Decision-makers likely didn’t consider durable CDR as a mitigation alternative when designing policies for the green transformation of shipping and aviation. In this post, we go through which policies are most relevant and what could be done to change them.
(If you haven’t read my previous two articles comparing the cost of CDR with electrofuels and biofuels for shipping and aviation, those are useful to skim first.)
Aviation policy
For aviation, the EU’s RefuelEU and CORSIA are the key regulations. Refuel EU requires airlines to use an increasing share of sustainable aviation fuels (SAF) starting at 2% in 2025, ramping up to 20% in 2035, and reaching 70% by 2050 (35% biofuel and 35% e-fuel). The mandate is a fuel-blending requirement, not a climate-outcome requirement, meaning removals can’t be used. The lifecycle emissions of the SAF are not considered as long as it is certified and fulfills the Renewable Energy Directive sustainability requirements. Airlines can only comply by sourcing SAF, regardless of cost or availability.
In parallel, aviation inside the European Economic Area (EES) is included in the EU ETS. Here, CDR may become eligible after 2031 when removals are expected to be integrated into the ETS. But the effect will likely be marginal as long as the SAF blending mandate dominates compliance. Since the EU ETS only covers within-EES flights, but ReFuel EU covers all uplift of fuel in the union, the SAF that carriers have to buy is likely enough to cover a large share or all ETS needs with little space left for CDR.
Globally, ICAO’s CORSIA scheme, allows airlines to use carbon credits to offset growth in emissions above a 2019 baseline. CDR has a role here, but since cheaper conventional offset types are allowed, the demand for high-priced durable CDR will be low.
Shipping policy
There are two main policy actors affecting shipping decarbonisation right now: The International Maritime Organisation (IMO) and the EU.
The IMO agreed in April 2025 on a draft Net Zero Framework, which is due for final adoption later this year and is expected to enter into force around 2027. It will apply to large ships (>5000 GT) and require stepwise cuts in the emission intensity of fuels from 2028, with penalties for non-compliance and rewards for using zero- and near-zero GHG fuels.
The EU’s FuelEU Maritime Regulation is already in force, covering large ships calling at EU ports. It mandates a 2% cut in fuel GHG intensity by 2025 ramping to 80% by 2050 on a well-to-wake basis (all life-cycle emissions).
These two regimes are huge steps forward for shipping decarbonization, but currently does not consider CDR. Only the lifecycle-based carbon intensity of the fuel counts toward the target, so efficiency upgrades that reduce fuel use also do not contribute.
The EU has also brought shipping into the ETS. Large ships calling at EU ports must surrender allowances for their CO₂ emissions, with coverage expanding to 100% of emissions from voyages within the EU and 50% of emissions from voyages that only start or end within the EU by 2026. The number of allowances in the ETS is on a pathway to reach zero around 2039, which means emissions from voyages covered by the system would need to be fully abated.
FuelEU Maritime effectively forces ETS-covered ships to decarbonize via fuel shifting, rather than CDR. So even if ETS allows durable removals to be used to abate emissions, FuelEU will still require reductions in fuel intensity. The remaining “20%” in FuelEU Maritime may look like an opening for CDR in the EU ETS but it’s not a big one. Since FuelEUMartime covers well-to-wake emissions, but EU ETS only tank-to-wake, meeting the 80% emission intensity reduction in Fuel EU Martime will in many cases (most?) mean that you meet 100% of the ETS requirement.
This may lead to a future in which decarbonized fuels are more expensive than efficiency upgrades and CDR, but shipping companies will be forced to pay more for an equivalent environmental impact, just to comply with FuelEU Maritime.
In general, FuelEU is expected to have a much bigger impact on the shipping sector than EU ETS. This type of double policy coverage, also known as policy stacking, is a way to ensure decarbonization, but it has also been criticized for making the ETS less cost-effective.
Feasible policy change
Permanent carbon removal is neither better nor worse than other mitigation solutions. Given sufficient guardrails on quality and safety, using CDR for the emissions, where it is the cheapest option, makes net zero cheaper and easier to achieve. But to make this possible, we need technology-neutral rules. Here are some initial suggestions for how each policy could be reformed:
IMO net zero framework: Has set targets for reductions in fuel intensity until 2035, and it seems unlikely CDR could come in before then. But after 2035, a parallel removal/neutralisation mechanism could potentially be added. For example, the rules could allow a defined share of residual emissions to be covered with durable removals, complementing the carbon intensity rules.
