Carbon credits in Europe: from the ETS to the new framework for certifying removals

1. Differentiated markets, converging rules

• EU ETS (Directive 2003/87/EC, recast 2023): emission allowances (EUAs) for < 15,000 industrial installations, aviation and, from 2024, maritime transport.

• Voluntary market: ex-ETS credits, now subject to the CRCF's ‘high integrity’ criteria and the CSRD disclosure requirements. Both systems prohibit double counting and converge on digital MRV methodologies.

2. ‘Fit for 55’ review of the ETS

The 2023 legislative package raises the cap-and-trade cut to 62% in 2030 and activates the CBAM (border adjustment mechanism) for cement, aluminium, fertilisers, iron-steel and electricity. It expands the Market Stability Reserve, increasing structural scarcity and maintaining the EUA price above €60 t-CO₂.

3. CRCF: Regulation (EU) 2024/3012

Establishes Q-A-L-S (Quantification, Additionality, Long-term storage, Sustainability) criteria to certify forest, agronomic and technological removals (BECCS, DACCS). Requires:

• External audit and uncertainty threshold ≤ 10%.

• Unified registry of removed credits to avoid overlap with the ETS.

• Minimum contribution of co-benefits (biodiversity or soil).

4. Transposition and national frameworks

• Spain: Royal Decree 214/2025 creates a Register of Absorption Projects and a 10% reversal buffer.

• France: Label Bas-Carbone 2022, integrable into CRCF.

• Germany: reform of the Bundeswaldgesetz for forestry credits and wood storage. Each Member State retains inspection powers but recognises CRCF certificates with ‘direct effect’.

5. Interaction with corporate disclosure

• CSRD (2023) requires details of credits used and their integrity; does not allow dubious offsets.

• SFDR (sustainable finance) requires funds to classify the quality of credits.

• The penalties under the Green Claims Directive target ‘greenwashing’ and allow fines of up to 4% of annual turnover.

6. Critical challenges and the 2030 horizon

(i) Volatility: absence of a ‘floor price’ in the voluntary market; forward contracts and reversal insurance are traded.

(ii) Permanence: reversal due to fires and climate risks drives buffers of ≥ 10% and parametric policies.

(iii) Global convergence: Article 6 of the Paris Agreement will require accounting consistency; the EU plans to link CRCFs with International Carbon Units by 2028.

Conclusion

The European regulations combine the rigour of the ETS with the new CRCF to create a carbon credit market that is more transparent, homogeneous and aligned with the 2050 climate neutrality target, while strengthening the confidence of companies and investors and setting a global standard of integrity.

Sustainability and biodiversity