3 Policy framework

3.1 Target setting

Ambitious climate targets provide the foundation, acknowledging the potential role of CCUS in mitigation. The Nordic countries have separate sectoral and/or economy-wide climate targets, and they are spread out over different target years (Table 2). Many countries have aggregated net-zero GHG emissions targets for the whole economy: Finland by 2035, Iceland by 2040, Sweden by 2045 and Denmark by 2050. Norway does not have a net zero target and aims for economy-wide 90–95% emission reduction by 2050 compared to 1990. Finland, Sweden and Denmark are part of a “Group of Negative Emitters” which advocate for the inclusion of net negative ambitions in updated climate plans, facilitating knowledge sharing and capacity building (KEFM, 2024).

Table 2. Economy-wide and sectoral climate targets of Nordic countries. The numbers are not directly comparable as emission reduction targets may have different reference years and LULUCF treatment.

		Net emission reduction compared to base year					Base year, (reference), comment
Country	Sector	2030	2035	2040	2045	2050	Base year, (reference), comment
Finland	ESR	60%	100%	80%		90–95%	1990 (Finlex, 2022)
	ETS	60%		80%		90–95%
	LULUCF
	Other
Iceland	ESR	41%*	55%*	100%			*2005 (EC, 2025d)
	ETS
	LULUCF
	Other
Sweden	ESR	63%		75%	85%		1990 (Swedish Environmental Protection Agency, 2025c) *additional
	ETS				85%
	LULUCF*				15%
	Other				15%
Denmark	ESR	70%				100%	1990 (KEFM, 2020),(FVM, 2021)
	ETS
	LULUCF	55%
	Other
Norway	ESR	50–55%	70–75%			90–95%	1990 (Ministry of Climate and Environment Norway, 2017)
	ETS
	LULUCF
	Other

The ETS Directive, which currently extends to all Nordic countries, explicitly recognizes that CCS can contribute to the sectoral target. The Directive does not recognize non-permanent CCU storage, and operators capturing carbon for these types of uses still need to surrender allowances as if CO₂ was emitted. Bio-CCS and DACCS could be counted to economy-wide national targets if they were visible in the inventory, but they are not within the scope of any EU sectoral target at least until 2030. Looking forward, it is an open question whether bio-CCS, DACCS, bio-CCU, DACCU should be counted to a sectoral target, or have separate quantitative targets in national and EU policy.

The European Scientific Advisory Board on Climate Change (ESABCC), reports and certain scientific works recommend more detailed frameworks and separate targets for LULUCF and permanent removals (e.g., bio-CCS, DACCS) over several target years (Allen et al., 2025; ESABCC, 2025; Kujanpää et al., 2023). This could ensure a certain level of CO₂ removals, help avoid non-sustainable biomass use and avoid mitigation deterrence. For example, it would be possible to set separate targets for specific industrial sectors or activities, for example targeting process emissions in hard-to-abate sectors and treating them as supplementary measures with case-specific monitoring.

Each Nordic country currently has its own approach to target-setting. Sweden aims to use LULUCF, bio-CCS or international cooperation, so-called supplementary measures, of a maximum of 15% GHG emission reductions compared to 1990 (or approximately 11 MtCO₂) to reach climate neutrality in 2045 (Swedish Environmental Protection Agency, 2025c). There is currently no technology-specific quantitative target for bio-CCS, but a dedicated budget based on targets of the Government Official Report 2020:4, which sets the ambition to capture and store 2 MtCO₂/a by 2030 (Swedish Energy Agency, 2025c). Sweden’s ESR target of -63% by 2030 can also contain a maximum of 8% supplementary measures (Government offices of Sweden, 2021). Finland’s Climate Act contains an economy-wide climate neutrality target by 2035, and combined ETS and ESR emission reduction targets for 2030, 2040 and 2050. Interpolating between the 2030 and 2040 GHG emission reduction targets indicates that removals (incl. LULUCF) of at least 21 MtCO₂ may be needed to reach climate neutrality in 2035, but it does not specify the role of technologies or international cooperation (Finlex, 2022). Denmark does not have quantitative targets for CCUS but has dedicated budgets for CCS and bio-CCS. Norway’s target for 2050 to become a low-emission society is not framed as a net emission reduction target, meaning it does not specify the role of removals and international cooperation. In Iceland and Norway all CCUS activities visible in GHG inventory contribute to climate targets, but there are no technology-specific targets. As countries move towards climate neutrality, there will be some residual emissions from so-called hard to abate sectors that may need to be decarbonised using CCUS, but it remains unclear what these sectors are in practice (Buck et al., 2023; Dufour & Möllersten, 2025). The EU refers to hard to abate sectors in relation to its proposed 2040 target without defining what sectors belong to this category (EC, 2024b). Nordic policy documents indicate residual emissions to be those which cannot be eliminated using “emission-free alternatives or technological advances”(UNFCCC, 2020) or emissions that originate from “sectors where other emission reduction options either do not exist or are not feasible“ (KEFM, 2023a; Swedish Environmental Protection Agency, 2025c). Energy intensive industries, maritime and aviation transport are sometimes mentioned (EC, 2024c; EU, 2025). Nordic countries have funded or expressed interest in activities linked to mixed waste incineration (Danish Energy Agency, 2025a; Icelandic Environment and Energy Agency, 2025; Ministry of the Environment Finland, 2025b; Swedish Energy Agency, 2025d), cement production (Ministry of Energy Norway, 2025), geothermal energy plants and heavy industry in general (Icelandic Environment and Energy Agency, 2025).

The Nordic countries have also signed the Helsinki Declaration on Nordic Carbon Neutrality in 2019 (NCM, 2019). This Declaration underlines the important role of CO₂ removal and the need to intensify cooperation. Climate action in Nordic countries is also closely tied to cooperation linked to, and implementation of the EU climate targets. There are aggregated GHG emission reduction targets enshrined in EU Law, which are delivered by sector specific targets in ETS Directive, ESR and LULUCF Regulations (EU, 2023a, 2023b, 2024a). By 2030 net GHG emissions should be reduced by 55%, and this target considers CCS and CCU within the scope of the EU ETS. There is a proposal for a net 90% emission reduction target by 2040 and a decision to reach climate neutrality by 2050 (EC, 2025i). The 2030 and 2050 targets need to be achieved via domestic emission reductions and removals. The proposed 2040 target may allow international cooperation, permanent removals and new flexibilities between sectors.

The ETS1 cap and trade system, introduced in 2005, uses a linear reduction factor on the number of CO₂eq emission permits available to energy installations, intra-EEA aviation and energy intensive industries (EU, 2024a). The cap is applied throughout EEA and is not distributed between Member States. Based on legislative proposals on the implementation of the EU Green Deal, no new allowances will be issued after 2039, which means that the ETS sectors should reach net zero by 2040 based on current EU climate law (Matthes & Graichen, 2022). The shrinking allowance budget brings new challenges. Maintaining competitiveness through the transition, and ensuring all remaining installations are zero-emission, will be challenging without offsets and flexibilities. The functioning of the framework will be tested when free allowances are phased out (e.g., aviation in 2026) and the Carbon Border Adjustment Mechanism (CBAM) enters into force (EU, 2023g). Additional changes, and the role of domestic and international CCUS, may be proposed in connection with on the ongoing ETS review, concluding in Q3 2026.

ESR contains Member State-specific emission reduction targets for sectors such as agriculture, buildings and waste (EU, 2023b). Each Member State receives allowances, or Annual Emissions Allocations, equal to the ESR target, but there is no mechanism to include CCUS. However, waste incineration can already be included into the ETS1, where CCS is considered. Starting in 2027, a new trading system (ETS2) will cover fossil fuels in transport, buildings and small installations currently under the ESR sector (EU, 2023f).

There are also Member State-specific quantitative targets for LULUCF (EU, 2023a). Under the revised LULUCF regulation, EU Member States have individual reference levels for 2021–2025, and sectoral emissions should at least be compensated by at least an equivalent amount of removals. If countries do not meet their LULUCF commitments in this period, the remaining calculated emissions are transferred to the ESR. For 2026–2030, each Member State has a budget and target with the aim of bringing EU net LULUCF removals to -310 Mt CO₂eq in 2030.

