if net-zero goals were to be achieved. Despite this, companies investing in these technologies have continuously faced challenges such as high capital expenditure, market uncertainties and limited regulatory clarity on what actually constitutes a tonne of CO2 removed.

Recently, the EU took a decisive step to address these challenges and a step that might very well position the Union to become a global frontrunner in carbon removal.

With the adoption of the Carbon Removals and Carbon Farming (CRCF) regulation (Regulation (EU) 2024/3012), Implementing Regulation (EU) 2025/2358 and, as of 3 February 2026 the adoption of the first set of certification methodologies for selected carbon removal activities, the EU has established the first comprehensive voluntary framework designed to define, measure and verify permanent carbon removal activities.

This marks a pivot from climate policy ambition to operational reality as projects based on Direct Air Capture with Carbon Storage (DACCS), Biogenic Emissions Capture with Carbon Storage (BioCCS or BECCS) and Biochar Carbon Removal (BCR) will soon be eligible to begin applying for EU certification, creating a credible pathway for scaling of this emerging market.

So, what is new?

With the adoption of Regulation (EU) 2024/3012, the EU has created a voluntary Union certification framework for permanent carbon removals, carbon farming and carbon storage in products with the aim to facilitate and encourage the uptake of high-quality carbon removals and soil emission reductions while also ensuring environmental integrity and addressing regulatory uncertainty. With this regulation, the EU has established:

• The scope and quality criteria of eligible carbon activities
• A framework for verification and certification of carbon removals activities
• Rules for the functioning and recognition by the Commission of certification schemes
• The Union registry for carbon removals, carbon farming and carbon storage in products

The EU has since operationalised this framework through Implementing Regulation (EU) 2025/2358, which sets out technical and procedural rules for how the certification framework shall function in practice. The act addresses:

• Activity and monitoring plans
• Auditing processes and reporting obligations
• Rules for the operation and recognition of certification schemes
• Rules for the operation and certification of certification bodies
• The ruleset for certification registries and certification units

Now, with the adoption of the delegated act on 3 February 2026 regarding the first set of certification methodologies for permanent carbon removal activities, the Commission has established how the certifications schemes shall operate regarding the first three carbon capture technologies. 

With both framework and governance rules now in place, emitters, developers, and project owners using these three technologies may soon start applying for certification, allowing the first projects to be recognised under the framework.

To whom does this matter?

For investors and banks, the framework provides clear definitions and a verification ruleset that improves asset credibility and reduces uncertainty through increased transparency and comparability of different projects and standards.

For project developers, the framework has the potential to unlock new revenue streams from the sale of certified carbon removal units (CDRs), helping to offset a funding gap currently affecting technologies like DACCS, BioCCS and BCR.

For corporate buyers, the framework offers a credible system for the acquisition of certified units as well as higher integrity in ESG and net-zero claims.

In summary, the framework lays the foundation necessary for carbon removals to evolve from pilot projects into financeable, scalable infrastructure assets.

What to consider?

With EU at the helm, carbon removal projects are increasingly being framed as regulated infrastructure assets rather than just sustainability initiatives. While participation in the regime remains voluntary, the first set of certification methodologies has set out detailed regulations on:

• EU-backed quality criteria for carbon removals
• Long-term storage and permanence
• Liability mechanisms
• Sanctioning for non-conformity
• Monitoring and reporting obligations

These factors, among others, are expected to directly influence structuring, risk allocation, financing models and project bankability.

What do we think?

The EU-backed CRCF regulation is no hermit. It co-exists with additional and partially overlapping requirements from the CDR and VCM standards, and in particular from CDR buyers. With a few CDR buyers currently driving the market, CDR projects and emitters are aligning projects and supply chains to the CDR buyers’ requirements. The success of the CRCF regulation and the future EU registry will hinge on the CDR buyers accepting that the CRCF regulation certifies only high-quality credits and its effective co-existence with well-established voluntary carbon credit standards.

Banks and financial institutions require risk transparency and secure revenue streams (and perfected security) to project finance carbon removal projects. While the successful implementation of the CRCF will certainly provide some comfort to investors and financing partners, it’s only one piece of a bigger puzzle that emitters and project developers need to get in place to secure financing.

So, how can we help?

The carbon removal ecosystem stands at the intersection of climate regulation, infrastructure development, public funding, state aid, permitting and complex contractual frameworks. With our combined expertise in energy, infrastructure and public law, Poul Schmith is uniquely positioned to support market participants across the full lifecycle of carbon removal projects.

Our work in the energy transition enables us to assist market participants with matters ranging from how to navigate the regulatory requirements, the structuring and financing of carbon removal projects as well as addressing both subsidies, procurement and related commercial agreements.

As the CRCF framework is moving from rulemaking to real deployment, integrated legal and regulatory advice will become a critical enabler for projects reaching financial close.

Looking ahead

The EU’s voluntary certification framework is more than a technical regulatory development – it is a foundational step toward scaling a more credible, investable carbon removal market in Europe.

At Poul Schmith we are following these developments closely and are ready to assist stakeholders in navigating the new regulatory landscape.