How to turn EU carbon removal policy into bankable demand

The EU ETS reform proposal would make the European Commission the largest buyer carbon removal has ever had. It covers up to 250 Mt of permanent removals between 2031 and 2040, in a durable carbon removal market that has delivered 1.6 Mt in its entire history.

On paper, that's the demand signal this industry has been asking for. In practice, developers still struggle to raise money against it.

We see this gap every week. At Rainbow, we write methodologies and certify projects, which puts us between the policy text that defines a tonne and the site where someone is trying to produce one. Our science and field engineering teams work on both sides of that line. From there, the view is fairly clear: Europe has solved the theory, but it hasn't yet solved the practice.

Here's what we think it would take to turn that 250 Mt promise into actual tonnes delivered.

Close the gap between defining a tonne and paying for one

In February 2026, the CRCF defined what counts as a permanent removal tonne in Europe. Years of debate on quality led to the adoption of EU-backed certification methodologies.

But the buyer doesn't arrive until 2031. Certification is now several years ahead of procurement, and the open question has shifted from quality to payment. Projects can't cross a five-year gap on a signal. To deliver in 2031, they need financing now, which means contracts now. The EU Buyers' Club, aiming for first purchases by December 2026, is currently the only bridge designed to carry them across.

Give lenders something they can model

From where we sit, projects rarely get stuck on the science. They get stuck on practical things: no named buyer, no fixed payment date, no certainty about when credits will be issued. A methodology can be rigorous and still produce credits a lender can't model.

Bankability requires calculations, not predictions. A lender needs a named payer, a fixed date and a known price. Few European projects today have all of these.

The best examples of what bankable means today come from two places: state-backed mechanisms like in Sweden or Denmark, and flagship offtakes from large tech buyers in the voluntary market. Not necessarily because the per-tonne numbers are generous, but because they are multi-year contracts with a trusted counterparty at a known price.

Sign in 2028 for delivery in 2031

The single change that would make the ETS facility bankable early is forward contracting. If it can sign in 2028 for delivery in 2031, projects can finance against those contracts straight away. If it only pays on delivery, developers and their lenders carry the risk for five years, and fewer projects will exist to deliver.

Price design matters just as much. How the facility pays — as a fixed, indexed, or auction-set price — could, together with forward contracting, decide whether 2031 demand reaches projects in 2028.

Build rigour that works on a real site

A public buyer paying on delivery turns issuance into a finance question. Lenders need to know when credits will land, and at 250 Mt, issuance and traceability have to run at a volume this market has never seen. That's operational work, and it's where registries either help projects or slow them down.

Reaching 250 Mt means certifying far more projects than exist today and issuing credits at a scale and frequency this market has never handled. The answer cannot be to lower the bar. Every tonne the facility buys has to hold up to scrutiny, because both public money and the credibility of the CRCF depend on it. But a requirement only protects integrity if real projects can meet it. A methodology that is scientifically sound but can't be applied on a working site doesn't produce more high-quality tonnes. It produces fewer projects.

That's the balance we work to strike in methodology design. Our science team sets conservative requirements for quantification, durability and monitoring. Our field engineers test them against how projects actually operate: what can be measured on site, how often and at what cost. When a project falls short, we show the developer what needs to change to meet the standard, rather than turning them away without a path forward.

The same pragmatism applies to eligibility. CRCF certifies biochar as a permanent removal, yet the proposed ETS facility excludes it, with a review set for 2034. If Europe needs every credible tonne, that's a long time to leave proven supply waiting.

Check back after the next two checkpoints

There are two checkpoints in the next six months. First, the Buyers' Club's first purchases, targeted by the end of 2026, which will set the first CRCF reference price. Then the final ETS text in Q1 2027. In that text, look for whether the facility can contract ahead, and how it sets prices.

Europe has done the theory. Those two design choices will determine whether it works in practice.

I'll be discussing this at Carbon Unbound Europe on the panel "From CRCF to the EU ETS: when does policy become demand?" alongside Fabien Ramos, Carbon Removal Lead Expert at European Commission, and Olga Gassan-Zade, Member of the Article 6.4 Supervisory Body. Get in touch if you’ll be there and want to talk more about it: hello@rainbowstandard.io