Europe’s Programme for Purchasing Permanent Carbon Removal

Carbon Dioxide Removal (CDR) is a public ecological restoration service that is enjoyed equally by the company undertaking the removal project and their indifferent neighbors across town. These types of public services are historically undersupported by markets and require policy interventions. Carbon removal is no different. To increase the public demand for CDR, the European Union is preparing to launch a purchasing programme for permanent carbon removal (EU PermCDR Purchasing Programme).*

“What we wanted to do here is to kick something off. We will not be able to solve everything with one programme. This is about how we can get a public-private purchasing programme to kick things off. This is about how we can get things started. This is about the trust of everyone, that we believe we need removals and that we need to invest into them. This is about creating a positive movement, getting together and getting this off the ground.” 

- Christian Holzleitner, DG Clima, European Commission 

The programme must be built to support the creation of a carbon removal sector capable of delivering the quantity of removals that Europe will need to reach net zero. Every part of the programme should be in service of that goal. Accordingly, The EU must design its purchasing programme to stand on its own. It should not assume co-financing from the private sector. That assumption risks creating stranded funds. Instead, the programme should lead with public commitment and allow private participation to follow. 

This also means maintaining a portfolio approach. Carbon removal is not a solved problem. We do not yet know which methods will prove most effective, have the lowest-cost, or be the most scalable over time. Public procurement must reflect that uncertainty. Funding should be distributed across many approaches, not just concentrated with the largest projects. To establish a healthy, diverse ecosystem, smaller developers and early-stage technology developers also need access to capital.

“We are moving from early research and development into actual projects. And those actual projects, in my mind, are what will make the difference between carbon removal being this esoteric concept into something that folks can actually understand, [the projects] can justify the scale of public expenditure and private, voluntary expenditure needed. We are moving out of the phase where tens of millions of dollars is sufficient, and into the phase where we are going to need hundreds of millions to billions of dollars to finance large-scale projects that ultimately will enable us to get gigatonne scale at the affordable price that we need.” 

- Noah Deich, RMI Fellow, Stripe Climate Fellow, former Deputy Assistant Secretary U.S. DOE Office of Fossil Energy and Carbon Management

The European Commission's workshop outlined potential models for an EU-led programme sized in the €2.5 to €6.2 billion range. This article offers a critical assessment of those options, based on a simple premise: the programme must be focused, achievable, and built to support future expansion. To align with the overarching aim of creating positive momentum, the purchasing programme should operate as simply as possible at the start. The programme should be based on public funding, built with the flexibility to evolve, and designed to catalyze broader participation over time. 

Key Focus for 2025-2030

Of the options proposed in the workshop (and the pre-read), the EU Removals Fund is the strongest starting point. It can be implemented relatively quickly and leverages existing institutional experience. Most importantly, it communicates public commitment. Developers and financial institutions will take cues from the presence of a stable public buyer. However, the size and scope of the fund matter; a small fund will send a small signal. 

After initiating the Removals Fund, the EU could work to establish a Centralised Procurement Agency during the 2020s. This body can run competitive tenders, pool demand across Member States, and streamline purchasing processes. It has the potential to introduce administrative efficiency and as the market grows, this body can manage carbon removal procurement at greater scales. Importantly, the learnings from the purchases made by the Removals Fund can directly inform the design of the Centralised Procurement Agency. 

Other Proposed Programme Designs

Included in the “Policy Blueprint” is the EU-Coordinated Buyers’ Club, which would aggregate voluntary demand from companies and other private buyers under an EU-coordinated umbrella. The European Commission proposes covering operating costs and providing seed capital to get started. While this has attracted some attention, and could draw in private capital, it could distract from the central need: sustained public funding. Core funding should come from the EU budget and Member State contributions. Voluntary private finance should be welcomed but not relied upon. Eventually, the polluter pays principle should apply. That means establishing obligations on companies to support removals, whether through integration into the ETS, fuel standards, or dedicated levies. Until that happens, public budgets must lead. 

