VoxTalks Economics S8 Ep51: A European Carbon Central Bank
Oct 10, 2025
Matthias Kalkuhl, an economist at the University of Potsdam and the Potsdam Institute for Climate Research, dives into the concept of a European Carbon Central Bank. He explores how integrating carbon removal into EU policy is essential for achieving net zero goals. The discussion highlights innovative CDR technologies and their roles in facilitating reductions and undoing past emissions. Kalkuhl also breaks down the need for cleanup certificates and addresses the political challenges and urgency of implementing these reforms to combat climate change effectively.
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Net Zero Is Ambitious And Needs Flexibility
- The EU's net-zero target requires that by 2050 emissions equal removals across its territory, making net zero a legal aim.
- Achieving interim targets is costly and needs regulatory flexibility and new technologies to lower costs.
CDR Fills Gaps Where Abatement Is Hard
- Some sectors (aviation, cement, agriculture) face prohibitively high abatement costs or technical limits to zero emissions.
- Carbon dioxide removal (CDR) provides the flexibility to achieve net zero without shutting down those sectors.
Two Families Of Carbon Removal
- CDR includes nature-based options and novel technologies like direct air capture and BECCS, which work but are currently expensive.
- These methods create negative emissions by storing CO2 permanently, offering long-term climate benefits.