The European Union (EU) must establish a clear legislative framework and begin developing a pipeline of international carbon credits well before purchases are due to start in 2036, according to a recent report by BeZero Carbon.

In December, the European Commission is expected to present legislation governing the facility. Under proposed reforms to the EU Emissions Trading System (EU ETS), as many as 260 million allowances could be made available to finance the purchase of an equivalent volume of international credits for the 2036–2040 period.

BeZero argues that the facility cannot rely on future demand alone to bring enough projects to market. Developers need early financial commitments to cover project development costs, secure funding and navigate approval procedures under Article 6 of the Paris Agreement. The report recommends tools such as forward purchase agreements, advance payments, guarantees and project-preparation support.

According to BeZero, the proposed EU facility should have three core responsibilities: building a supply pipeline between 2028 and 2035, purchasing credits for use from 2036 to 2040, and managing the resulting portfolio after acquisition.

The report recommends straightforward eligibility rules, including alignment with methodologies under the Paris Agreement Crediting Mechanism (PACM) or the Core Carbon Principles (CCPs), alongside corresponding adjustments by host countries.

But broad eligibility criteria should be backed by project-level due diligence covering additionality, carbon accounting, permanence, potential harm to communities and the environment, and implications for host countries’ climate targets.

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BeZero also calls for clear partner-country requirements on climate reporting and Article 6 governance, as well as flexible procurement methods, including competitive tenders, auctions and negotiated transactions.

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