The EU ETS Proposal Advances Geological Net Zero while the UK Reject it, in Response to Whitehead Review
Rachel Ardiff
Stephanie Loo
On 17 July 2026, the EU and UK each published long-awaited policy documents in their respective jurisdictions. The EU’s proposed ETS reform set out conditions for the integration of engineered carbon dioxide removal into the carbon market, the largest compliance market in the world. On the same day, the UK government responded to the Independent Review of Greenhouse Gas Removals (the Whitehead Review), rejecting one of the headline recommendations to adopt the principle of geological net zero within the UK’s carbon budget and policy pathways and signalling a potential deviation from the approach pursued by the EU.
What is geological net zero?
Geological net zero means balancing fossil-origin CO₂ emissions with geological-timescale storage. The logic here is quite simple. Fossil carbon was locked away underground for millions of years and once released stays in the biosphere for millennia unless it’s put back underground via secure geological storage. Forests, peatlands, and soils, by contrast, are temporary carbon sinks vulnerable to wildfires, drought, and other climate-driven disturbances and could therefore re-release the carbon that we relied on them to absorb. Furthermore, the Climate Change Committee has noted that we already are placing a heavy reliance in the UK on nature-based or biogenic carbon removals to balance unavoidable land-based emissions such as those from agriculture.
The core principle of geological net zero, which is supported by the latest climate science, is that removals should match emissions in kind: biogenic emissions are balanced by lower-durability storage methods and fossil emissions are balanced using higher-durability storage methods.
The recent EU ETS reform is consistent with geological net zero
In the latest proposal for EU ETS reform, the European Commission announced that the market would integrate 250Mtpa of engineered carbon removals cumulatively between 2031 and 2030, in the form of biogenic emissions capture with storage (BioCCS) and direct air capture with carbon capture and storage (DACCS). The proposal must still pass through the European Parliament and the Council before becoming law.
The choice of which removals qualify signals an approach compatible with geological net zero. The ETS exists to regulate fossil and industrial emissions, as emissions from biogenic sources are exempt. By including only removals with geological-timescale storage and excluding shorter-lived or less proven methods, such as biochar or enhanced rock weathering, the current proposal remains consistent with the principle of geological net zero.
Meanwhile, the UK has rejected geological net zero in its latest response
By contrast, the UK has diverged from the EU by rejecting geological net zero in its response to the Independent Review of Greenhouse Gas Removals. The review, led by Alan Whitehead, recommended that government embrace the principle of geological net zero, advocating for a similar source-sink logic that underpins the Climate Change Committee’s advice on the UK’s carbon budget. Despite this, the government’s response states that a wide technology mix, including nature-based solutions, will be used to balance residual emissions from hard-to-abate sectors, and that it therefore does not plan to adopt the principle of geological net zero.
Why does this matter?
The Labour government has previously signalled its ambition to link the UK ETS with the EU ETS. This would be a significant win for the UK, allowing British businesses access to a larger, more liquid carbon market and reducing the risk of price volatility in a standalone UK scheme. It would also remove the competitiveness concerns and administrative burden that comes with carbon border adjustment mechanisms between the two systems. By rejecting the Whitehead Review advice, the UK risks falling out of step with its largest trading partner by creating structural misalignment. The longer the UK delays aligning with the EU’s direction of travel, the harder and more costly any future linkage is likely to be.
Additionally, one of the aims of the Whitehead Review was to advise on how best to scale up the British greenhouse gas removals industry, ensuring the UK captures its natural advantages in this fast-growing market. The global removals market is predicted to reach up to $1.2 trillion by 2050, and the UK is well-placed to capture a sizable share of it through building on existing technological expertise and drawing on its abundant suitable geology in the North Sea. Although the UK government is yet to comment on whether woodland carbon credits will be included in the UK ETS, without a clear signal that only durable, engineered removals count towards compliance, the UK’s carbon removals market risks being flooded with cheaper nature-based credits, undercutting the nascent engineered removals sector before it has a chance to scale.
As London experiences its worst heat wave in decades, the case for geological net zero stretches beyond the stabilisation of temperatures. It presents an important opportunity for Britain to position itself as a potential leader in the market for engineered carbon removals while strengthening alignment with the EU’s direction of travel. Unfortunately, in this case, the UK declined on all fronts.