VoxTalks Economics S8 Ep51: A European Carbon Central Bank
Oct 10, 2025
Matthias Kalkuhl, an economist at the University of Potsdam and the Potsdam Institute for Climate Research, dives into the concept of a European Carbon Central Bank. He explores how integrating carbon removal into EU policy is essential for achieving net zero goals. The discussion highlights innovative CDR technologies and their roles in facilitating reductions and undoing past emissions. Kalkuhl also breaks down the need for cleanup certificates and addresses the political challenges and urgency of implementing these reforms to combat climate change effectively.
AI Snips
Chapters
Transcript
Episode notes
Two Families Of Carbon Removal
- CDR includes nature-based options and novel technologies like direct air capture and BECCS, which work but are currently expensive.
- These methods create negative emissions by storing CO2 permanently, offering long-term climate benefits.
Include Removals In The EU ETS
- Make eligible carbon removals tradable within the EU ETS so removers can create and sell certificates for removed tonnes.
- This market eligibility would incentivize investment in removals and integrate residual emissions compensation.
What Cleanup Certificates Do
- Cleanup certificates would let firms emit now but require them to remove the same CO2 later, effectively borrowing against future removal capacity.
- Companies buying them bet on future cost declines in removal technologies to make the obligation affordable.