Commentary: EU's carbon removal framework allows double counting of emission reductions; practice could discourage companies from making real emissions cuts and risk reducing efficacy of climate action

Motivated by a desire to keep down the cost of achieving its climate targets, the EU has failed to rule out the double counting of emissions reductions under its Carbon Removals Certification Framework. By so doing it is undermining established standards and its own policies.

With the adoption of the Carbon Removals Certification Framework, the EU is aiming to develop its own rules for creating tradeable units or credits for emissions reductions, short-term carbon storage and permanent carbon removals that are meant to raise the bar higher than voluntary carbon market standards.

This endeavour has, so far, largely failed to deliver on its aspirations.

Moreover, on at least one crucial issue, the EU does not seem ready to even match the level of rigour exercised by existing voluntary carbon market (VCM) players. Motivated by a desire by the European institutions to lower the cost of achieving the EUs climate targets, and thereby providing companies with a licence to delay real emissions cuts, the EU has so far failed to adopt clear rules requiring that if companies count a removal unit towards their own voluntary climate targets, then that same removal unit cannot also be counted by the country where it is generated.

One unit=one target or claim. It should be simple. In fact, Gold Standard, the second largest standard issuing carbon credits (including for removals) on the VCM, has for years adopted a position that units should not be used towards emission reduction targets, including a corporate target, if the underlying reduction or removal is already being counted by the country where it takes place.

This principle is reflected in the rules for “corresponding adjustments” established under the carbon market rules of the Paris Agreement, aka “Article 6”. These rules require that countries do not count any emission reductions or removals towards their targets if they authorise their use by others, including another country, an airline under the UN’s CORSIA offsetting scheme, or a company.

Mitigating factors

In the case of units being used by companies on a voluntary basis for non-offsetting purposes, a UNFCCC decision at COP27 came as close as possible in the UNFCCC context to regulating this issue, by creating a “mitigation contribution” unit. This is code for a unit which companies can use to advertise that they are “contributing” to host country efforts, but which should not be used to offset the buyer’s own emissions because it is already being counted by the seller country.

Despite the example set by the Article 6 rules, the EU failed to rule out counting any removals or emission reductions sold to companies under the CRCF towards the EU’s nationally determined contributions (NDC) target as well.

This leaves the possibility open for double counting, with all the problems this causes. If companies buy CRCF units and use these to meet a mitigation target, to make a climate claim inside or outside the EU, or to “compensate” for their residual emissions, then the country selling this unit should correct its own greenhouse gas accounting to make sure that it does not also count the same unit. This is what the UN calls “applying a corresponding adjustment”.

Dead letter

The CRCF deal does stipulate that units “should not be used by more than one legal or natural person at any point in time”, but this is open to interpretation, with legal experts consulted by CMW indicating that member states would not be considered “legal or natural” people. Tellingly, other parts of the CRCF cover “natural or legal persons or public entities”. The intentional omission of the latter from the double counting language is deeply troubling.

Elsewhere, double counting between EU countries and third countries is explicitly tackled, but corporate targets and claims are not mentioned there at all. The integration of corresponding adjustments is left hanging for a future revision in 2026 – but even then it is kept optional and dependent on developments in international negotiations on Article 6. EU policymakers purposely did not demand corresponding adjustments in the CRCF framework, even if some negotiators called for it. The weak compromise language shows that some negotiators from EU institutions actively support double counting.

Additional problems

At the UN, the EU has made it a priority in international carbon market negotiations to emphasise the importance of additionality. If someone buys a carbon credit, there must be a very high likelihood that this purchase delivers an extra tonne of CO2 reduction or removal that would not otherwise have occurred. This position continues to be a stated priority of the EU to this day.

Double claiming, in fact, is extremely similar to the problem of non-additionality. That is because double claiming a reduction/removal unit risks displacing climate action instead of adding to it.

Take company X buying a removal unit in France. Company X claims that this unit has enabled the additional capture and long-term storage of carbon dioxide, and hence contributes to its climate mitigation target. However, France is also counting the unit, and it ends up contributing to the EU’s overall NDC goal. If you extrapolate, no longer focusing on a single tonne but on millions of tonnes, which is the goal of the CRCF, the purchase of removal units by companies now leads to several million tonnes being double counted towards EU and corporate climate goals.

As a result, and given that target setting is often the result of delicate political negotiations, it is credible that the EU, i.e. its member states, decide to not adopt other climate policies that might have been needed, because they have already met their target, thanks to these corporate investments.

Cheap deals

While this might be the implied goal of the EU, it is clearly not how company X intended it, and it is not how company X communicates on its purchases of removal units and target achievement. If company X ends up replacing action the EU would have otherwise undertaken, then its claim to have financed additional removals isn’t credible.

This problem is exacerbated by the EU being a rich bloc that should be taking robust and ambitious climate action without having its cake and eating it too by conveniently allowing double-counting when it suits its needs for a cheap deal. The CRCF has also set the EU on course to compete with climate projects in cash-strapped developing countries.

Scrutiny begins at home

Double claiming can lead to the exact same outcome as the purchase of non-additional carbon credits under the Kyoto Protocol. While the EU has fought hard to curb the problem of non-additionality under the CDM, it does not seem to be ready to do the same at home.

Finally, let there be no mistake: incipient efforts to rebrand “double claiming” as “co-claiming” (including under the CRCF) constitute a feeble attempt to mask the underlying issue. Co-claiming is double-claiming, unless there are clear rules in place to, for example, share benefits whereby a buyer company can claim 50% of the removals it purchases, and the other 50% gets counted by the country where the removals are generated.

If the percentages add up to more than 100%, it’s not co-claiming, it’s double claiming, which is double counting, and this undermines climate action and damages the credibility of the EU at the UNFCCC.  Even though there was strong opposition among many policymakers in the CRCF negotiations, it wasn’t enough. The EU is now supporting this practice at home in an unambiguous surrender of leadership and responsibility that will undermine global action to tackle the climate crisis.