However, as we get closer to 2030, concerns have been raised that the allowances supply may not be enough to balance the demand. If we look further ahead, towards 2040, sooner or later allowances will become scarce, since it is likely that there will be residual emissions in for instance the aviation sector.
This report presents a set of alternatives to deal with these challenges. We also look at the future need for carbon dioxide removals (CDR) and how to incentivize these in the EU. We also brieflydiscuss how the EU has responded to the US Inflation Reduction Act through the EU Net Zero Industrial Act (NZIA). This policy report has been supported by funds from the NEPP-program (North European Energy Perspectives) and builds, in part, on previous work done within the research program Mistra Carbon Exit.
