Is it an absolute requirement in paragraph 30 that 90-95% of GHG emission reduction needs to be performed before giving the option to work with GHG Removals?

ESRS E1 paragraphs 30, 34 and 60

ESRS Annex II (Glossary): GHG removal and storage; ESRS Annex II (Glossary): Carbon credit

ESRS E1-4 paragraph 30 refers to ‘Targets related to climate change mitigation and adaptation’. ESRS E1 paragraph 34(b) specifically requires GHG emission reduction targets to be gross targets and not to include GHG removals, carbon credits or avoided emissions as a means of achieving the reduction targets.

ESRS E1-7 ‘GHG removals and GHG mitigation projects financed through carbon credits’ paragraph 60 requires transparency related to targets that intend to achieve net-zero GHG emissions. It states that if the undertaking discloses a net-zero target in addition to the gross GHG emission reduction targets (Disclosure Requirement E1-4), it shall explain the scope, methodologies and framework applied and how the residual GHG emissions (after approximately 90-95% of GHG emission reduction) are intended to be neutralised.

ESRS Annex II (Glossary): GHG removal and storage – (anthropogenic) removals refer to the withdrawal of GHGs from the atmosphere as a result of deliberate human activities. These include enhancing biological anthropogenic sinks of CO2 and using chemical engineering to achieve long- term removal and storage. Carbon capture and storage (CCS) from industrial and energy-related sources, which alone does not remove CO2 from the atmosphere, can remove atmospheric CO2 if combined with bioenergy production (Bioenergy with Carbon Capture & Storage – BECCS). Removals can be subject to reversals, which are movements of stored GHG out of the intended storage that re-enter the atmosphere. For example, if a forest that was grown to remove a specific amount of CO2 is subject to a wildfire, the emissions captured in the trees are reversed.

ESRS Annex II (Glossary): Carbon credit – A transferable or tradable instrument that represents one metric tonne of CO2eq emission reduction or removal issued and verified according to recognised quality standards.

The ESRS E1 standard does not mandate undertakings to work, or prevent them from working, with GHG removals. While the (extent of) use of carbon removals remains the undertaking’s decision, ESRS E1 aims at ensuring transparency. It requires to differentiate between:

Undertakings can work with GHG removals before achieving 90-95% GHG emission reductions near the point of net-zero. If they claim to have set a net-zero target, however, they need to explain how they expect to neutralise the outstanding residual emissions after a 90-95% of GHG emissions reduction has been achieved.