CRACKING EUROPE’S HARDEST CLIMATE NUT

The document assesses the failure of the EU Emissions Trading System (EU ETS) to reduce emissions in heavy industry due to free pollution permits and inadequate sectoral plans. It proposes a transition based on electrification, circular economy models, and breakthrough technologies like hydrogen-based steelmaking, while calling for the phase-out of free allowances and the introduction of green public procurement.

• Resource and energy-intensive industry is the third largest climate polluter in Europe, emitting 708 million tonnes of greenhouse gases annually, with the cement, chemical, and steel sectors accounting for nearly 60% of these emissions.
• The EU ETS has failed to reduce carbon pollution from heavy industry since 2012, and projections suggest no reductions in the steel, cement, and chemical sectors until 2030. This is attributed to the allocation of free pollution permits, which means over 90% of industrial carbon pollution is emitted without cost to companies.
• Current industrial climate roadmaps are insufficient, representing only an 18% reduction in greenhouse gas emissions between 2016 and 2050, which is more than 2.5 times slower than the historical reduction pace of 36% seen between 1990 and 2015.
• Deep decarbonisation is possible through a combination of energy efficiency, electrification, and circularity. Adopting fully circular economy models in sectors like steel, plastics, aluminium, or cement could reduce European emissions by 56% (300 MtCO2) annually by 2050.
• Breakthrough technologies are emerging, such as the HYBRIT project in Sweden, which aims for fossil-free steelmaking by 2035 using hydrogen reduction of iron instead of coal and coke. If successful, it could reduce Sweden's CO2 emissions by 10% and Finland's by 7%.
• The transition requires significant funding and infrastructure. Global decarbonisation of energy-intensive sectors (steel, cement, ammonia, and ethylene) could cost between USD 11 trillion and USD 21 trillion through 2050. In the EU, additional annual investments of EUR 175-290 billion are needed above the baseline to reach a net-zero economy.
• The document recommends a policy framework including a Paris Agreement compliance test for new investments, a phase-out of free EU ETS allowances, carbon performance standards for materials, and the use of public procurement to drive markets for zero-carbon solutions.

APA

Carbon Market Watch (2019). CRACKING EUROPE’S HARDEST CLIMATE NUT. https://carbonmarketwatch.org/wp-content/uploads/2019/04/Cracking-Europe’s-hardest-climate-nut-2.pdf

Chicago

Carbon Market Watch. CRACKING EUROPE’S HARDEST CLIMATE NUT. 2019. https://carbonmarketwatch.org/wp-content/uploads/2019/04/Cracking-Europe’s-hardest-climate-nut-2.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=CRACKING EUROPE’S HARDEST CLIMATE NUT |date=April 2019 |url=https://carbonmarketwatch.org/wp-content/uploads/2019/04/Cracking-Europe’s-hardest-climate-nut-2.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2019cracking, author = {{Carbon Market Watch}}, title = {{CRACKING EUROPE’S HARDEST CLIMATE NUT}}, institution = {Carbon Market Watch}, year = {2019}, month = apr, url = {https://carbonmarketwatch.org/wp-content/uploads/2019/04/Cracking-Europe’s-hardest-climate-nut-2.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }