This report takes a starting point from EU’s need to produce significant volumes of carbon removals by the year 2040, 2050 and beyond. According to the EU Commission, approximately 350 – 400 Mt carbon removals will be needed in 2040 and 450 Mt in 2050, whereof 49-75 Mt permanent removals, Bioenergy Carbon Capture and Storage (BECCS), and Direct Air Carbon Capture and Storage (DACCS) will be needed to 2040 and 125 Mt in 2050. There are almost no incentives to produce permanent removals in the EU today and several studies have analyzed how certain removals can be included in the EU ETS. The EU commission shall investigate before 31 July 2026 if and how credits representing carbon removals can be integrated in the EU ETS while safeguarding that such removals do not offset necessary emission reductions. This report investigates the pros and cons of including removals in the EU ETS and offers an alternative approach, the establishment of a separate removals targets and trading system which is not linked to the EU ETS. We also propose how the EU ETS can have enough allowances to balance residual emissions without delaying emission reductions.