Following the ongoing debate on the future of the EU ETS, the CCSA, issued the following statement.

Since 2005, the EU Emissions Trading System (ETS) has evolved through successive reforms to address early design flaws, strengthen the cap, and reinforce market stability, transforming from a pilot scheme into the backbone of EU climate policy for the 2050 climate objectives. For the Carbon Capture Utilisation and Storage (CCUS) value chain, the EU ETS is the core framework that assigns an explicit cost to unabated emissions, creates demand for CO₂ storage and CCU products, supports funding instruments, and generates dedicated revenue streams for first-of-a-kind and commercial-scale projects.

A uniform carbon price, implemented by the EU ETS, allows companies to choose the most cost-effective CO₂ mitigation options rather than locking them into specific technologies. This market-based approach delivers economic efficiency by enabling flexibility in how emissions reductions are achieved, and crucially, when paired with targeted support for innovation and infrastructure, carbon pricing can trigger investment reallocation toward low-carbon assets without micromanaging.

For capital-intensive technologies with long lifetimes, such as CCUS, expectations of a rising and durable carbon price are at least as important as the spot price itself, because they inform long-term investment decisions. Full value-chain breakeven costs for many European industrial CCUS applications still exceed current ETS prices. Carbon pricing must therefore be reinforced with complementary measures, such as a Carbon Border Adjustment Mechanism (CBAM), to protect competitiveness as prices rise and technology costs decline.

Excessive volatility can undermine investor confidence, especially for long-term strategic investments in capital assets such as CO₂ pipelines and storage hubs. The EU has responded to these concerns by introducing and strengthening the Market Stability Reserve, which automatically adjusts auction volumes based on the total number of allowances in circulation, thereby mitigating oversupply and extreme price swings.

In addition, emerging tools such as Carbon Contracts for Difference (CCfDs) for CCUS and Carbon Dioxide Removals (CDR), anchored in a robust ETS, offer a powerful way to combine market-based efficiency with investment stability. Without a strong and credible ETS, developers and financiers would face far greater uncertainty about long-term revenue streams, making Final Investment Decisions (FIDs) for CO₂ transport and storage networks, cluster projects, and large capture installations significantly less likely or more expensive. Early experience in Europe shows that successful CCUS projects usually combine three elements: 

• A meaningful ETS price,
• Targeted public support,
• Clear regulatory frameworks for storage and transport infrastructure.

Removing any of these would risk shrinking the pipeline of investable projects precisely when deployment needs to accelerate sharply to meet 2050 climate objectives, making the maintenance of a strong EU ETS particularly critical as we approach these crucial milestones.

The evidence from nearly two decades of operation is clear: the EU ETS has delivered substantial emissions reductions, operates as a cost-effective, technology-neutral instrument, and is indispensable for unlocking investment in CCS, CCU, and CDR at the scale required to decarbonise European industries and achieve the EU’s 2050 climate objectives.

Therefore, it will be crucial to safeguard the ETS and, both at the EU and Member State levels, streamline ETS-funded instruments, such as the Innovation Fund and future CCfDs, to prioritise the deployment of decarbonisation projects aligned with net zero and delivering long-term system value.

It is now time to provide long-term security for investments and to support European industries to decarbonise, while reinvesting ETS revenues in a pragmatic and structural way to support the decarbonisation and competitiveness of hard-to-abate European sectors. 

The Carbon Capture and Storage Association, therefore, urges EU institutions and Member States to:

• Maintain the environmental integrity and long-term predictability of the EU ETS cap and price signal, including a robust Market Stability Reserve and clear cap trajectories consistent with 2050 goals.
• Complete the transition from free allocation towards a CBAM-centred leakage protection regime to maintain industrial competitiveness, while ensuring that revenues are earmarked and recycled into the industrial decarbonisation of the contributing sectors, including the development of CO₂ infrastructure.
• Expand and streamline, both at the EU and Member State levels, ETS-funded instruments, such as the Innovation Fund, future CCfDs, and a dedicated mechanism to de-risk EU industrial CO2 value chain.
• Advance work on integrating high-integrity removals into the EU carbon pricing architecture.

Weakening or dismantling the EU ETS would jeopardise the EU’s net zero trajectory, undermine existing decarbonisation investments, increase abatement costs, and halt the deployment of critical carbon management technologies. The competitiveness of European industry, alongside a pragmatic and technology-neutral approach to decarbonisation, is essential for achieving climate neutrality and decarbonisation without deindustrialisation. 

Q&A with CCSA Chief Executive, Olivia Powis   l   KeyFacts Energy Industry Directory: CCSA