FuelEU Maritime: Requires an 80% emission intensity reduction by 2050, making the integration of CDR into this regulation more challenging. The most straightforward way may be to allow permanent CDR credits to indirectly lower the carbon intensity of fuel. This would take a large revision of the FuelEU Maritime directive, though. The concept of lowering the well-to-wake carbon intensity of fuels using CDR also needs to be established elsewhere first, for example, through certification with the ISCC.
RefuelEU: A possible change to push for is for airlines struggling to source enough SAF to be allowed to instead purchase durable removals to meet their mandates. This likely needs to come bounded to fly, maybe with a clause that if volumes of affordable SAF are not available, then CDR is allowed.
EU ETS: Permanent CDR should also be included in the ETS, and the commission is expected to come up with a proposal regarding this in 2026. (See my recommendations here) but as discussed above, this may not have a major impact on shipping and aviation CDR demand if FuelEU Maritime and ReFuelEU are not reformed.
CORSIA: Could introduce an increasing share of the durable CDR in the credits eligible, demanding it to reach 100% of credits by 2050.
Action today
Two things shippers and carriers can do immediately is to start raising awareness about CDr as a mitigation solution in their foras, AND start buying durable CDR alongside their fuel transition. For companies with net zero pledges or customers demanding carbon-neutral freight, permanent removals offer a way to neutralise emissions today. As my previous analysis have shown, durable CDR may in fact be the most cost-efficient option for a large share of shipping’s and aviations decarbonisation. Early demand also helps grow the removal market so that the option exists at scale when the sector needs it most.
Direct Air Capture and other concentrated CO2 capturing methods are also needed for most e-fuel production, so even if CDR needs were zero, the need to scale these methods is large, especially for aviation.
Long game ahead
CDR has not had a seat at the table when policy has been made. Now, a substantial amount of work will be needed to remake aviation and shipping legislation to make it technology-neutral. Remember, these are the sectors where CDR makes most sense. If we can’t use CDR here, then where? I’ll continue to write and analyze, but that’s not enough to move policy. We need loafers on the ground, smart, tireless lobbyists working consistently for years.
Extra: Explore scenarios yourself
To help companies and policymakers plan for different futures, I developed four interactive calculators that compare fuels and removals for aviation and shipping.
Two focus on costs (e-kerosene vs fossil + CDR; and e-ammonia vs fossil + CDR) and two on volumes (how much CO₂/removals are needed for shipping and aviation under different shares of biofuels and electrofuels).
You can play with key variables (costs, fuel shares, etc.) to see how those change whether CDR or alternative fuels are more economical and the total global theoretical CDR and CO₂ needs.
Parts of this text were first published on Milkywire.com under the heading CDR in Shipping, What is happening today?
This is well done in the context of minimizing the carbon mitigation costs for the EU. But I've been curious about the internal drivers of EU policy since Russia destabilized Europe's energy supply chains.
The EU does not seem to be chasing the least-cost climate policy (lowest marginal abatement cost of CO₂ emissions), but instead emphasizes de-fossilization. They seem to be focusing on increasing the robustness of their energy supply chains through the guise of climate policy rather than pursuing a least-cost mix of abatement strategies.
For instance if the cost of CDR is $200/tCO2e, and a de-fossilized supply chain leads to a MAC cost of $300/tCO2e, the added value for resilient/secure energy is only $100/t. Mitigating risk in energy by producing domesticly or through broader supply chains is hard to argue with as tax-efficient spend.
The higher-cost mitigation option shapes markets to favor strategic energy carriers aligned with its industrial and geopolitical priorities.
Its possible that framing this policy in terms of “marginal abatement cost” provides cover against claims of trade protectionism, since the rules apply uniformly across imports and domestic production. Yet the outcome is a distorted abatement portfolio: cheaper carbon removal mechanisms are sidelined, while expensive de-fossilization pathways receive disproportionate policy support (from a CO2 mitigation lens).
What do you think?