Canada as a Global Hub for Carbon Removals

At a Glance · Where Things Stand

Of the activities within scope of ECCC’s Article 6 framework, durable removals are those in which Canada has the clearest advantage as a seller, Canada authorizing the transfer and applying a corresponding adjustment so that the buyer, and not Canada, claims the removal.

The EU has proposed to purchase 250 Mt of permanent removals and up to 260 Mt of Article 6 credits over the next decade, while Europe’s own storage build-out is still at an early stage. The opportunity depends on Ottawa settling which tonnes it will authorize for export, how they stack with the Clean Fuel Regulations, and how Canadian storage is recognized under the EU’s certification rules, the policy groundwork and the 2035 target question being set out in Part 1.

Canada’s case as a removals exporter rests on geology, skills, power, fiscal support and delivered tonnes that other countries cannot easily replicate, as set out in Table 1.

Table 1 · Canada’s removal advantages. Sources: Carbon Removal Canada via Climate Tech Canada; Government of Alberta; Pathways agreement reporting; Deep Sky.

Carbon Removal Canada’s tracker recorded about 101,000 tonnes removed to date against 11.9 Mt of projects in development in September 2025, and an estimated 35 Mt needed to meet Canada’s climate goals, so that the gap between promise and delivery remains wide. Early offtakes, such as those of Microsoft and RBC with Deep Sky, are voluntary-market purchases, and Article 6 offers the route by which that pipeline can reach compliance-grade, government-backed demand.

Figure 1 · Canadian carbon removal, removed to date versus projects in development and estimated need. Source: Carbon Removal Canada data via Climate Tech Canada, September 2025.

Recommended sequence

• The authorization list should begin with durable, geologically stored removals (DACCS and BECCS), where Canada’s advantage is greatest and the integrity case is most straightforward.
• A host-country share should be published, setting out how much of each project’s output may be exported and how much is retained for the 2035 target, since an authorized removal counts toward the buyer’s target and not Canada’s, and such a rule gives developers certainty while protecting the NDC.
• The registry and MRV should be built now, since buyers will not sign forward offtakes against a framework without a registry, and Japan’s lead under its Joint Crediting Mechanism came from building this infrastructure first.
• Host agreements should be signed with the active buyers, Singapore, Japan, Switzerland and South Korea already purchasing and the EU becoming a major buyer from 2031 for removals and from 2036 for Article 6 credits.

Every authorized export also bears on Canada’s own 2035 target, which current projections do not reach, and that tension, together with the reasons the export case still holds, is set out in Part 1: Canada’s Article 6 framework.

Climate Decode advises Canadian removal, CCS and low-carbon fuel developers on which Article 6 buyers fit a project and what authorization will require.

Under the July 17, 2026 EU ETS review proposal, the Commission would raise the cap by an initial 250 million allowances, auctioned over 2031–2040, and use the revenue to purchase an equivalent volume of permanent removals, which are the kind of removals Canada is best placed to produce. Only BioCCS and DACCS qualify at the outset, both requiring certification under the EU’s Carbon Removals and Carbon Farming Regulation, Regulation (EU) 2024/3012 (the CRCF), and the Commission adopted the CRCF certification methods for DACCS, BioCCS and biochar on February 3, 2026, as examined in the Climate Decode analysis of the EU ETS removals mechanism.

Third-country eligibility

The CRCF provides that certified units should not count toward third countries’ NDCs or international compliance schemes, and the ETS proposal, as summarized by ICAP, does not address third-country removals, so that Canadian removals cannot enter the EU purchase at present. Some legal readings expect any opening to be tied to countries with an ETS linked to the EU’s, a route better suited to the UK than to Canada, while the separate Article 6 window is open to international credits only from 2036.

Storage availability

Europe’s injection capacity is still being built against the Net-Zero Industry Act’s goal of 50 Mt a year of CO₂ storage capacity by 2030, and much of that capacity will be taken by industrial CCS before removals. By contrast, Canada has storage in operation and in evaluation, the well-drilling and injection workforce of a major oil and gas producer, and provincial regimes that already regulate long-term storage liability, and since shipping CO₂ across the Atlantic is impractical, the trade would be in certified tonnes.

Figure 2 · EU demand for removals and Article 6 credits. Sources: EU ETS review proposal (July 2026) via ICAP and EPRS; CRCF Regulation (EU) 2024/3012; Carbon Gap; Taylor Wessing.

Table 2 · Routes into EU removal demand. Sources: EU ETS review proposal (July 2026), ICAP, CRCF, COP30 Presidency; Climate Decode analysis.

The most bankable removal tonnes in Canada are likely to come from biogenic CO₂ that is already being separated, namely fermentation CO₂ from ethanol plants and process CO₂ from renewable natural gas upgrading, renewable diesel, SAF and biogenic hydrogen. Capturing and storing that CO₂ costs less than direct air capture, and it corresponds to the BioCCS pathway that the EU proposes to purchase from the outset.

These plants already fall within the Clean Fuel Regulations, under which CCS added to low-carbon fuel production lowers the fuel’s lifecycle carbon intensity, potentially below zero, and generates Compliance Category 2 credits, while CCS on fossil fuel production earns Category 1 credits; CFR credits traded at an average of $358.18 in June 2026. The CFR does not reward a standalone removal tonne, such as a DAC credit, which has no fuel to attach to, and the pathways are set out in the Climate Decode CFR and CCS guide.

Article 6 and clean fuel economics

• A biofuel plant with CCS could earn CFR credits on its fuel and, if Ottawa allows it, sell an authorized removal unit to a foreign buyer, and that second revenue line is what could turn marginal CCS retrofits on ethanol and RNG plants into financeable projects.
• CCS lowers the carbon intensity of fuels destined for markets with their own standards, from SAF for CORSIA-covered airlines to fuels sold into Europe.
• Biogenic CO₂ volumes help fill the storage hubs being developed in Alberta and Saskatchewan, reducing per-tonne storage costs for every user.

Fuels Market Watch

The benchmark review, provincial offset rules and Article 6 authorization will move on different timelines, and Fuels Market Watch, Climate Decode’s market intelligence platform, follows both the compliance and the clean fuel side in one place.

A guided walkthrough can be arranged by booking a demo.

• ECCC’s authorization list will show whether durable, geologically stored removals come first and what host-country share Canada retains.
• Parliament and Council will decide in the EU ETS negotiation whether the 250 Mt removals purchase remains domestic or opens to recognized third-country storage.
• A CFR stacking rule will determine whether a stored tonne can lower a fuel’s carbon intensity and also be sold abroad as a removal.
• Singapore’s second-stage tender, for at least 12 million ITMOs with carbon removal eligible, will be an early test of whether removal projects can compete in a sovereign tender.
• Alberta’s storage hubs will show which of the 24 proposals move from evaluation to sequestration agreements, and how much capacity they make available to removal projects.

Canada has its first certified removal tonnes in geological storage and a buyer in Europe designing its purchases, and whether this becomes an export industry depends on the authorization, stacking and storage-recognition rules written over the next year.

Climate Decode · Advisory

Positioning Canadian projects for Article 6 demand

Climate Decode supports buyer mapping, authorization readiness, and CRCF and CFR stacking from start to finish.

Sources