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The briefing advocates for shifting or supplementing production-based carbon pricing with consumption-based models to eliminate the need for free allowances and exemptions that mute price signals. It highlights that pricing at the point of final consumption can prevent carbon leakage in basic materials like steel and cement, incorporate emissions from imports, and provide sub-national governments with jurisdictional autonomy. The text proposes an evolutionary implementation path, starting with undifferentiated sector benchmarks and moving toward full life-cycle carbon accounting.

Carbon Market Watch argues that the risk of carbon leakage within the EU ETS has decreased due to global climate progress, such as the Paris Agreement, and suggests that the long-term competitiveness gains of a low-carbon transition outweigh short-term costs.

The document argues that restricting California's oil production can significantly lower global CO2 emissions because a portion of the avoided production is not replaced by other sources. It estimates that for every barrel of oil left in the ground in California, global consumption would drop by 0.2 to 0.6 barrels, leading to a reduction of 80 to 240 kg of CO2 per barrel. The brief identifies several policy options, including ceasing new well permits, implementing emissions performance standards, and targeting production in pollution-vulnerable areas. It notes that such measures are cost-competitive with other California climate strategies and could address 'carbon leakage' by complementing demand-side policies. Additionally, the report highlights that many of California's most productive oil fields are more GHG-intensive than global averages and are located in disadvantaged communities, making production limits a matter of environmental justice.

The report examines border carbon adjustments (BCAs) as a tool to prevent carbon leakage and incentivize climate ambition among trade partners. It analyzes past proposals in the EU and US, evaluates the legal constraints imposed by the WTO, and provides a comprehensive design framework. The authors recommend a BCA focused on imports of primary goods from energy-intensive sectors, utilizing global sectoral benchmarks for emissions and ensuring revenues benefit developing countries.

The briefing contends that the EU ETS phase 4 (2021-2030) fails to drive sufficient decarbonisation due to low carbon prices and excessive free allowances. It recommends that Member States implement national carbon floor prices, unilaterally cancel allowances following coal plant closures to avoid the 'waterbed effect', and redirect auctioning revenues toward a just transition. For the industrial sector, it advocates replacing free allocations with a carbon border tax and increasing the Linear Reduction Factor (LRF) to align with a 2040 or 2050 decarbonisation timeline.

The policy brief argues that border carbon adjustments (BCAs) are a more effective tool for addressing emissions leakage than traditional 'behind the border' measures like free allowances. It outlines a specific six-step design process: determining scope and coverage, calculating embedded carbon, determining the adjustment level, deciding revenue use, establishing an expiration date, and ensuring a fair and transparent process. The authors recommend that BCAs focus on primary goods in high-carbon sectors, apply only to imports to avoid WTO subsidy issues, and exempt Least Developed Countries. Revenue generated should be used to support environmental objectives and benefit affected developing countries. The brief also notes that while BCAs have been proposed in the EU and US, they are rarely implemented.

The document summarizes over 125 written submissions and workshop contributions regarding the proposed Canadian Clean Fuel Standard (CFS). Stakeholders generally support the CFS's goal of reducing GHG emissions by 30 Mt annually by 2030, though they diverge on the feasibility of the timeline and the specific regulatory design. Key areas of discussion include the preference for an emission intensity-based approach over volumetric mandates, the need for flexible compliance pathways such as credit trading, and the importance of harmonizing the CFS with existing carbon pricing and international aviation and marine standards. Industrial sectors expressed significant concerns regarding competitiveness, carbon leakage, and the technical feasibility of fuel switching, while environmental groups advocated for broad sustainability criteria and the inclusion of indirect land use changes (iLUC) in life-cycle analyses.

The document summarizes stakeholder responses to Canada's proposed Clean Fuel Standard (CFS). While there is broad support for the goal of reducing greenhouse gas emissions by 30 Mt by 2030, stakeholders express divergent views on regulatory design, specifically regarding sector-specific targets, the inclusion of indirect land-use change (ILUC) in life-cycle assessments, and the potential for policy duplication with carbon pricing. Key concerns include the economic impact on trade-exposed industries, the feasibility of infrastructure for low-carbon fuels, and the need for harmonization with international standards in aviation and shipping.

The policy brief critiques the proposed EU ETS revision, arguing that over-generous free allowances to industrial sectors—particularly the steel industry—create windfall profits and deprive the public of potential auctioning revenues. It recommends increasing the Linear Reduction Factor to 4.2% to align with Paris Agreement goals, establishing a Just Transition Fund for workers, and shifting toward full auctioning to fund low-carbon innovation and support citizens.

Carbon Market Watch calls for the curtailment of free carbon allowances in the EU ETS following a court ruling requiring ArcelorMittal to return wrongfully received permits. The organization warns that current trialogue negotiations may result in the allocation of an additional 300 to 775 million free permits for heavy industry, contradicting the 'polluter pays' principle. The text advocates for increased auctioning of permits, the inclusion of importers in emission costs, and the potential introduction of a carbon tax to drive industrial decarbonization.