Another risk of establishing the Buyers’ Club is the drain on the bandwidth of the programme administrators. It is possible to achieve the overarching goals of the Buyers’ Club without building the specific programme. The U.S. Department of Energy’s CDR Purchase Pilot provides a useful precedent. After selecting a group of semifinalists, the program attracted private buyers (including commitments from Meta and Google). There was no need to facilitate a Buyer’s Club because the signal from government action was sufficient to provide confidence to the private sector. Europe should follow this example. Make the public commitment first and allow private participation to naturally grow from there. Purchasing programmes are not trivial to operate and implement. Including a separate non-purchasing workstream into the programme can stretch the resources of the implementing entity to their limits. 

Finally, an EU-focused Buyers Club risks diverting CDR demand away from the Global South. The EU purchasing programme is determined to include only removals within the Union. If CDR buyers who may otherwise have supported a removals project contributing to co-benefits and economic development in the Global South are instead diverted to the EU, that would represent a loss. 

Purchasing Methods

In the near-term, the mechanism used by the EU to procure CDR credits should (1) allow the programme operators to look beyond cost per credit as a selection criterion and (2) increase market certainty to the greatest extent possible. In the immediate term, the EU should prioritize competitive project-based tendering that not only rewards contracts based on cost per tonne. The funds should be split across existing pathways and the programme can include a catch-all (none-of-the-above) category for projects that may not neatly fit into existing taxonomies. The funding should be open to projects that have reached a sufficient technology readiness level and that have successfully mitigated delivery risk. These contracts should provide bankability by extending beyond 2030, which is essential for unlocking finance. 

Simultaneously, to provide financing to earlier-stage projects, the fund can utilize a prize mechanism (payment for work that has already been performed) to purchase 100 tons (or a similar quantity) from any company’s first deployed project, at a pre-determined price. This prize mechanism should be pathway agnostic and award any supplier that satisfies the pre-determined competition requirements. The benefit to this model is that it can serve as a consumer signal similar to the Energy Star program. Projects that have sold credits to the EU’s procurement programme will have demonstrated that they are a trustworthy vendor of CDR credits and that their project meets the EU’s quality standards.

Independent of the method, governance must be publicly anchored. This includes oversight from EU institutions, transparent decision-making, and alignment with broader climate policy goals. The execution of the programme, however, should be delegated. The implementing entity must be able to act swiftly, run procurement rounds efficiently, and adapt programmes to best suit the needs of the industry. Promulgating prescriptive purchasing requirements (beyond baseline quality criteria for CDR credits) risks handcuffing the programme. 

Beyond 2025-2030

The integration of carbon removal into the EU ETS will likely happen in 2031. A proposal for that integration is expected from the EU Commission next year. However, allowing CDR into the ETS doesn't mean there will be a strong immediate demand, as emission allowances may still be cheaper. Here, an instrument like contracts for differences (CfD) could be implemented to ensure that CDR is scaled up appropriately.

The idea of the EU building towards a Carbon Central Bank is also promising. Modeled on the European Central Bank, this institution could manage long-term procurement and oversee integration with carbon markets. It would represent a meaningful commitment to treating removals as a core pillar of the EU’s climate strategy. This however, ties into the question of how to best integrate removals into the EU ETS, and there are other options too and many complex considerations are yet to be made. 

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The EU cannot wait for this market to mature on its own. Every delay increases the cost and risk of missing its climate targets. Carbon removal will only be available at scale if we invest in it now. The EU should move forward with a clear programme design. Establish the Removals Fund to tender bankable contracts and award prizes to qualifying projects, as soon as possible. Lay the groundwork for future programmes and institutions and provide the programme flexibility to mature along with the CDR market. This is how we transition from scattered pilot projects to a bankable industry and from disparate voluntary commitments to structured, rules-based markets. 

 *Ideally, the EU’s PermCDR Purchasing Programme will be long-lived and provide decadal demand for carbon removal. However, the focus of the workshop held May 21, 2025 was to design a programme that will function in the short-term (2025-2030).