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Algae have a potentially significant role in climate policy: as carbon-sequestering biomass, as a low-carbon substitute for fossil-derived ingredients, and as producers of renewable energy. This chapter covers the EU Emissions Trading System, the Renewable Energy Directive's algae-specific provisions, the Carbon Removal Certification Framework, and the lifecycle greenhouse gas footprint methodology for algal production. See also Biogas and Biofuels for the bioenergy-specific rules.

Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowances trading within the Community (EU ETS), OJ L 275, 25.10.2003, p. 32 (as substantially revised by subsequent amending Directives, most recently by Directive (EU) 2023/959).

Relevance to algae: The EU ETS is a cap-and-trade system for CO₂ and other greenhouse gas emissions from large industrial installations. Algae production facilities are generally not directly covered by the EU ETS, as they do not fall into the listed categories (power generation, heavy industry) unless they are co-located with large industrial installations. However, algae producers may interact with the ETS in two ways:

• CO₂ as a growth input: photosynthetic algae producers who capture CO₂ from industrial flue gases (from facilities covered by the ETS) and use it for algae cultivation benefit from a reduced CO₂ release to the atmosphere by the industrial operator. The accounting treatment of this “CO₂ utilisation” in the ETS is governed by ETS Monitoring and Reporting Rules. This is a commercially relevant interaction, as CO₂ supply from industrial partners who can account for reduced ETS liability is a potential revenue model for algae facilities.
• EU ETS2: the new emissions trading system for buildings and road transport fuels (ETS2), operational from 2027, extends carbon pricing to the fuel sector in ways that may benefit algae-derived transport fuels economically relative to fossil alternatives.

The principal RED II/III framework for algae as a bioenergy feedstock is covered in detail in Biogas and Biofuels. This chapter summarises the climate-specific provisions:

• Algae (macroalgae and microalgae grown without arable land) are listed in Annex IX Part A of RED II as advanced biofuel feedstocks.
• Biofuels from algae must achieve a minimum GHG saving of 65% compared to fossil fuel comparator (for new installations as of 2021).
• The GHG saving must be calculated according to the Annex V/VI methodology, which requires assessment of cultivation, processing, transport and end-use emissions.

Regulation (EU) 2024/3012 of the European Parliament and of the Council of 27 November 2024 on a Union certification framework for carbon removals (Carbon Removal Certification Regulation), OJ L, 12.12.2024.

Relevance to algae: This recently adopted Regulation establishes a voluntary EU framework for certifying carbon removals — verified, quantified and monitored reductions in atmospheric CO₂ achieved through carbon farming and industrial carbon removal activities. Algae are potentially relevant under two scenarios:

• Ocean/aquatic carbon sequestration: large-scale marine macroalgae cultivation has been proposed as a mechanism for ocean carbon sequestration, where algae absorb CO₂ and sink (or are sunk) to the seabed where the carbon is stored. The scientific evidence for and reliability of this mechanism is still being assessed; the Carbon Removal Certification Regulation's methodologies (to be developed by the Commission through delegated acts) will determine whether such pathways qualify.
• Terrestrial biomass carbon: algal biomass incorporated into soil (directly or via biochar from algal pyrolysis) represents a form of biological carbon sequestration that may qualify under carbon farming methodologies developed under the Regulation.
• CO₂ utilisation (CCU): industrial use of CO₂ captured from the atmosphere or from biogenic sources in algae cultivation can count as a temporary carbon removal; the Regulation addresses this category but with specific conditions on the durability of the removal.

The implementing acts and methodologies for this Regulation are still being developed; this is an area of active regulatory development and close monitoring is recommended.

Beyond the biofuel-specific RED II methodology, producers seeking to make climate-related claims for algae products (carbon footprint labelling, low-carbon claims, climate benefits) should follow recognised lifecycle assessment (LCA) methodology:

• ISO 14040/14044 (LCA principles and requirements/guidance) — the foundational international standard for LCA methodology.
• EU Product Environmental Footprint (PEF) methodology — the Commission's preferred LCA methodology for product-level environmental footprint claims within the EU, used under the forthcoming Green Claims Directive (see Green Claims and Greenwashing).
• BioGrace — the GHG calculation tool developed for RED II compliance, also widely used for comparative GHG analyses in the bioenergy sector (see Biogas and Biofuels).

The GHG footprint of algae production varies enormously by production system: open pond systems in sunny climates can achieve very low energy inputs and thus low GHG footprint per kg of biomass; closed photobioreactor systems in temperate climates with artificial lighting can have a substantial energy-related GHG footprint. Heterotrophic production GHG footprint depends on the carbon source (sugar from sugarcane, wheat glucose, etc.). These system-specific differences are significant and must be modelled carefully before making comparative environmental claims.

Regulation (EU) 2019/1021 on persistent organic pollutants (POPs), as amended: OJ L 169, 25.6.2019, p. 45.

Relevance to algae: Marine and freshwater algae can bioaccumulate PFAS (per- and polyfluoroalkyl substances) and other persistent pollutants from their growing environment. Ongoing EU regulatory developments on PFAS (including potential broad restrictions under REACH) may have implications for algae products from polluted growing environments. Producers sourcing algae from environments with potential PFAS contamination should monitor regulatory developments in this area.

• Algae as a CO₂ sink from industrial emitters is commercially viable but requires careful ETS accounting coordination with the CO₂ supplier — formalise this in a contract that addresses ETS liability allocation.
• Advanced biofuel claims under RED II require certification from a recognised voluntary scheme (see Biogas and Biofuels) — do not make renewable energy market claims without it.
• Carbon farming and carbon removal credit revenue from algae is emerging but regulatory frameworks are still being developed; treat any carbon credit revenue projections as highly uncertain until implementing methodologies are published under the Carbon Removal Certification Regulation.
• GHG footprint claims (carbon footprint labelling, carbon neutral claims) must be supported by LCA studies and will increasingly need to comply with the Green Claims Directive — align methodology with PEF guidelines from the outset if intending to make such claims in EU markets.
• Monitor PFAS regulatory developments if growing in environments with potential PFAS contamination — restrictions are tightening across the EU.

See also: Biogas and Biofuels | Green Claims and Greenwashing | Spatial Planning, Permits and Water Use | Fertiliser Product Regulation | Initiatives and Strategic Documents

Last reviewed: June 2026.