The Carbon-CAP project assesses the effectiveness and feasibility of consumption-based carbon accounting (CBCA) and demand-side policies to address emissions embodied in trade. By analyzing sectors such as food, buildings, and transport, the report identifies a suite of promising policy instruments—ranging from regulatory standards to carbon-intensive material charges—that could potentially reduce the EU's carbon footprint by up to 48% theoretically, or 4-10% when accounting for realistic behavioral responses by 2050. The study emphasizes that while production-based policies are standard, CBCA provides a critical macro-level indicator of an economy's carbon intensity and the responsibility of consuming nations for global emissions.

Carbon Market Watch argues that the European Parliament failed to strengthen the 'polluter pays principle' by rejecting a carbon border tax and free permit phase-out for the cement sector. While the Parliament decided to include shipping in the EU ETS and strengthen aviation rules, it voted to maintain a 2.2% annual emissions cap reduction rate rather than increasing it to 2.4%.

International researchers advocate for the strengthening of the EU ETS post-2020, emphasizing the need to address structural surpluses and ensure a full carbon price pass-through for basic materials like steel and cement to drive innovation and global policy alignment.

The document advocates for a mechanism requiring cement and clinker importers to pay for their pollution to create a level playing field and end free allocation in the EU ETS. It argues that free allocation has hindered innovation, increased emissions by subsidizing high-carbon exports to Africa, and generated over €5 billion in windfall profits for the cement industry. The briefing asserts that an import inclusion scheme is WTO-compatible and beneficial for the industry, as it would incentivize the adoption of new technologies in a sector where European production is currently less efficient than in other global regions.

The UK has nearly completed its transition from coal, a process driven initially by market forces and later by a carbon tax, rather than a single planned strategy. While the 'dash for gas' in the 1990s and the 2013 carbon tax significantly reduced coal-fired power, the socio-economic recovery of mining communities remains incomplete. Despite regeneration efforts, former coalfields experience persistent 'economic inactivity' and high rates of incapacity benefit claims, indicating a long-term job shortfall that transcends the retirement of the original mining workforce.

The document argues that consumption-based accounting provides a more nuanced view of climate responsibility than territorial accounting by attributing emissions to the final consumers of goods and services. Using data from the Eora and IOTA models, it demonstrates that high-income OECD members have increasingly imported emissions from middle-income countries between 1992 and 2010, suggesting that some territorial emission reductions in wealthy nations are the result of 'carbon leakage' to other territories.

The report argues that the EU ETS's 'carbon leakage' rules have allowed heavy industry to generate over €25 billion in windfall profits from 2008 to 2015. It claims that free allocation of pollution permits has cost governments at least €143 billion in lost auctioning revenues, reduced incentives for efficiency, and lacks empirical evidence of actual carbon leakage. The document calls for phasing out free allocations and establishing a Just Transition Fund to support impacted communities.

The cement industry in 20 European countries generated €5 billion in windfall profits between 2008 and 2015 due to the EU ETS, which the document argues subsidises pollution and hinders decarbonisation. These profits were derived from surplus allowances (€2.7 billion), cost-pass through (€2.1 billion), and offsets (€0.1 billion), with the highest gains in Spain, Italy, and Germany. The brief identifies failures such as low carbon prices and benchmarks that incentivise high-carbon clinker production, noting that European production is less energy efficient than that of India. To drive decarbonisation, the author recommends ending free allocations, introducing 100% auctioning with benchmarked border levelling to prevent carbon leakage, and replacing clinker benchmarks with cement benchmarks.

Between 2008 and 2015, heavy industry in 20 European countries generated over €25 billion in windfall profits from the EU ETS. These profits were primarily driven by the free allocation of emission allowances intended to prevent "carbon leakage," a phenomenon the report argues is unsubstantiated by evidence. The most significant gains came from cost-pass through to customers (€16.8 billion), followed by the sale of surplus allowances (€7.5 billion) and the use of cheaper international offsets (€0.8 billion). The iron and steel, cement, refineries, and petrochemicals sectors were the primary beneficiaries. The report concludes that these subsidies reduce the incentive for industrial decarbonisation and deprive governments of an estimated €143 billion in potential auctioning revenues, recommending a phase-out of free allocations and the establishment of a Just Transition Fund.

Carbon Market Watch argues that the European Parliament's industry committee has failed to fix fundamental flaws in the EU ETS, specifically regarding the oversupply of pollution permits and the continued provision of free allowances to heavy industry. While the committee strengthened exclusions for future coal investments and permanently cancelled a small portion of surplus allowances, the organisation contends these measures are insufficient to drive a low-carbon transition or meet Paris Agreement commitments.