Investing in future-proof policies

The document explains the EU's 2030 climate and energy framework, focusing on the EU Emissions Trading System (EU ETS) and the Climate Action Regulation (CAR). It details the requirements for Member States to develop National Energy and Climate Plans (NECPs) and identifies 'loopholes' in the CAR that may delay climate action. The guide recommends that civil society engage in the NECP process to push for the phase-out of free emission allowances, the introduction of carbon floor prices, and the avoidance of flexibility mechanisms that undermine net-zero transitions.

• The EU's 2030 climate and energy framework establishes three primary targets: a minimum 40% reduction in domestic greenhouse gas emissions from 1990 levels, a minimum 32% share for renewable energy, and a minimum 32.5% improvement in energy efficiency.
• The EU utilizes two main instruments to meet its 2030 climate target: the EU Emissions Trading System (EU ETS), which targets a 43% reduction in emissions from power, industry, and aviation compared to 2005, and the Climate Action Regulation (CAR), which targets a 30% reduction in emissions from buildings, transport, agriculture, and waste compared to 2005.
• The Climate Action Regulation contains 'loopholes'—flexibility mechanisms that allow Member States to postpone climate action. These include the EU ETS loophole (using 100 million allowances from the carbon market), the land use loophole (using 280 million credits from forestry), and the 'hot air' loophole (using 105 million credits from pre-2020 surpluses).
• Free allocation of emission allowances in the EU ETS, intended to prevent 'carbon leakage', is criticized for lacking evidence of effectiveness and creating financial losses for governments. Between 2008 and 2015, European industry earned a €25 billion pollution windfall from these allocations.
• The EU ETS has historically suffered from an oversupply of allowances, keeping carbon prices below the levels required for the Paris Agreement. While the linear reduction factor was increased from 1.74% to 2.2%, the document argues a factor of 4.2% is needed to phase out emissions by 2040.
• National Energy and Climate Plans (NECPs) must be developed by Member States to detail how they will meet 2030 commitments. The process requires public consultation, and the Governance Regulation mandates that Member States provide early and effective opportunities for public participation.

APA

Carbon Market Watch (n.d.). Investing in future-proof policies. https://carbonmarketwatch.org/wp-content/uploads/2018/09/NATIONAL-ENERGY-AND-CLIMATE-PLANS-AND-THE-TRANSITION-TO-CARBON-FREE-SOCIETIES-_-WEB_final.pdf

Chicago

Carbon Market Watch. Investing in future-proof policies. n.d. https://carbonmarketwatch.org/wp-content/uploads/2018/09/NATIONAL-ENERGY-AND-CLIMATE-PLANS-AND-THE-TRANSITION-TO-CARBON-FREE-SOCIETIES-_-WEB_final.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=Investing in future-proof policies |url=https://carbonmarketwatch.org/wp-content/uploads/2018/09/NATIONAL-ENERGY-AND-CLIMATE-PLANS-AND-THE-TRANSITION-TO-CARBON-FREE-SOCIETIES-_-WEB_final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatchndinvesting, author = {{Carbon Market Watch}}, title = {{Investing in future-proof policies}}, institution = {Carbon Market Watch}, url = {https://carbonmarketwatch.org/wp-content/uploads/2018/09/NATIONAL-ENERGY-AND-CLIMATE-PLANS-AND-THE-TRANSITION-TO-CARBON-FREE-SOCIETIES-_-WEB_final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }