Climate neutrality in cities: how to make best use of negative emissions?

A new JRC report offers guidance on negative emissions for cities, including a definition and a methodology to identify residual emissions, and a framework for emissions compensation (local carbon removals and carbon credits).

The guidance, primarily aimed at cities participating in the EU’s 100 Climate-Neutral and Smart Cities Mission, also serves as a reference for any city developing net-zero strategies. It establishes clear principles for defining residual emissions, accounting for carbon removals, and using carbon credits in a way that ensures environmental integrity, transparency, and alignment with international best practice.

Defining and addressing residual emissions

A central element of the guidance is the “how to” for defining residual emissions, which remain after all technically and economically feasible emissions reduction options have been implemented. The report emphasises that residual emissions should not be set in advance through fixed targets but must be identified through a detailed, iterative assessment of local mitigation potential and constraints.

Prioritising emissions reduction

Emissions reduction at source must remain the overriding priority in any climate neutrality strategy, according to the guidance. Carbon removals and compensation measures are positioned strictly as complementary tools to address only those emissions that cannot be eliminated in time.

Over-reliance on compensation risks delaying structural decarbonisation and increasing long-term system costs, while also raising concerns around credibility and greenwashing.

Carbon removals and crediting approaches

To achieve net-zero, cities may rely on two main mechanisms:

In-boundary carbon removals – carbon removal activities that take place inside the city, such as afforestation, revegetation, restoration of wetlands, and bioenergy with carbon capture and storage;
Out-of-boundary carbon removal credits, provided they meet strict quality and integrity criteria in alignment with the EU Carbon Removal and Carbon Farming Regulation.

The guidance specifies that only carbon removal credits are eligible for emissions compensation, excluding emissions reduction or avoidance credits. Importantly, any carbon removal credit sold to external actors cannot be counted towards a city’s own net-zero balance, reinforcing strict rules against double counting and double claiming.

Cities are also encouraged to reinvest revenues from carbon credits into further climate action, reinforcing a self-sustaining cycle of mitigation and innovation.

Six principles for robust residual emissions strategies

The framework is structured around six core principles to ensure that compensation strategies remain credible, balanced, and adaptable over time. These are:

Emissions reduction first: mitigation remains the primary priority;
Transparency: full disclosure of emissions, removals, and credits;
Environmental and ethical integrity: avoidance of unintended social and ecological harm;
Co-benefits: prioritisation of solutions that support broader sustainability goals;
Diversification: balancing technologies, geographies, and approaches;
Cost and time effectiveness: aligning action with feasibility, maturity, and timing.

The first two principles guide the whole strategy and governance of emissions compensation, the following two support a locally rooted selection of individual compensation options, while the last two help combine options in robust portfolios.

The transparency principle has immediate implications on emissions accounting. Cities are required to report positive emissions (emissions and sold credits), negative emissions (removals and retired credits) and their difference (net emissions) in a fully transparent accounting framework. Additionally, all data should be traceable and publicly verifiable, with robust monitoring, reporting and verification (MRV) systems in place to ensure consistency and comparability across cities.

Governance and implementation

The guidance also highlights the importance of governance structures that enable cities to act as regulators, investors, innovators, and coordinators of carbon removal ecosystems. It encourages collaboration across public and private actors, as well as investment in monitoring systems and data infrastructure to improve long-term decision-making.

As a companion to the Guidance, a Summary for Policymakers will be published soon. It is intended as a practical and accessible entry point for decision-makers, explicitly linking each stage of the decision-making process to the relevant sections of the Guidance.