Høringssvar om EU-Kommissionens retsakt om DACCS, BioCCS og biochar

The Danish District Heating Association (hereafter DDHA) welcomes the EU’s initiative on developing a common EU certification scheme for projects delivering carbon removals. The certification scheme will be crucial in providing assurance for investments in carbon removals and ensuring that these efforts become a fundamental part to combat climate change. The CRCF is a step in the right direction towards enhancing market credibility by establishing a common and ambitious regulation for certification of carbon removals.

The DDHA represents around 350 companies in the Danish district heating sector ranging from production of district heating to transmission and distribution companies. Hence, the DDHA also represents a large volume of carbon removal potential through capture of CO2 from the biomass combined heat and power (CHP) plants and waste-to-energy facilities in Denmark. The Danish Energy Agency has estimated the possible capture potential in 2040 in Denmark at 5.4-10.8 million tonnes of CO2 per year, of which more than half of the potential (2.9-5.9 tonnes of CO2 per year) comes from waste-to-energy and biomass CHPs.

General remarks

First and foremost, DDHA would like to use this opportunity to thank the Commission, the ICF and others for their work in drafting a detailed method on quantification of negative emissions through Bioenergy with Carbon Capture and Storage (BioCCS) – where both REDIII sustainable biomass operators as well as operators with mixed CO2 streams such as waste-to-energy are eligible for certification. This vital regulatory initiative marks a significant step forward in Europe’s climate strategy, underscoring the EU’s commitment to achieving net-zero emissions and fostering technological innovation. By establishing a robust framework for BioCCS, the Commission not only supports the scaling of sustainable carbon removal solutions but also ensures that these technologies align with the need for environmental integrity and transparency.

Second, the DDHA would strongly urge the Commission to ensure that the Delegated Act does not impose any additional requirements on biomass sustainability compared to the RED. As a general principle, we believe the best regulatory practice would be to keep the regulation on the sustainability of biomass for energy in the RED and refrain from imposing additional requirements in the CRCF including delegated acts. Furthermore, recognizing that national implementation of the RED can differ between Member States, we believe it is important that any requirements in the CRCF Delegated Act take into account these differences in national implementation.

The delegated act

Recital 4 in the Delegated Act on finance stacking & financial additionality

DDHA welcomes the Commission’s focus on finance stacking in recital 4 in the delegated act. The ability to combine both public and private funding sources and revenue streams is essential for enabling CDR projects to secure the necessary capital to reach Final Investment Decision (FID). This flexibility ensures that projects can leverage a di-verse range of funding mechanisms, including government grants, private investments, and carbon credit revenues, which are often crucial for early-stage deployment and scaling of CDR technologies.

Maintaining finance stacking as an option will foster a more dynamic and resilient funding environment, ultimately accelerating the development and deployment of high-integrity carbon removal solutions across Europe.

Recital 12 in the Delegated Act on biomass requirements

It is stated in recital 12 in the delegated act that: “In order to enhance transparency and to recognise best practices in the sourcing of biomass feedstocks, operators of DACCS,

BioCCS and BCR activities should report on the biomass feedstocks consumed by their activities. This information should feed into the assessment of how permanent carbon removal activities could affect ecosystems, the availability of feedstocks for other sectors, and the risk that feedstocks are sourced beyond local availability in the context of the review of the certification methodologies and for the purposes of their potential amendments.”. While DDHA as a general principle supports the focus on enhancing transparency in the sourcing of biomass feedstocks, we strongly urge the Commission to remove the focus on feedstocks being sourced beyond local availability as it goes beyond regulation in REDIII. As a general principle, we believe the best regulatory practice would be to keep the regulation on the sustainability of biomass for energy in the RED and refrain from imposing additional requirements in the CRCF including delegated acts.

The Annex to the Delegated Act

Section 1.1.1 in the Annex – Eligibility of Carbon removal activities with CO2 capture and geological storage

The CRCF framework is built on an ex-post certification logic (Art. 4(1)), where units are only issued after permanent storage is verified. However, the Delegated Act defines “operators” narrowly which would only cover CO₂ capture facilities (DACCS/BioCCS). DDHA encourages the Commission to allow any economic operator or a group of operators willing to assume the responsibility for the carbon removal activity with CO2 capture and geological storage by itself and/or by engaging sub-suppliers to be eligible for certification in the CRCF.

