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Carbon Market Watch outlines ten key elements for effective carbon pricing, arguing that such systems must be integrated into a broader policy mix, utilize absolute declining caps, and eliminate free allocations and offsets. The briefing emphasizes the need for transparency, the reinvestment of revenues into climate action and vulnerable communities, and the use of carbon border levies to prevent leakage without protecting polluting industries. It concludes that carbon pricing is a tool to be used alongside regulations and democratic engagement, rather than a standalone solution for decarbonization.

The report examines the uneven progress of carbon pricing in Asia, contrasting the advanced emissions trading systems (ETS) in Japan and South Korea with the early-stage designs in Vietnam, Indonesia, and the Philippines. It argues that while the EU CBAM poses a financial risk to exporters—particularly in the steel sector—the overall impact is limited and can be mitigated by implementing effective domestic carbon pricing and transitioning to cleaner production technologies. The document provides specific fee estimates for each country and recommends phasing out carbon offsets, implementing absolute emission caps, and shifting toward the auctioning of allowances to drive genuine decarbonisation.

The report analyzes how the EU chemical sector has avoided the costs of carbon pollution through free allowances under the EU ETS, noting that 98% of emissions since 2013 were covered. It highlights that the sector remains a major emitter, with emissions increasing in 2024, and that the Carbon Border Adjustment Mechanism (CBAM) currently only covers a small fraction of the industry. The author argues that this system protects polluters and hinders decarbonization, specifically citing BASF as an example of a company receiving more allowances than it needs while opposing carbon costs. The report recommends a clear phase-out timeline for free allowances, more ambitious benchmarking, and the introduction of decarbonization conditionalities.

Carbon Market Watch argues that a Carbon Border Adjustment Mechanism (CBAM) is preferable to the free allocation of allowances in the EU ETS, provided it is implemented without double protection. The organization recommends that CBAM cover cement, steel, chemicals, and power, and that its revenues be primarily disbursed as climate grants to developing countries. It further suggests that Least Developed Countries and Small Island Developing States be exempted from CBAM obligations to uphold the principle of common but differentiated responsibilities.

The report argues that carbon pricing is a vital but insufficient tool for climate action and must be integrated into a broader policy mix. It advocates for absolute emission caps, the elimination of free allowances, and the reinvestment of revenues into public climate benefits. The document strongly warns against the use of carbon offsets and credits, which it claims undermine environmental integrity and allow polluters to avoid real reductions. It also addresses the 'carbon leakage' myth, suggesting that the risks are often overestimated and used to justify policies that lock in polluting industries.

The report argues that while the EU ETS has halved emissions in key sectors, it remains structurally oversupplied and hampered by free allocation subsidies. It advocates for the total elimination of free allowances, the expansion of the system to cover all international aviation and shipping, and the rejection of carbon offsets and removals. The document emphasizes that the Market Stability Reserve (MSR) must be preserved to maintain a strong carbon price signal and that revenues should be redirected from fossil fuel subsidies toward a 'people first' transition.

Carbon Market Watch argues that the Carbon Border Adjustment Mechanism (CBAM) must be implemented as a full alternative to free emission allowances to avoid market failures and incentivize industrial decarbonisation. The organization demands that the CBAM's scope be expanded to include bulk chemicals and indirect emissions, and that it provide special exemptions or support for Least Developed Countries (LDCs) and Small Island Developing States (SIDS). Furthermore, it advocates for the full earmarking of CBAM and EU ETS revenues for climate action, both within the EU and as international climate finance, while opposing the introduction of export rebates for EU companies.

The report by Carbon Market Watch outlines a framework for 'carbon pricing done right,' arguing that such systems must be integrated into broader policy packages and based on strict emission caps to be effective. It emphasizes the 'polluter pays principle,' warning against free allocations and offsets, which it claims can weaken price signals and lead to greenwashing. The document advocates for transparency, the reinvestment of revenues into climate action and vulnerable communities, and a cautious approach to carbon leakage and border adjustment mechanisms to avoid protectionism while ensuring climate justice.

Carbon Market Watch and several partner organisations call for the immediate phase-out of free EU ETS allowances, arguing they create market failures and hinder industrial transformation. The letter advocates for full auctioning of allowances to generate revenues for green investments, the removal of free allocations for sectors covered by the Carbon Border Adjustment Mechanism (CBAM), and the rejection of a Carbon Leakage Protection Reserve. It further proposes increasing the minimum annual benchmark reduction rate to 1% and integrating carbon pricing into a broader regulatory framework including pollution performance standards and green public procurement.

