UK Establishes Policy for Engineered Carbon Removal Market through ETS and CfD Contracts
The UK is launching a dual-policy framework to establish a market for engineered Greenhouse Gas Removals (GGRs) as part of its strategy to achieve net-zero emissions by 2050. This approach involves integrating GGRs into the UK Emissions Trading Scheme and introducing Contracts for Difference to ensure revenue certainty for project developers. The framework, which focuses on highly durable carbon removals, aims to attract private investment and is expected to be operational by 2029.
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The UK is implementing a dual-policy framework to create a domestic market for engineered Greenhouse Gas Removals (GGRs) to meet its net-zero target by 2050. This strategy includes integrating GGRs into the UK Emissions Trading Scheme (ETS) and establishing a new business model based on Contracts for Difference (CfD) to secure investment and drive deployment.
The integration will replace traditional emissions allowances with GGR allowances without increasing the overall emissions cap. Only highly durable removals, monitored for a minimum storage period of 200 years, will qualify.
The GGR Business Model guarantees project developers a strike price for each tonne of carbon dioxide removed, ensuring revenue certainty. The framework aims to create a robust negative emissions market and attract private investment, with legislation targeted for 2028 and operational by 2029.
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