Pricing it right: Accounting for non-permanent CCU while safeguarding the EU ETS

The document examines the challenges of accounting for fossil CO2 used in non-permanent products (like plastics and fuels) in the EU ETS. It compares a 'final emitter pays' (downstream) approach, which avoids double pricing but risks emissions leakage, against a 'capture installation pays' (upstream) approach, which is the current system but risks double pricing if MWI is included. The authors recommend including MWI in the ETS by 2028 and suggest specific safeguards for either accounting path to maintain environmental integrity.

• The 'final emitter pays' (downstream) approach avoids double pricing by placing the obligation to surrender allowances on the final emitter, but it introduces risks of emissions leakage where products are exported, landfilled, or used in applications outside the ETS scope.
• The 'capture installation pays' (upstream) approach is the current ETS framework and requires fewer regulatory changes, but it risks repeated pricing for products that are later incinerated at municipal waste incineration (MWI) facilities.
• Product export is identified as the largest route for emissions leakage for CCU-plastics, with an estimated 2.96 MtCO2 escaping the EU ETS by 2050.
• To mitigate double pricing in an upstream approach, the authors suggest a virtual system of Guarantees of Origin (GoO) certificates to track 'ETS exempt' fossil carbon in circulation.
• Without a cost pass-through mechanism, the final emitter pays approach may give CCU an advantage over carbon capture and storage (CCS) by incentivising capture installations to supply CO2 for utilisation to avoid storage costs.
• The authors recommend the inclusion of municipal waste incineration (MWI) in the EU ETS starting in 2028 to incentivise decarbonisation through carbon capture, recycling, and waste prevention.

APA

Vermeulen, H., Lockwood, T., & Lawaetz, R. (n.d.). Pricing it right: Accounting for non-permanent CCU while safeguarding the EU ETS. Clean Air Task Force. https://cdn.catf.us/wp-content/uploads/2025/07/08104318/accounting-non-permanent-ccu-safeguarding-eu-ets.pdf

Chicago

Vermeulen, Hanne, Toby Lockwood, and Rose Lawaetz. Pricing it right: Accounting for non-permanent CCU while safeguarding the EU ETS. Clean Air Task Force, n.d. https://cdn.catf.us/wp-content/uploads/2025/07/08104318/accounting-non-permanent-ccu-safeguarding-eu-ets.pdf.

Wikipedia

{{cite report |last1=Vermeulen |first1=Hanne |last2=Lockwood |first2=Toby |last3=Lawaetz |first3=Rose |title=Pricing it right: Accounting for non-permanent CCU while safeguarding the EU ETS |publisher=Clean Air Task Force |url=https://cdn.catf.us/wp-content/uploads/2025/07/08104318/accounting-non-permanent-ccu-safeguarding-eu-ets.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vermeulenndpricing, author = {Vermeulen, Hanne and Lockwood, Toby and Lawaetz, Rose}, title = {{Pricing it right: Accounting for non-permanent CCU while safeguarding the EU ETS}}, institution = {Clean Air Task Force}, url = {https://cdn.catf.us/wp-content/uploads/2025/07/08104318/accounting-non-permanent-ccu-safeguarding-eu-ets.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }