IVL Swedish Environmental Research Institute

Limiting global warming to close to 1.5°C by 2100 requires deep and rapidgreenhouse gas emission reductions and carbon dioxide removals (CDR) on amassive scale, presenting a remarkable scaling challenge. This paper focuses onthe financing of bioenergy with carbon capture and storage (BECCS) in Sweden.BECCS is one of the most prominent CDR methods in 1.5°C-compatible globalemission scenarios and has been assigned a specific role in Swedish policy fornet-zero. A Swedish state support system for BECCS based on results-basedpayments is planned. Furthermore, demand for CDR-based carbon credits is onthe rise on the voluntary carbon markets (VCM) for use towards voluntarymitigation targets. Risks involved with the current Swedish policies areanalysed, specifically for the co-financing of BECCS by the planned statesupport and revenues from the VCM.

We find that with the current policies,state support systems will subsidise carbon credit prices on the VCM. We arguethat such subsidisation can lower decarbonisation efforts by lowering the internalcarbon price set by actors, thus undermining environmental integrity. It isconcluded that proportional attribution should be applied, i.e., attributingmitigation outcomes to the state support and VCM revenue in proportion totheir financial contribution to the CDR achieved.

The attribution analysis shouldbe accompanied by adjustments in national greenhouse gas accounting so thatmitigation outcomes that are issued as carbon credits and used for offsetting arenot double claimed (i.e., not used by both a nation and a non-state actor on theVCM towards their respective mitigation targets). If proportional attribution andadjustments in national GHG accounting are not implemented, the credibility andenvironmental integrity of offsetting claims made by carbon credit users areeroded. We recommend that action is taken to operationalise and implementproportional attribution to allow for co-financing of BECCS projects whilemaintaining environmental integrity. Wider implications for ourrecommendations beyond the case of Swedish BECCS are also analysed.