Section 1.2 in the Annex

Activity period

The activity period set out in the Delegated Act is currently limited to a maximum of 10 years. However, this may not reflect the financial and operational realities of most large-scale carbon removal projects. Most subsidy schemes, PPAs, or offtake agreements run for 15 years or more. 

Limiting the period to 10 years risks creating misalignment between certification cycles and financing structures, potentially reducing bankability and discouraging investment. DDHA recommends extending the activity period up to a maximum of 15 years to ensure long-term project viability. 

Certification period

The DDHA welcomes that the delegated act allows more frequent re-certification than 1-year periods. This added flexibility is crucial for the project developers to manage cash-flows and enhance their ability to secure capital for investments in carbon capture initia-tives due to their capital-intensive nature.

However, it is essential that this measure remains practical and implementable. While frequent re-certification is beneficial, the requirement for an audit at every re-certification interval could impose a significant administrative and financial burden on both certifica-tion schemes and project developers. To balance rigor with feasibility, DDHA suggests that an annual audit should be sufficient to meet compliance requirements. This would reduce the logistical challenges associated with repeated audits while still ensuring the integrity of the certification process.

Additionally, allowing for more frequent re-certification and annual audit needs to align with the documentation requirements of the methodology, so these does not become a limitation to the frequency of issuing credits. As it is formulated now, it is uncertain whether many of these documentation requirements are available with the frequency needed to support a more frequent re-certification and yearly audit. E.g. if compliance with REDIII regulation is dependent on authority approval, these are often only provided on a yearly basis and published several months into the following year which would limit how frequent a project could issue credits. We suggest rephrasing in a way so REDIII-compliant biomass can be used for credits even if the formal approval comes at a later date. Likewise, electricity grid emission factors are often calculated on a yearly basis and published a couple months after the end of the year. Streamlining the documentation requirements and processes which are aligned with the re-certification and audit process is critical to enable the necessary cash-flow for CDR projects, facilitate efficient docu-mentation management, and reduce bureaucratic hurdles.

Section 4.2 in the Annex – Biomass sustainability

DDHA welcomes that the Delegated Act broadly aligns with the Renewable Energy Di-rective (RED). In particular Article 29 therein, and the recognitions of voluntary schemes recognised by the Commission or the Member States as providing compliance with the biomass sustainability requirements. Further, DDHA welcomes the alignment of the cascading principle with the national implementation of the Renewable Directive. 

Financial support for the production of energy on certain biomass types

In 4.2 b (iii) it is stated that “The certification body shall verify that the operator does not receive direct financial support from Member States to process saw logs, veneer logs, industrial grade roundwood, stumps and roots.”. The wording of this can be misunderstood and hence the meaning is unclear. With the current wording, the biomass sources mentioned may not be used for energy production if the company has received any form of financial support (for example support for CCS). However, in REDIII it is stated that member states may not provide financial support for energy production on these types of biomass: “Member States shall not grant direct financial support for: (a) the use of saw logs, veneer logs, industrial grade roundwood, stumps and roots to produce energy.”. Therefore, DDHA calls for alignment with REDIII in the delegated act on certification of permanent carbon removals.

Section 4.3.1 in the Annex - Avoidance of unsustainable demand for biomass raw mate-rial

Consumption capacity

In section 4.3.1 it is stated that “Where the activity involves CO2 capture from a facility other than a waste to energy facility, where the primary purpose of biomass consumption is to produce heat or electricity and that was already operational at least a year before the start of the activity period, the operator shall demonstrate that the nameplate bio-mass consumption capacity of the facility has not increased by more than the amount necessary to supply energy for the capture process, as compared to the nameplate capacity on whichever date is later out of the date on which the facility became operational and the date three years prior to the start of the activity period. This includes facilities that have been retrofitted in parallel to the installation of carbon capture capacity.”.

DDHA fully understands these requirements are an intent to avoid unsustainable demand for biomass raw materials. But there should be enough room for economic and operational optimization within a complex CHP that delivers electricity, heat, carbon capture and auxiliary services to the energy system. In particular, the DDHA finds the last sentence unclear. In DDHA’s opinion, it should be possible to make a whole system optimization of an entire facility when retrofitting BECCS to an existing installation as this often requires additional load hours on the BECCS facility to make operational or economic sense - while reducing load hours on adjacent or connected biomass boilers/facilities.

