Biochar gets EU ETS carbon removal mandate from lead MEP
EU carbon market could open to biochar credits under upcoming 2040 framework, Liese says.
Lead MEP Peter Liese said on Wednesday (2026-07-15) that biochar "must be part of the solution" for carbon removals within the European Union's emissions trading system, pushing back against calls to limit the types of sequestration eligible for the market.3
ICE EUA Dec-rolling settled at €82.65/tCO2 at Friday's (2026-07-26) close, a price that has struggled to break decisively higher since the European Commission proposed its 90% net reduction target for 2040 on July 2nd.1 Liese's intervention as the Parliament's lead voice on the ETS revision signals how Brussels intends to shape the removals debate — and which credits might qualify.
Liese also argued on Wednesday (2026-07-15) that financial traders should continue to be allowed to participate in the carbon market.3 That position counters growing calls in some member states to restrict speculative activity in EUA trading, which traders say would thin liquidity and widen bid-ask spreads.
The commission's 2040 proposal, released on July 2nd, explicitly allows up to three percentage points of the 90% reduction target to be achieved through carbon dioxide removals, not just emission cuts.1 That creates a formal demand channel for removal credits, and biochar sits at the centre of the eligibility debate.
Biochar, made by heating biomass in an oxygen-free environment, locks carbon into a stable form that can be buried in soil. Supporters argue it is one of the few removal technologies ready to scale now, unlike direct air capture plants that remain expensive and scarce.1
Sceptics point to problems in voluntary carbon markets, where cookstove and forestry credits have faced integrity challenges. "The issue stems from the design of the system," researcher Shashi Dev told the Quint on 2026-06-25, noting that companies "reap benefits of the loopholes that exist."2 If biochar credits enter the compliance market, the same verification questions will apply.
The broader policy context is shifting. The EU's carbon border adjustment mechanism has been simplified — the commission said that excluding all shipments under 50 tonnes means 90% of firms originally obliged will no longer have to participate, even though the change leaves 99% of the targeted emissions covered.1 That simplification frees administrative capacity for regulators to design a removal framework, but also signals political fatigue with complex compliance burdens.
Liese's twin positions — support for biochar and for financial traders — point toward a carbon market design that prizes depth and scalability over purity.3 Inclusion of biochar would create a new supply source for compliance buyers; keeping financial intermediaries in the market helps ensure there are counterparties to trade those credits at transparent prices.
The unresolved risk is quality control. If biochar credits enter the compliance market with weak verification standards, the ICE EUA Dec-rolling price signal could be diluted — a concern that weighs directly on power generators and industrial hedgers.2 The distinction between compliant and non-compliant removal credits will set the discount the market applies to the new supply.
Traders should watch the Parliament's draft report on the 2040 ETS revision.1 The specific language around removal eligibility — whether biochar is named directly, and whether durability requirements mirror those for geological storage — will set the tone for a new segment of the EU carbon envelope. The ICE EUA Dec-rolling close of €82.65 at Friday's (2026-07-26) settlement leaves room for a premium if the removals pathway tightens, or for a slide if it loosens.