The new CRCF creates a framework for generating permanent and non-permanent CDR units, and it is unclear whether units will be traded in voluntary and possibly compliance markets, and if/how they should contribute to achieving LULUCF targets (EU, 2024d).

Another notable policy package, the Renewable Energy Directive III (Directive (EU) 2023/2413) sets EU-level binding targets for certain CCU products, called renewable fuels of non-biological origin (RFNBOs) (EU, 2023j). In 2030 5.5% of energy used in transport should be based on hydrogen or CCU e-fuels, and by 2035 CCU e-fuels should prioritize biogenic or atmospheric CO₂ as feedstock. Delegated Regulation (EU) 2023/1185 states that “Captured emissions from the combustion of non-sustainable fuels for the production of electricity should be considered avoided emissions up to 2035 […] while emissions from other uses of non-sustainable fuels should be considered avoided emissions up to 2040” (EU, 2023e). This means that RFNBOs based on CO₂ captured from ETS installations, including waste incineration, will not be considered avoided emissions from 2041 onwards. The use of RFNBOs is promoted as RefuelEU Aviation Regulation (EU) 2023/2405 and FuelEU Maritime Regulation (EU) 2023/1805 require the gradual shift to low-carbon fuels and clean energy (EU, 2023h, 2023i). Because CCU fuel production is limited and unevenly distributed additional flexibilities and support mechanisms may be needed to enable access in island states such as Iceland (Government of Iceland, 2025). Policy implementation is done by countries individually, and there are some differences in how countries view and promote CCU.

According to the Communication on Sustainable Carbon Cycles (EU Communication 2021/800), the EU should have a framework for reporting fossil, atmospheric, and biogenic CO₂ by 2028 (EC, 2021). Whereas fossil carbon capture is subtracted in the sector where it occurs, CCUS-based removals including DACCS, mineral carbonates and possible permanent CCU products could have designated common reporting table (CRT) categories (Jörß et al., 2022). In the absence of IPCC guidelines, CCUS can be included in GHG inventories using national methods which go through a technical inventory review. Possible CRT category options for including removals are CRT 2.H ‘Other’ of the industrial processes sector and CRT 6 ‘other emissions and removals’ (Jörß, 2024). As a result, fossil and biogenic CO₂ may be included in the same category, and/or they may be outside the scope of national and EU climate targets.

The IPCC methodology report on Carbon Dioxide Removal Technologies, Carbon Capture Utilisation and Storage planned for 2027, estimated publication time in 2029, is expected to propose a framework for better including CCU and CDR in national greenhouse gas inventories which will enable the development of more detailed national policies (IPCC, 2024). In the meantime, it seems that the CRCF Regulation may contribute to the EUs climate goals by generating removals within Member States. Yet, there is a missing link between project-based certified units and GHG inventory reporting, and the process of finalizing methodologies is challenging, and the outcome is uncertain (Chiti et al., 2024).

3.2 Policy measures

Nordic countries accelerate CCUS by implementing national measures. Several CCUS-related strategies or plans have been published, and currently the priority is to develop value chains, build capacity, cut costs, and demonstrate technologies. Substantial state aid has been approved and distributed in recent years. In Norway, around NOK 22 billion in grants has been distributed to the Longship project, which opened for CO₂ shipments in June 2025 (Ministry of Energy Norway, 2025). It includes CO₂ capture at cement and waste-to-energy plants, ship transportation and permanent storage beneath the seabed on the Norwegian west coast, managed by Northern Lights. The project has signed commercial agreements to store CO₂ from waste incineration and from shipments from companies in Denmark, Sweden and the Netherlands. In Denmark grants have been distributed to projects via the Energy Technology Development and Demonstration Programme (EUDP), specifically to scale CCS (Danish Energy Agency, 2025b). By regulatory measures such as licensing rounds Denmark also supports the development of storage capacity connected to depleted oil and gas fields and saline aquifers in the North Sea, as well as onshore projects (Danish Energy Agency, 2024b). In Sweden, the Industrial Leap and Climate Leap support programs continues to distribute grants to climate projects (Swedish Energy Agency, 2024). Iceland uses the Climate Fund and the Technology Development Fund to support a wide range of climate projects (Icelandic Centre for Research, 2025). Finland has relied on tax credits for clean industry investments and allocated funding for clean hydrogen and CCUS in industry projects in industry, specifically promoting CCU (Finnish Government, 2024).