If the Commission by the sentence means that facilities without carbon capture cannot increase their consumption capacity, this is problematic, as it would imply that a facility without carbon capture cannot adjust its use of biomass to meet energy demand at a given time. We therefore suggest that this sentence is removed from the framework. If it is retained, it is important that the term "facilities that have been retrofitted in parallel" is further clarified.

Newly constructed facilities

In section 4.3.1 it is stated that “Newlyconstructed facilities include facilities constructed on sites with no history of operation of the CO2 generating process and facilities con-structed on sites where the CO2 generating process was previously operational under the control of a different economic entity but where operations had ceased and are restarted after a retrofit or expansion”. DDHA suggests amending this definition, as changing the economic entity of an existing facility does not make it a new facility. Therefore, there should be no extra requirements on such projects, relative to already operating biomass installations.

In addition, it is unclear why the definition places specific emphasis on changes in control. Mergers and acquisitions are a critical mechanism for unlocking investment into decarbonisation projects that might not otherwise proceed, enabling scale, expertise, and capital to be brought together to accelerate climate action. 

The proposed language would also have negative impacts on joint ventures between existing facilities and technology partners. It is common practice in the industry to set up separate legal entities created to house such projects. 

Therefore, DDHA suggest amending the definition as follows: ”Newly constructed facilities include facilities constructed on sites with no history of operation of the CO2 generating process.”

In the same section it is stated that “Where the activity takes place at a newlyconstructed facility that became operational not more than twelve months before the start of the activity period, operators shall demonstrate that if the facility had been constructed without carbon capture capacity it would still be economically viable […]”.

While DDHA recognises and understands the underlying concerns – including those related to the risk of distorting biomass demand – DDHA strongly believes that the economic viability test currently in the draft text of the delegated act is not the most appropriate or effective mechanism to address these concerns. 

We would encourage the Commission to consider an alternative test. 

For example, an assessment as to whether a BioCCS facility has a strategic role in the host country’s overall decarbonisation plans, e.g. if it is making use of local or regional biomass supply or makes use of existing or planned critical infrastructure.

We would suggest that it is also important to distinguish between the types of installations (power only; CHP, biofuels; waste to energy or industry applications) and types of biomass.

Coupled with the sourcing safeguards contained in REDIII, these measures should be sufficient to enable the deployment of sustainable newly build BECCS facilities, without limiting bioenergy in a manner inconsistent with the common treatment and subsidisation of other renewable technologies.  

Requirements that go beyond REDIII

Clarity is needed on the requirement to report on biomass type, which should not go beyond REDIII. It is stated that: “Operators shall disclose the biomass feedstock or feedstock mix consumed, disaggregating feedstock to the level required in Directive (EU) 2018/2001 reporting, with an explicit identification of the respective fractions of the feedstock that comes from saw logs, veneer logs, wastes or residues and mixed material that may contain industrial grade roundwood, stumps or roots.”.

The requirement introduces non-standard forestry terminology that is unfamiliar to the industry. Schemes like the Sustainable Biomass Program (SBP) already use well-established feedstock classification systems, and the CRCF should align with those for consistency and practicality. Additionally, the term industrial grade roundwood (IGRW) is poorly defined in REDIII. It encompasses all roundwood except that which is “unsuitable for industrial use” - a determination left to Member States to define. This lack of a uniform definition – where we will likely end with multiple definitions - will result in inconsistent implementation and undermine reliable feedstock tracking.

DDHA therefore recommends that biomass sustainability criteria and reporting align with RED and that the reporting requirement aligns with available nomenclature and feedstock classification systems from the approved voluntary certification schemes or national and industry classifications.

Quantification of removed CO2 in the CRCF

Displacement of fossil fuels should count as positive in the quantification of the NCR benefit

In addition to the large CO2 reductions- and removals that can be achieved through carbon capture, the process also generates significant amounts of surplus heat that can be utilised in e.g. district heating or for industrial purposes and therefore displace fossil fuels that otherwise would have been used. This enables the displacement of additional fossil fuels within the heating network.

DDHA recommends that surplus heat from the carbon capture process utilized in a district heating network be considered providing a co-benefit towards the sustainability objective of climate change mitigation and be reported on the certificate of compliance as this would align the delegated act with recital 15 in the CRCF regulation.