Search Climate Insights Directory

The report concludes that while the EU Emissions Trading System (EU ETS) remains the primary driver for industrial decarbonisation, current carbon prices alone are insufficient to trigger the massive investments required for deep decarbonisation in the steel and cement sectors. It argues that demand-side measures—specifically Green Public Procurement (GPP) and sustainable product regulations—can provide the necessary market signals to build technological capacity and avoid carbon lock-in. The study highlights that government-driven initiatives have significantly more potential than voluntary industry pledges, though the latter can serve as a short-term bridge. Key recommendations include harmonising low-carbon product definitions across EU Member States and exploring Carbon Contracts for Difference (CCfDs) to bridge the 'green premium' cost gap.

The report concludes that all analyzed policy frameworks are inadequate for the robust deployment of carbon dioxide removals (CDR). Most frameworks fail to establish a clear firewall between emissions reductions and removals, often treating them as interchangeable through offsetting mechanisms. Key deficiencies include the absence of legally binding, separate CDR targets, the lack of a robust definition of CDR that ensures long-term permanence, and insufficient monitoring, reporting, and verification (MRV) systems. The authors recommend that CDR be strictly defined as a secondary climate function to balance residual emissions, supported by dedicated legal targets and rigorous accounting to prevent 'mitigation deterrence'.

The authors argue that the EU's current net-zero industry plans are insufficient and propose broadening the scope to include basic material production, introducing a charge on basic materials to raise approximately €50 billion annually for a sovereign wealth fund, and implementing a governance framework that links funding to national reform agendas.

Carbon Market Watch advocates for a legally binding EU target of over 90% gross emissions cuts by 2040 to achieve domestic net zero. The organization argues for 'turbo charging' the EU ETS by increasing linear reduction factors, phasing out free allowances by 2030 in favor of the Carbon Border Adjustment Mechanism (CBAM), and keeping carbon removals strictly separate from the ETS to avoid offsetting and ensure deep decarbonization. It also calls for the expansion of the ETS to full scope for aviation and shipping and the use of auctioning revenues for transparent climate projects.

The report asserts that the EU cannot reach net zero by 2050 without large-scale deployment of CCUS, estimating a need to capture and store between 300 and 640 Mt of CO2 annually by 2050. It highlights a significant gap between current project announcements and the necessary infrastructure, particularly in CO2 transport and geological storage. The authors recommend that the European Commission establish clear targets, a regulatory framework for CO2 grids, and financial mechanisms like Carbon Contracts for Difference (CCfD) to de-risk investments. The document specifically identifies 'hard-to-abate' sectors—such as cement, steel, and waste-to-energy—as critical areas where CCUS is either the lowest-cost or only viable decarbonisation pathway. It also emphasizes the necessity of technology-based carbon dioxide removals (CDR) via BECCS and DACS to balance residual emissions.

The document argues that the EU Innovation Fund's current overhaul risks funding projects with marginal abatement potential due to outdated benchmarks. It recommends updating reference points to target the highest emission-reduction potential, making resource saving a mandatory criterion for support, and prioritizing economy-wide scalability over local or sectoral scalability to ensure true sustainability.

Analysis of 2022 EU-ETS data shows that the ten largest emitters in the system are all coal power plants, which together account for 13% of total EU-ETS emissions and 25% of power sector emissions. Germany and Poland are the primary contributors, together responsible for two-thirds of coal power emissions. Three utilities—RWE, PGE, and EPH—dominate the sector, collectively accounting for 30% of power sector emissions. While coal emissions rose 6% in 2022 due to the energy crisis, the long-term trend remains a decline, with 2022 levels 40% lower than a decade ago.

The report identifies that the ten largest emitters in the EU-ETS are all coal power plants, which together account for 25% of the power sector's emissions. While 2022 saw a 6% increase in coal emissions due to the energy crisis, the long-term trend remains a decline. Germany and Poland dominate the emissions landscape, and three utilities—RWE, PGE, and EPH—have remained the top emitters for six consecutive years.

The author contends that the steel industry's exemption from the EU ETS benchmark reform, secured through lobbying—particularly by Germany—shields polluting installations from necessary price signals. While the sector faces high costs for transitioning to Direct Reduced Iron (DRI) technology, the document argues that free allowances do not bridge the investment gap and instead reduce the pressure to modernise. The author suggests that the ETS should make polluting more expensive to incentivise the shift to low-carbon steel, rather than serving as a protectionist tool.

Carbon Market Watch critiques the European cement association's (Cembureau) claims that cement production and use can provide carbon removals. The author argues that proposed methods—including the use of sustainable biomass with CCS, enhanced carbonation, and natural carbonation—fail to meet the criteria for permanent and additional removals when full life-cycle assessments are considered. The document urges the EU to focus on proven removal techniques and industrial decarbonization strategies, such as reducing clinker-to-cement ratios and phasing out free pollution permits under the Emissions Trading System.

The document argues that the EU fisheries sector must shift away from carbon-intensive, high-impact fishing to meet the goals of the European Green Deal and the European Climate Law. It recommends a comprehensive approach including the creation of national emission-reduction roadmaps, the transition from active mobile bottom-contacting gears to passive techniques, and the elimination of fossil fuel subsidies. The brief emphasizes the need to quantify all greenhouse gas emissions, including those from seabed disturbance and the removal of fish biomass, and suggests integrating fisheries into the EU Emission Trading System (ETS). It also advocates for fairer funding access for small-scale coastal fisheries and the use of ecosystem-based fisheries management to protect 'blue carbon' habitats.

The author contends that 'carbon farming' activities are unsuitable for carbon removal certification because they provide temporary, volatile storage that risks enabling greenwashing and delaying actual emission reductions. Instead of market-based carbon credits, the document proposes 'activity-based finance' to support farmers and foresters in adopting nature-based practices, funded by public resources or polluter-pays instruments.

The Industrial Emissions Directive (IED) regulates approximately 50,000 large industrial installations in Europe, which account for 736 million tonnes of CO2 or about 40% of the EU's total carbon footprint. However, the IED currently does not address greenhouse gas emissions, as these are managed by the EU Emissions Trading System (EU ETS). The author contends that the EU ETS has failed to significantly reduce industrial emissions due to exemptions and free pollution subsidies. The European Commission's April 2022 proposal for reforming the IED failed to include GHG emission limits, with the Commission suggesting a delay until 2028 to avoid negatively impacting the EU ETS's efficiency. The document argues that this delay is unacceptable given the urgency of the climate crisis and that the EU ETS already possesses mechanisms, such as the Market Stability Reserve, to handle any oversupply of permits resulting from IED-mandated limits. The author urges the European Parliament and Council of the European Union to amend the proposal to regulate carbon emissions, particularly from the most polluting plants, noting that due to the IED's lengthy permit update processes, a delay until 2028 would mean no stringent GHG regulations would be in place until 2038 or later.

The cement sector is a major industrial emitter, accounting for approximately 7% of global CO2 emissions and 4% of EU emissions. The report argues that the current decade is critical because 30% of EU cement kilns will reach the end of their life by 2030, presenting a window to avoid stranded assets by investing in low-carbon technologies. Key technical levers include reducing the clinker-to-cement ratio, implementing carbon capture and storage (CCS), and substituting fossil fuels with biomass and waste. To support this, the report recommends a comprehensive policy suite: upstream (accelerating renewable energy and CO2 infrastructure), midstream (implementing Carbon Contracts for Difference and phasing out ETS free allowances), and downstream (mandating green public procurement and scaling off-take agreements). It also highlights the role of sustainable finance, noting that while sustainability-linked bonds (SLBs) have been issued, their potential in the cement sector remains under-exploited due to a lack of sector-specific standards.

The October 2023 Polish parliamentary elections represent a critical juncture for the country's democratic governance and its relationship with the European Union. The contest pits the ruling nationalist coalition, led by the Law and Justice (PiS) party, against a fragmented but numerically stronger 'democratic opposition' including the Civic Coalition, Poland 2050, the Left, and the Polish People's Party. While PiS and its partner United Poland oppose EU decarbonisation and the Green Deal, the opposition generally supports the green transition and Eurozone accession. A victory for the opposition would necessitate extensive reforms to restore the rule of law and depoliticise state institutions, while a PiS victory would likely continue the undermining of European constitutional values.

Longship is a Norwegian megaproject designed to create a full-chain carbon capture and storage network, linking industrial capture sites to offshore storage in the North Sea. The Norwegian government is funding approximately two-thirds of the first phase, valued at over C$3.5 billion, to overcome high upfront costs and regulatory barriers. The project includes two initial capture sites—a cement factory in Brevik and a waste-to-energy plant in Oslo—and the Northern Lights transport and storage facility. While phase one is heavily subsidized, phase two aims for commercial viability by providing storage services to industrial emitters across Europe. The document highlights the importance of addressing non-financial barriers, such as regulatory red tape, and leveraging existing national expertise to jumpstart a regional CCS market.

Carbon Market Watch argues that the EU's proposed Carbon Removal Certification Framework (CRCF) must be strictly limited to permanent carbon removals to avoid 'mitigation deterrence'. The organization recommends prohibiting the use of certified removals for offsetting emissions in the EU ETS or ESR, excluding carbon farming and carbon storage in products due to their lack of permanence, and implementing stricter quality criteria for quantification and liability. It suggests that nature-based solutions should be funded via activity-based finance for biodiversity and soil health rather than through carbon removal metrics.

The Clean Air Task Force and nine other organizations oppose a provisional agreement on RePowerEU that would allow Member States to use 60% of grants from the Innovation Fund and 40% of front-loaded ETS allowances to fund RePowerEU measures. They argue that diverting these funds undermines the deployment of non-commercial scale technologies essential for meeting climate goals.

Carbon Market Watch criticizes the ICAO General Assembly for weakening the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) by lowering its emissions baseline to 85% of 2019 levels. The author contends that CORSIA is an ineffective tool relying on low-quality offsets and is susceptible to industry influence. Consequently, the document urges the EU to stop relying on this global system and expand the EU ETS to cover all long-haul flights departing and arriving in the EU.

The report evaluates the voluntary carbon offsetting practices of eight major European airlines, including easyJet, Ryanair, and Lufthansa. It finds that while some airlines like easyJet have high volumes of offsets, the overall quality of credits is often low due to a reliance on cheap forestry projects in developing countries. The study highlights a significant lack of transparency in reporting and warns that promoting 'carbon neutral' flying may encourage air traffic growth, contradicting the need for sector decarbonization through sustainable aviation fuels (SAF).