At Carbon Capture Scotland, we are deeply committed to advancing innovative solutions that address the pressing challenge of climate change. As part of our mission, we recently contributed to the UK government’s consultation on integrating Greenhouse Gas Removals (GGRs) into the UK Emissions Trading Scheme (UK ETS). This blog post summarises our key insights and recommendations, which aim to ensure that the UK’s net zero goals are met through robust, market-driven approaches.

Aligning Policy with Innovation

The integration of GGRs into the UK ETS is a pivotal step in the UK’s journey towards net zero. We are pleased to see that the proposed policy design principles align closely with our own technologies and ambitions. The principles of maintaining market integrity, ensuring environmental robustness, and allowing for future flexibility are not only sensible but essential for the successful incorporation of GGRs into the UK’s climate strategy.

Our biogenic CO2 capture technology exemplifies the kind of innovation that these principles support. By delivering permanent and verifiable carbon removals, we ensure that the environmental benefits of our work are real, measurable, and enduring.

Balancing Decarbonisation and Growth

A critical part of the consultation focuses on how GGRs should be introduced into the existing cap-and-trade system of the UK ETS. We strongly advocate for maintaining the gross cap on emissions during this initial phase. This approach effectively balances the need to continue incentivising direct emission reductions while also fostering the growth of the GGR market. By preserving the overall cap, we signal strong demand for GGRs, thereby encouraging the investment necessary to scale these technologies.

Sustaining Long-Term Demand for GGRs

For the GGR market to thrive, there must be sustained demand. We propose several strategies to achieve this:

• Widening the UK ETS Scope: Expanding the scheme to cover additional sectors will naturally increase the demand for allowances, including those for GGRs.

• Implementing a GGR Mandate: Requiring that a specific percentage of emissions be offset through GGRs will create a stable, ongoing demand, similar to the mandate seen in the Sustainable Aviation Fuel sector.

• Encouraging Long-Term Contracts: Supporting long-term offtake agreements will provide financial stability for GGR projects, ensuring they remain viable over time.

Ensuring Integrity Through Ex-Post Issuance

We support the proposal that GGR allowances should be issued only after the carbon removal has been verified (ex-post). This ensures that the integrity of the UK ETS is upheld, as allowances would only be granted for removals that have been demonstrably achieved. This model aligns with best practices seen in other carbon markets and reduces financial risks for GGR developers by providing certainty around eligibility and compliance.

Facilitating Offtake Agreements

To support the scaling of GGR projects, we believe it is crucial for the UK ETS to facilitate long-term offtake agreements. These agreements are vital for providing the financial stability that GGR projects need to attract investment. We recommend the introduction of government-backed contracts and mechanisms within the UK ETS to support price discovery and transparent trading of GGR allowances.

Supporting Smaller Operators

Small-scale GGR operators often face significant challenges, including limited access to capital and complex regulatory environments. We propose tailored financial support mechanisms, simplified compliance processes, and the promotion of cooperative models to help these operators compete and thrive in the UK ETS. By lowering the barriers to entry, we can ensure a diverse and dynamic GGR market that includes contributions from operators of all sizes.

Differentiating GGR Allowances

Not all carbon removals are created equal. We advocate for differentiating GGR allowances from standard UK Emission Allowances (UKAs) to reflect their distinct environmental impact. This differentiation would enhance market transparency and create a premium market for higher-quality removals, thus incentivising the development of advanced GGR technologies.

The Role of the Authority

The UK government has a crucial role to play in facilitating the market for GGRs. We suggest several measures, including establishing dedicated auctions for GGR allowances, supporting smaller projects through financial and regulatory assistance, and fostering public-private partnerships to drive innovation and market growth. By actively shaping the market, the government can ensure that GGRs become an integral part of the UK’s climate strategy.

Focusing on Domestic Benefits

Awarding allowances primarily to UK-based and UK-owned GGR projects ensures that the economic and environmental benefits of these initiatives are retained within the country. This focus supports the growth of a strong domestic GGR industry, creates jobs, and drives technological innovation, all of which are vital for the UK’s long-term success in achieving net zero.

Ensuring Permanence and Accountability

To maintain the credibility of GGRs within the UK ETS, we support a framework that includes a minimum storage period, liability measures, and a mechanism to differentiate between types of carbon removals. These measures are essential for ensuring that GGRs deliver lasting environmental benefits and that project developers are held accountable for the long-term maintenance of carbon storage.

Conclusion

At Carbon Capture Scotland, we believe that integrating GGRs into the UK ETS is not just a regulatory challenge but an opportunity to lead the world in climate innovation. By supporting robust policy frameworks, differentiated market incentives, and strategic government interventions, the UK can ensure that GGRs play a pivotal role in meeting its climate goals. We are proud to contribute to this process and look forward to working with stakeholders across the sector to make net zero a reality.