Public purchasing programs and contracts for difference have also been used to procure CCUS. Sweden has approved the use of SEK 30.6 billion for reverse auctions to support bio-CCS, and distributed SEK 20 billion to Stockholm Exergy’s bio-CCS Stockholm project in the first auction round (Swedish Energy Agency, 2025a; Swedish Government, 2025). The project will capture 0.8 Mt biogenic CO₂ per year over a 15-year period from a combined heat and power plant and transport it for injection into geological storage. Denmark uses tendering processes to distribute three climate funds with different focus areas and criteria (Danish Energy Agency, 2024a): The CCUS fund distributes DKK 8 billion to CCUS projects over a 20+ year period, in order to reduce emissions by 0.4 Mt CO₂ starting in 2026 and 0.9 Mt CO₂ from 2030 onwards (Danish Energy Agency, 2024a) . The CCS fund distributes DKK 27 billion to CCS and CCU in 2029–2044, in order to store around 2.3 Mt CO₂in 2030 (KEFM, 2025). The NECCS fund supports bio-CCS projects with a total of DKK 2.6 billion over 8 years (KEFM, 2025). Reverse auctions will be used to distribute DKK 268 million to use sustainable aviation fuels (SAF) in the operations of domestic airline routes (EC, 2025c). Finland is planning to distribute EUR 90 million via reverse auctions for biogenic CCS and CCU activities in years 2030–2035 (TEM, 2025).

There may also be other measures planned or in effect which support CCUS development directly and indirectly. For example, Norway and Iceland have placed a CO₂ tax on fossil fuels in non-ETS sectors (Icelandic Environment and Energy Agency, 2025; Norwegian Ministry of Climate and Environment, 2023). Much work is carried out to improve national schemes and assess potential new policy instruments. Key questions relate to the size of projects that can receive funding, whether the origin of CO₂ should be biogenic, fossil or atmospheric, the size of compensation and timelines, and interactions with other funding sources and policy packages. There is growing awareness of the need for information sharing between Nordic countries to facilitate CCUS development, for example to facilitate matchmaking between stakeholders across the value chain. Studies have suggested that in the future auctions could be arranged across Nordic countries, for example to trade bio-CCS (Möllersten et al., 2021; Pedersen et al., 2020).

The Draghi report highlights that even though there is strong focus on transport in EU policy, it is still excluded from planning documents such as the National Energy and Climate Plan (NECP) (EU, 2025). NECPs will be updated again in 2030, and they could provide an overview of planned CO₂ capture at ETS installations, and capture of biogenic CO₂ and atmospheric CO₂, planned transport infrastructure, storage capacity and injection volumes (EU, 2018). Meanwhile, CCUS projects could benefit Nordic cooperation and a better overview of responsibilities.

The EU also promotes Nordic CCUS through various instruments. Since 2020, revenues from the ETS have been distributed via the Innovation Fund to advance the following activities in Nordic countries (EC, 2025g): transport storage of CO₂ in onshore basalt formations (Iceland), build capacity for bio-CCS (Sweden), CCS linked to cement production (Denmark), waste incineration (Sweden), geothermal power (Iceland), and CCU for hydrogen and methanol (Sweden; Finland). The Innovation Fund received around 10% of ETS revenues in 2022, and assuming a price of EUR 75 per tCO₂, a total of EUR 40 billion of revenues from 2020 to 2030 could be channelled to mitigation (ESABCC, 2025).

There are several other EU initiative, for example INNO-CCUS, a research mission and partnership created in 2020 under the Innovation Fund that supports CCUS activities (INNO-CCUS, 2025). Research infrastructure and development linked to carbon capture, for example is maintained via Horizon Europe (EC, 2025f). The EU is also exploring the option of having an EU-wide purchasing program for CCUS-based removals, and recent studies focus on how to design such a framework (McDonald et al., 2025) and align it with other funding schemes (Marton et al., 2025).

In Table 3 we provide a short overview of near-term Nordic CCUS policies building on multiple sources. It contains information about CCUS-relevant documents, what is said about transport and storage, and what funding instruments are used to accelerate CCUS activities.

Table 3. Overview of national CCUS policies, storage and transport initiatives and funding instruments.

Denmark

CCUS policies: CCS strategy (Danish Energy Agency, 2024c).

Storage and transport: Efforts to scale domestic transport, onshore and offshore storage (Bellona, 2025) and international agreements to facilitate cross-border CO₂ transport (KEFM, 2023a).

Funding: DKK 38 billion total for storing CO₂ via NECCS, CCUS, and CCS Funds (Danish Energy Agency, 2024a; KEFM, 2025).

Finland

CCUS policies: CCUS included in separate policies related to clean energy and industry (Ministry of the Environment Finland, 2025a).

Storage and transport: There are no geological storage sites available for permitting (Ministry of the Environment Finland, 2025a) but international agreements with Denmark and Norway to facilitate cross-border CO₂ transport (Finnish Government, 2025b, 2025a).

Funding: EUR 90 million to be distributed to bio-CCS and bio-CCU activities via reverse auction (VM, 2025)

Iceland

CCUS policies: CCS included in the climate action plan and CCUS in separate policies (Icelandic Environment and Energy Agency, 2025).

Storage and transport: Efforts to scale storage using CarbFix method (Carbfix, 2022).

Funding: Distributed via Climate Fund and Technology Development Fund (Icelandic Centre for Research, 2025).

Norway

CCUS policies: CCUS included in separate policies and incentives

Storage and transport: Efforts to scale domestic transport and offshore storage (Ministry of Energy Norway, 2025), and international agreements to facilitate cross-border CO₂ transport.

Funding: Total NOK 22 billion distributed to Longship project (Ministry of Energy Norway, 2025). Other funding distributed via Enova, Climate and Energy Fund (Ministry of Climate and Environment Norway, 2018) and CLIMIT carbon capture R&D and demonstration support scheme (Gassnova, 2025).

Sweden

CCUS policies: Dedicated bio-CCS policy and CCUS included in separate policies and incentives (Government offices of Sweden, 2020; Swedish Environmental Protection Agency, 2025c)

Storage and transport: Sweden is conducting geological investigations linked to onshore and offshore storage, but there may not be any projects before 2030 (Swedish Energy Agency, 2024). There are international agreements for cross-border transportation of CO₂with Denmark, Norway (Regeringskansliet, 2024).

Funding: SEK 30.6 billion reserved for bio-CCS (EC, 2024a). Industry Leap and Climate Leap are major funding programs (Swedish Energy Agency, 2024).

3.3 Market-based mechanisms for permanent removals

The European Commission finds that reaching climate targets will require creating price incentives for removing CO₂ from the atmosphere that mirror the mechanisms in place for reducing emissions (EC, 2024b). The 2040 impact assessment shows that a high carbon price is needed to drastically upscale bio-CCS, DACCS, CCU in mineral, chemical, metal and other industries (EC, 2024b), and the European Commission recommends using an ETS1 carbon price of over 100€/t CO₂ in 2030, 290€/t CO₂ in 2040 and 490 €/t CO₂ in 2050 in modelling of scenarios with additional measures (WAM) (EC, 2025j). At these levels CCUS could become cost-effective and projects in hard-to-abate sectors could start to reach positive returns by 2030 (Tumara et al., 2024).

As a result, in connection to the proposal for a 2040 target, the European Commission suggested that CO₂ trading of domestic and permanent CO₂ removals could help to compensate for residual emissions, specifically mentioning bio-CCS and DACCS with permanent geological storage (EC, 2025i). During April–July 2025, the European Commission has collected evidence from stakeholders in preparation for the 2026 ETS review impact assessment, and over 80% of respondents support introducing CRCF-certified permanent removals into the ETS (EC, 2025e). This suggests that a new compliance market for removals could be created by extending the Emission Trading System (Directive 2003/87/EC) in connection with the review due in Q3/2026 or later. Trading of removals would be compatible with the ‘polluter pays’ principle, and practical considering that permanent CCUS relying on fossil carbon and carbon from non-sustainable biomass can already be subtracted from ETS1 emissions (Jörß et al., 2022).

The (Swedish Environmental Protection Agency, 2025a) has presented four approaches for ETS integration as possible options in a preparatory work for the government: (1) without restrictions; (2) with restrictions on the amount of removals and a cap for emissions; (3) indirect integration with restrictions and a price mechanism to ensure sufficient incentives; and (4) indirect integration using ETS revenues or reverse auctions. The Danish Ministry of Climate, Energy and Utilities has published a position paper proposing an option for direct integration (KEFM, 2023b) which contains two phases. In the first phase (2030–2035), permanent removals could be used to cancel out allowances under the existing cap. In the second phase (2036–2040), removal allowances could be issued. According to SEPA (2025) the Danish approach would probably not generate the amount of permanent removals needed for 2030–2040, and it would favour low-cost removal technologies. Consequently, complementary policies need to be developed to support a diverse portfolio of technologies, and ETS integration should wait until policies are adapted to consider the differences in costs, maturity and environmental concerns (Swedish Environmental Protection Agency, 2025b). The recent proposal by the UK to integrate removals into the UK ETS by the end of 2028 is important because the EU is committed to link the emission trading systems in some way (UK Government, 2025). The UK intends to allow permanent removals (200 years permanence minimum) to be used without restrictions, while maintaining a cap on emission allowances. This approach considers that supply controls may be adopted if needed.

Current EU suggestions to introduce market-based mechanisms for incentivizing removals tend to ignore non-permanent removals, such as CO₂ storage in bio-CCU or DACCU products. However, the EU Industrial Decarbonisation Accelerator Act states that incentives for the uptake of CCU should be considered in the future. A recent report by the Netherlands Scientific Climate Council presents what the responsible use of non-permanent removals may look like, including whether they should be used in order to limit peak warming and whether the like-for-like principle should apply (WKR, 2025).

The trading of carbon credits representing emission reductions or removals in voluntary carbon markets will still have a role in the post-2030 policy framework. Internationally Transferred Mitigation Outcomes (ITMOs) are expected to be a key instrument for mobilizing removals (Michaelowa et al., 2023). Ahonen et al. (2025) find that authorizing ITMOs under Article 6 of the Paris Agreement would make it possible to count credits towards an NDC and at the same time for companies to make contribution claims. To be counted towards NDCs a ‘corresponding adjustment’ must be applied by the host country. In connection to the proposed EU 2040 target, the European Commission suggests to allow the use of international credits to contribute to the 90% economy-wide net emissions reduction target (EC, 2025i). Sweden and Norway are cooperating with Switzerland to pilot transactions and reporting of removals (Swedish Energy Agency, 2023). Nordic countries may foresee different roles for ITMOs in national targets or voluntary offsetting.

Current efforts aim to clarify the types of activities can be credited under Article 6.4 mechanism and to define the requirements for removals which can be transferred from a host party or project developer to a buyer party or entity. Also the planned EU legislation on green claims may also influence the private demand for carbon credits, including ITMOs (EU, 2023d). The CRCF will create a framework for voluntary carbon markets, and all emission reductions and removals generated under CRCF must contribute to the EUs NDC and cannot be transferred via ITMOs (CRCF art 1 point 2). It is important to make sure that the financing, usage and claiming of removals is done right, as there are concerns about the quality and durability of projects. Monitoring, reporting and verification play an important role, and methodologies are still being developed. In the past there have been deficiencies (e.g., related to biomass certification schemes under the Renewable Energy Directive, and the ESABCC calls for more effort to enhance the capacities of institutions involved (ESABCC, 2025).

3 Policy frame­work

3.1 Target setting

3.2 Policy measures

3.3 Market-based mechanisms for permanent removals

3 Policy framework