Interrelations Between the EU ETS Carbon Price and the Associated CCU and CDR Technologies

The European Union Emissions Trading System (EU ETS) serves as an environmental policy tool that aims to reduce carbon emissions, but the potential impact of novel carbon management technologies on the carbon price itself remains largely unknown. The aim of this study is to investigate the interrelations between carbon capture and utilization (CCU) and carbon dioxide removal (CDR) technologies and the EU ETS carbon price. To this end, we analyze the relevant detrended time series to examine short-term relationships between energy stock prices, carbon management technologies, and the EU ETS price. Our results reveal a significant positive association between coal prices and carbon prices, and between bioenergy with carbon capture and storage/utilization (BECCS/BECCU) turnover and carbon prices. These findings suggest that market forces may support the economic viability of these technologies in a way that complements the benefits from the EU ETS. Our study highlights critical policy implications regarding the long-term efficacy of the EU ETS and the need to refine carbon pricing mechanisms in alignment with decarbonization goals. This study provides new insights into how CCU/CDR technologies interact with carbon markets, offering guidance for policymakers in the ongoing revision of the EU ETS.