Researcher pushes for European 'Carbon Central Bank' for negative emissions market

Europe should establish a so-called “Carbon Central Bank” – an institution to oversee a market mechanism to remove carbon emissions from the atmosphere – to reach climate targets, Ottmar Edenhofer, director at the research institutes MCC and PIK, proposed. At the heart of this mechanism would be so-called clean-up certificates, which would grant holders the right to emit a tonne of CO2 while obliging them to remove one tonne at a specific future date.

This central carbon bank would build on the European Emissions Trading System (EU ETS), which sets a decreasing limit on emissions. "The addition of clean-up certificates makes the green transition more flexible and cheaper," MCC wrote in a press release. Even when ETS permits become scarcer, emissions would not have to be avoided at all costs if it would be more cost-effective to emit now and remove later. "The price of these certificates would reflect expected future cost reductions in carbon removal technologies," the MCC added.

Implementation by a strong, credible authority – such as a future European Carbon Central Bank – would prevent the mechanism from failing due to "physical inadequacies or corporate tricks," according to Edenhofer. "CO2 removal is already no longer a niche technology – and it is becoming the third missing pillar in global climate protection alongside emission avoidance and climate adaptation," Edenhofer said.

There is strong consensus that carbon removals will be needed to reach climate neutrality and to deal with emissions that are very hard to avoid. In addition, they could be used to remove CO2 already in the atmosphere to reach net-negative emissions and eventually reverse the global temperature rise. The European Union has already begun to look beyond pure CO2 reduction to tackle the large share of hard-to-abate greenhouse gas emissions. Getting to a net zero economy means the EU will have to capture emissions from certain industrial processes, store them underground and tackle residual emissions in livestock farming by removing an equivalent amount from the atmosphere. The European Commission presented first proposals in its EU industrial carbon management strategy earlier this year. Germany is currently developing a long-term strategy for net-negative emissions.