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The document examines the growth of the transatlantic trade in natural gas liquids (NGLs), specifically ethane and propane, from the US to Europe. It contends that this trade allows European plastics producers to bypass domestic fracking bans and climate regulations, effectively offshoring the high greenhouse gas emissions associated with extraction and transport. The author calls for the EU to expand its Methane Regulation, Emissions Trading System (ETS), and Carbon Border Adjustment Mechanism (CBAM) to cover the full petrochemical supply chain and imports.

Carbon Market Watch argues that while the CBAM proposal has positive elements, such as basing certificates on verified emissions and avoiding export rebates, it requires significant revisions. Key recommendations include removing the overlap between CBAM and free emission allowances, including bulk chemicals and indirect emissions from the start, providing special considerations for least developed nations and small islands, and recycling revenues toward international climate finance rather than the Next Generation EU facility.

Carbon Market Watch argues that the European Commission's EU ETS revision proposal is inadequate, specifically citing an insufficient emission reduction target and a failure to implement the polluter pays principle through the continued use of free emission allowances. The organization proposes increasing the 2030 emission reduction target to 65% or 70%, reforming the Market Stability Reserve, phasing out free allocations, and expanding the scope of the ETS to include municipal solid waste incineration and full shipping emissions.

Carbon Market Watch argues that the European Commission's proposal to update the EU ETS is insufficient, specifically citing an inadequate emission reduction target and the failure to implement the polluter pays principle through continued free allowances. The organization advocates for a 70% emission reduction target by 2030, a more aggressive Market Stability Reserve (MSR) intake rate of 36%, and the immediate phase-out of free emission allowances. Further recommendations include expanding the ETS to cover all international shipping voyages and waste incineration, excluding Carbon Capture and Utilization (CCU) due to potential loopholes, and deleting Article 26 of the ETS Directive to allow binding greenhouse gas limits in industrial permits.

The document examines the resurgence of carbon capture and storage (CCS) in Europe as a critical tool for decarbonizing heavy industries and achieving Paris Agreement targets. It analyzes EU-level policies like the TEN-E Regulation and the EU Emissions Trading System (EU ETS), alongside financing tools such as the Innovation Fund and Connecting Europe Facility (CEF). The paper highlights a strategic shift toward 'carbon management hubs' to achieve economies of scale and reviews national progress in Norway, the UK, the Netherlands, Denmark, Sweden, and Germany, concluding that existing policy levers may be insufficient for the required scale-up.

The author contends that the European Commission's proposal to exempt CCU from the EU carbon market is flawed because it defines 'permanent storage' too narrowly, ignoring the end-of-life release of carbon from products like plastics and the emissions generated during the CCU production process.

The report contends that Poland's proposed expansion of electricity-only gas plants is out of step with climate modelling and faces significant regulatory and financial risks from EU policies. It highlights that the EU's 'Fit for 55' package, the EU Methane Strategy, and the EU taxonomy could increase operational costs, restrict funding from the Modernisation Fund, and block financing for projects that do not meet strict emissions criteria. Modelling suggests Poland could meet electricity demand with a maximum gas capacity of 6 GW between 2025 and 2030, far less than currently planned, risking a lock-in of gas dependency beyond 2050.

The document argues that the European Union can legally eliminate fuel tax exemptions for vessels, including fishing boats, even in international waters. It refutes claims that such a move violates UNCLOS Article 89 by asserting that EU-flagged vessels remain under flag-state jurisdiction and non-EU vessels can be linked to the EU via the port where they refuel. Furthermore, it concludes that UNCLOS lacks the 'direct effect' necessary for individuals or companies to legally challenge these tax changes in court. The briefing also notes that while the International Maritime Organization (IMO) is slow to implement global levies, strong EU regulation often accelerates international consensus.

The proposal argues that the European Green Deal requires an effective CBAM to prevent carbon leakage and ensure carbon price signals drive industrial investment. It suggests a three-pillar approach: a 'climate contribution' based on carbon intensity benchmarks to ensure carbon costs are reflected in material prices; the EU ETS with conditional free allowance allocation to incentivise carbon efficiency; and Carbon Contracts for Difference (CCfDs) to support investments in clean production and recycling. The authors contend that these elements must work together to avoid trade conflicts, limit administrative complexity, and provide the revenue necessary to fund the transition across all European industrial regions.

The policy brief warns that the EU ETS is at risk of a new oversupply of allowances due to the fast decarbonisation of the power sector and the impact of the COVID-19 pandemic. It argues that the current Market Stability Reserve (MSR) is insufficient to manage the expected surplus from coal phase-outs, which could reach 1.55 billion EUAs by 2030 based on planned closures, or 5.31 billion EUAs if current trends continue. To maintain environmental integrity, the author recommends a one-off cap reduction of 450 million allowances, increasing the linear reduction factor to 3.1% from 2023, raising the MSR intake rate to 36%, and implementing a rule to cancel allowances held in the MSR for more than three years.

The document analyzes how free emission allowances under the EU ETS led to up to 50 billion euros in windfall profits for energy-intensive industries between 2008 and 2019. It challenges the 'carbon leakage' justification for these allowances, noting a lack of evidence for industrial relocation. The author recommends transitioning to full auctioning of permits and utilizing the resulting revenues for climate innovation and a just transition.

The report analyzes the legal and economic feasibility of a social contract intended to restructure Poland's hard coal mining sector. It concludes that the contract lacks direct legal effect and violates EU competition law, particularly regarding subsidies for operating mines. The author argues that the European Commission is unlikely to authorize new state aid for coal production given the European Green Deal, and that the sector's continued preferential treatment hinders Poland's energy transition.

Between 2008 and 2019, fifteen CO2-intensive industrial sectors in nineteen EU countries earned estimated additional profits between €30 billion and over €50 billion from the EU ETS. These profits were derived from three primary sources: the overallocation of free emission allowances, the use of cheaper international credits (CERs/ERUs) for compliance, and the passing through of opportunity costs of free allowances into product prices. The iron and steel sector was the largest beneficiary, with profits ranging from €11.9 billion to €16.1 billion. In contrast, the aviation sector experienced a net loss of €151.2 million due to the need to purchase allowances. The report argues that free allocation may no longer be fit for purpose and recommends increasing the share of auctioning combined with targeted investment subsidies or a Carbon Border Adjustment Mechanism (CBAM) to reduce windfall profits and encourage decarbonization.

The document argues that the restructuring plan for Complexul Energetic Oltenia (CEO) fails to restore long-term viability because it maintains unviable lignite assets and invests in fossil gas, which are viewed as stranded assets. The authors contend that the plan contradicts the European Green Deal and the Paris Agreement, and that the proposed State aid—including €241.4 million for 2020 CO2 allowances—violates EU law and the 'do no harm' principle. They highlight a lack of real own contribution from CEO and the absence of meaningful compensatory measures, suggesting instead a full lignite phase-out by 2030.

The European Commission has opened formal investigations into compensations provided to RWE (EUR 2.6 billion) and LEAG (EUR 1.75 billion) for the closure of lignite plants in Germany by 2038. The Commission preliminarily concludes these payments constitute state aid and expresses doubts regarding their proportionality, specifically whether the calculations for foregone profits and mine rehabilitation costs are realistic or lead to overcompensation. ClientEarth argues that the aid may violate the 'polluter pays principle' regarding mine recultivation and that declining market conditions and rising CO2 prices make the assumed long lifespans of the plants unrealistic.

The Mátra Power Plant in northern Hungary is implementing a strategy to phase out lignite by 2029 by integrating solar PV, biomass, and a green industrial park. This approach aims to preserve between 6,800 and 10,000 direct and indirect jobs in a region with lower-than-average GDP. While the plant has successfully installed over 40 MW of solar PV and established an industrial park with 23 firms, it faces challenges including financial losses due to EU CO2 prices, a reliance on EU subsidies for restructuring, and a lack of documented training plans for transitioning coal workers.

The policy brief calculates the environmental costs of aviation in the Single European Sky area, finding that capacity shortfalls in 2018 and 2019 led to approximately 31.86 million nautical miles of additional distance flown. This resulted in 1.06 million tonnes of CO2 emissions, with estimated climate costs ranging from 162 million to 903 million EUR depending on the carbon pricing model and the inclusion of non-CO2 effects. The authors highlight that CO2 represents only about 34% of the sector's effective radiative forcing, with the remainder coming from non-CO2 impacts like contrail cirrus and nitrogen oxides.

ClientEarth argues that the IED revision must shift from a static, activity-based approach to one that promotes the industrial activity with the least environmental impact for a given service. The organization advocates for expanding the IED's scope to include mining, upstream oil and gas, and aquaculture, while making greenhouse gas (GHG) emission limit values and energy efficiency standards binding, even for installations covered by the EU ETS. Key recommendations include restricting Article 15(4) derogations to a maximum of 48 months, introducing a right to compensation for victims of pollution, and strengthening Aarhus Convention rights through periodic permit renewals every four years and mandatory public participation for all permit updates.

Carbon Market Watch argues that the EU ETS has failed to significantly reduce industrial emissions since 2012 due to free pollution permits and exemptions. To achieve climate neutrality by 2040, the briefing recommends increasing the Linear Reduction Factor (LRF), strengthening the Market Stability Reserve (MSR), ending free allowance allocations for industry and aviation, and earmarking 100% of auctioning revenues for climate action and innovation.

The letter urges EU officials to adopt gross greenhouse gas reduction targets and separate carbon removal targets to ensure that forest restoration does not serve as a 'smoke screen' for climate inaction in the energy, transport, and industrial sectors. It argues that fossil carbon and atmospheric carbon pools are distinct and that forest sinks are too impermanent and uncertain to justify market-based offsets.