Search Climate Insights Directory

The document argues that free pollution permits intended to prevent carbon leakage have instead generated significant windfall profits for Finnish corporations while depriving the government of substantial auctioning revenues.

The 2030 Effort Sharing Regulation (ESR) is a central EU tool covering approximately 60% of total greenhouse gas emissions, specifically targeting the transport, buildings, agriculture, and waste sectors. While the proposal aims for a 30% reduction in non-ETS emissions by 2030 compared to 2005 levels, Carbon Market Watch argues that this target is insufficient and threatened by various 'loopholes'. These include the use of ETS allowances and LULUCF forestry credits to offset emissions, as well as an inflated starting point based on 2016-2018 average emissions rather than 2020 targets. The brief recommends increasing the 2030 non-ETS target to 45%, implementing five-yearly ratchet mechanisms, and prohibiting the use of forestry and ETS credits to ensure environmental integrity.

Carbon Market Watch and Transport & Environment criticize a European Commission proposal for 2021-2030 emission targets, stating that 'flexibilities' regarding forestry credits and ETS allowances could reduce actual emission cuts from 30% to 27%. They further argue that basing starting points on average 2016-2018 emissions rewards countries failing to meet 2020 targets by inflating their carbon budgets.

Green NGOs call on the European Commission to publish the Effort Sharing Decision on 20 July to maintain EU climate leadership and implement the Paris Agreement. They argue that the 2030 targets for sectors not covered by the ETS—including transport, buildings, and agriculture—must be upheld. The statement also warns against using forestry credits as loopholes to avoid reductions in other sectors.

Carbon Market Watch asserts that the proposed 2.2% annual emission reductions in the EU ETS are inadequate to meet the 2°C or 1.5°C warming targets, potentially leading to 2 billion tonnes more CO2 than the EU's Paris pledge. The briefing highlights that carbon prices remain too low to drive decarbonisation and that free permit allocations have allowed heavy polluters to profit, with over 24 billion euros made between 2008 and 2014. To address these failures, the author recommends steeper emission cuts, phasing out free allowances, and ensuring the next trading period starts at actual emission levels.

A coalition of European NGOs calls on the EU to intervene in ICAO negotiations to prevent the weakening of the Global Market Based Measure (GMBM). The authors demand the resolution of exemptions through fair differentiation, a strict 2020 deadline for any pilot phases, the protection of the EU's right to implement more ambitious regional measures, and the alignment of accounting methods between ICAO and the UNFCCC to avoid double counting.

Carbon Market Watch and partners argue that the proposed 30% emission reduction target for the 2021-2030 Effort Sharing Decision (ESD) is insufficient to meet Paris Agreement goals. They warn that specific loopholes—including the use of forest carbon removals, EU ETS surplus allowances, and the carry-over of unused permits—could lead to an additional 4.7 billion tonnes of CO2 emissions. The authors call for a minimum 45% reduction in ESD sectors by 2030, a target of -95% by 2050, and the implementation of an automatic mechanism to accelerate emission cuts every five years based on science and technology.

The letter calls for the EU ETS revision to align with the 1.5 degree goal of the Paris Agreement, establish a mechanism to direct revenues toward international climate finance, and correct the assumption that biomass burning is carbon neutral.

The document urges the European Parliament to revise the EU Emissions Trading System (EU ETS) to align with the 1.5°C goal of the Paris Agreement. It proposes using EU ETS revenues as a source of international climate finance, establishing an international climate action fund, and correcting the assumption that biomass burning is carbon neutral due to a lack of sustainability criteria.

The policy brief argues that the EU's Effort Sharing Decision (ESD) must be significantly strengthened to meet Paris Agreement goals. It recommends a 95% emission reduction by 2050 and at least 45% by 2030, based on a carbon budget. The author identifies five critical loopholes—including the use of ETS credits and land-use offsets—that could allow an additional 4,703 million tonnes of CO2 equivalent to be released. It further proposes robust governance through National Energy and Climate Plans (NECPs) and stronger financial penalties for non-compliant Member States.

The report finds that EU coal-fired power plants were responsible for approximately 22,900 premature deaths in 2013, with health costs estimated between 32.4 and 62.3 billion Euros. A significant portion of these impacts is cross-border; for example, coal plants in Poland and Germany caused over 7,000 premature deaths in other countries. The analysis identifies the 'Toxic 30' plants responsible for 51% of these deaths and the 'Dirty 30' plants contributing nearly half of the EU coal fleet's CO2 emissions. The authors advocate for a full coal phase-out, structural reform of the EU Emissions Trading System, and the implementation of an Emissions Performance Standard to meet Paris Agreement goals.

The document argues that emission reductions of 80% or more are possible in Europe's energy-intensive industries through process, product, and business-model transformations, provided there is strong public policy support and funding for innovation.

The report proposes 'Inclusion of Consumption' (IoC) as a way to ensure carbon prices are reflected in the cost of materials like steel and cement, which are currently shielded by free allowance allocations in emissions trading schemes. By adding a charge to the consumption of these materials based on benchmarks, the IoC aims to incentivize material efficiency and innovation without harming competitiveness. The authors argue that IoC is administratively feasible, compliant with WTO law, and qualifies as an environmental regulation under EU law.

The briefing argues that deep decarbonisation in Europe's energy-intensive industries is technically possible through process, product, and business-model transformations, though it requires strong public policy and funding. It details specific pathways for the chemical sector (bio-based feedstocks and circularity), steel (HIsarna, hydrogen-based DRI, and scrap-EAF production), and cement (calcium looping CCS and clinker substitution). It specifically recommends strengthening the EU ETS Innovation Fund to support the commercialisation of these capital-intensive technologies by 2030.

Carbon Market Watch and a coalition of NGOs advocate for a revised 2030 Effort Sharing Decision (ESD) that aligns with the Paris Agreement. They propose seven key reforms: increasing ambition to reach 95% emission reductions by 2050, implementing 5-yearly review and ratchet-up mechanisms, strengthening governance with annual targets, basing 2021 allowances on actual emission levels, banning the use of EU ETS surplus allowances for ESD compliance, treating carbon removals in a separate LULUCF pillar, and prioritizing energy efficiency through synergies with existing EU legislation.

The document examines the role of carbon pricing within the EU's Effort Sharing Decision (ESD), which covers approximately 60% of EU emissions. It argues that while carbon pricing is a useful tool, it cannot deliver results alone and must be framed within a supportive policy context. The author critiques the EU Emission Trading System (ETS) for permit oversupply and warns against expanding the ETS into transport and heating, suggesting instead national carbon taxes, permit trading, or auctioning of permits. Specifically, auctioning half of annual reductions could generate over €9 billion between 2021 and 2030.

The 2015 EU ETS emissions fell by 0.6% to 1802mt, driven by a 0.6% decrease in power and heat emissions and a 0.3% decrease in industrial emissions. Notable national trends include a 23% drop in UK coal power emissions and an 11% increase in Netherlands power emissions due to new coal plants. The report highlights a long-term trend of renewables displacing fossil fuels in the European power sector.

The policy brief examines Article 10c of the EU ETS Directive, which allows lower-income Member States in Central and Eastern Europe to grant free emission allowances to the power sector provided they invest the equivalent value in energy system modernisation. The author argues that this mechanism has largely subsidised coal power and fossil fuel infrastructure rather than diversifying energy mixes, citing examples in Poland, the Czech Republic, and Romania. It highlights failures in transparency, public consultation, and additionality, specifically noting investments in the Belchatow power station. The brief recommends that the post-2020 revision implement a competitive bidding process for all investments, exclude coal from eligibility, and ensure open public consultation to align the mechanism with EU decarbonisation goals.

The document reports that Swedish energy-intensive industries generated approximately €729 million in windfall profits from the EU ETS between 2008 and 2014. These profits were driven by the surplus of free emission allowances, the use of low-cost international offsets, and cost-pass through to customers. The brief highlights that the Swedish government missed out on at least €1.9 billion in auctioning revenues due to these free allocations. It specifically identifies SSAB, Preem, and Cementa as the highest profiting corporations. The author argues that the risk of carbon leakage is unsubstantiated and that the current system reduces incentives for industrial decarbonization, recommending a phase-out of free allocations in favor of full auctioning.

The document argues that the EU ETS "carbon leakage" rules have led to massive windfall profits for French industrial companies while depriving the government of significant auctioning revenues. Between 2008 and 2014, French energy-intensive companies generated approximately €2.7 billion in windfall profits, with Bersillon, Total, and Lafarge being the top beneficiaries. The brief contends that these subsidies reduce incentives for decarbonization and that the Paris agreement will mitigate future leakage risks. It recommends phasing out free allocations in favor of 100% auctioning and implementing a tiered approach to target support only where truly necessary.