A joint NGO statement arguing that the EU's Carbon Border Adjustment Mechanism (CBAM) must remove the overlap with free ETS allowances, expand its sectoral scope, provide special considerations for vulnerable nations, and redirect all revenues to international climate finance to avoid being a 'protectionist' measure.

The report by Carbon Market Watch provides a framework for implementing 'right' carbon pricing, arguing that such systems must be integrated into a broader policy mix, feature declining emission caps, and avoid loopholes like free allocations and carbon offsets. It emphasizes the need for transparency, the reinvestment of revenues into climate action and vulnerable communities, and the use of carbon border adjustments to prevent leakage while maintaining equity.

An open letter from various environmental and industrial organisations calling for a 68% reduction in ETS emissions, the phase-out of free allowances by 2030, and the use of CBAM as a replacement for carbon leakage protections to ensure the 'polluters pay' principle is upheld.

The document argues that the EU Emissions Trading System (ETS) has functioned as a subsidy for high-emitting industries, providing €50 billion in windfall profits while failing to reduce emissions. The authors call for a full phase-out of free allowances by 2032, a 10% annual reduction starting in 2026, and the introduction of a fully operational Carbon Border Adjustment Mechanism (CBAM) by 2026. They further propose making any remaining free allowances conditional on energy efficiency and decarbonisation plans, and revising benchmarks to include a minimum improvement rate of at least 0.4%.

The letter advocates for a CBAM that covers all high-emitting sectors and indirect emissions from the start, a faster phase-out of free ETS allowances to incentivize green investment, and the earmarking of CBAM certificate revenues for climate mitigation and adaptation in least developed countries.

A joint statement from NGOs urging the Economic and Financial Affairs Council (ECOFIN) to implement the Carbon Border Adjustment Mechanism (CBAM) as a direct alternative to EU ETS free allowances and indirect cost compensation to maintain decarbonisation incentives.

Carbon Market Watch proposes a comprehensive strengthening of the EU ETS, including increasing the Linear Reduction Factor to reach zero emissions by 2040 and increasing the Market Stability Reserve intake rate to 36% from 2024. The organization advocates for the full auctioning of emission allowances, earmarking 100% of revenues for climate action, and extending the system to include international maritime transport and waste incineration. Conversely, it argues against including road transport and buildings in the ETS and opposes the inclusion of Carbon Dioxide Removal (CDR) credits.

The report argues that climate change will increasingly exacerbate risks to US national security by intensifying physical impacts and mounting geopolitical tensions over the energy transition. It identifies a likely increase in cross-border conflicts over water and migration, strategic competition in the Arctic, and the risk of unilateral solar geoengineering. The document highlights 11 highly vulnerable countries and two regions (Central Africa and Pacific island states) where climate-induced instability may necessitate increased US diplomatic, humanitarian, and military resources. It also notes that current global policies are insufficient to meet Paris Agreement goals, leading to competition over critical minerals and technologies.

The report identifies a significant gap between the high demand for green financing driven by Morocco's Nationally Determined Contribution (NDC) and the limited supply of tailored financial instruments for SMEs. While energy efficiency and renewable energy projects are well-covered, sectors like fisheries and sustainable housing are underserved. The study recommends improving the regulatory framework for ESCOs, introducing fiscal incentives, and designing new equity or guarantee mechanisms to catalyze green investment.

The study identifies a significant gap between the high demand for green financing driven by Morocco's Nationally Determined Contributions (NDC) and the limited supply of dedicated instruments for SMEs. While sectors like industry and agriculture are well-served by credit lines, others such as transport, water, and construction remain underserved. The report recommends enhancing the regulatory framework, implementing a green taxonomy, and developing new instruments such as a dedicated green guarantee mechanism or an equity fund to support the transition to a green economy.

The report identifies a widening gap between coal capacity and generation, particularly in China and India, where new plants are built as 'system insurance' while renewables displace coal in actual output. Globally, the coal pipeline is narrowing geographically, with 95% of construction concentrated in China and India. However, the report notes a significant slowdown in retirements in the U.S. and EU due to policy interventions and energy security concerns. Regional analyses highlight Indonesia's growth in captive coal for industrial processing, the U.S.'s political push to sustain aging plants, and the EU's structural shift toward a coal-free system. The document also examines the impact of the EU's Carbon Border Adjustment Mechanism on the Western Balkans and the challenges of rebuilding Ukraine's energy system.