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The report examines the potential for reducing global GHG emissions by relocating production of carbon-intensive goods to regions with lower emissions intensities. It finds significant variation in GHG intensity across countries for products like clothing and steel, suggesting that shifting production could yield benefits that outweigh increased transport emissions. A case study on steel identifies the Americas as well-positioned for low-GHG production due to biomass and natural gas availability. The report also evaluates trade policies, noting that while border carbon adjustments and preferential tariffs are options, they face significant legal, political, and administrative hurdles, particularly regarding WTO compatibility and the principle of common but differentiated responsibilities.

The report argues that current carbon pricing, such as the EU ETS, is insufficient to alter global emission trends in the steel sector because costs are lower than production cost differences between regions. It highlights a lack of immediately deployable breakthrough technologies and suggests that a 'coalition of the willing' among steel-producing countries is necessary to scale up RDD&D and address competitiveness and leakage concerns.

The study finds that potential BCAs by the US and EU would capture only a small fraction of China's total exported emissions, though certain energy-intensive sectors like iron and steel would face significant charges. The impact varies greatly depending on whether charges are based on direct or embodied emissions, with embodied emissions resulting in significantly higher costs. Overall, the authors conclude that such measures would have limited impact on incentivizing total carbon reductions as exporters might divert production to other regions.

Carbon Market Watch proposes eleven specific reforms for the Clean Development Mechanism (CDM) to be discussed at CMP8, focusing on additionality, project bans, human rights, and governance.

The EU-ETS is the world's largest cap-and-trade system, regulating approximately half of the EU's CO2 emissions across 30 countries. While it has evolved through three trading periods to include more greenhouse gases and airline emissions, the system has suffered from severe over-allocation of allowances, leading to price collapses and a surplus of approximately 2 billion allowances by the end of 2012.

The report examines how unilateral carbon pricing leads to carbon leakage—where emissions are shifted to foreign locations—across energy-intensive industries (EII) such as steel, cement, and chemicals. It evaluates the effectiveness of various policy remedies, including border adjustments and output-based free allocations, across different regional contexts. Findings indicate that while the EU can mitigate leakage from a 30% reduction target at moderate cost, a mandatory Japanese ETS would significantly impact steel and cement production. In China, a carbon price of 100 Yuan/t CO2 would most affect ferrous metals, basic chemicals, refining, and cement, potentially serving as a tool to reduce carbon intensity and restrain exports during high growth periods.

The report evaluates the capacity of China, Germany, Italy, and the United States to meet evolving international and domestic MRV requirements for greenhouse gas emissions and mitigation actions. While most countries are well-positioned for emissions reporting, significant gaps exist in tracking the impact of specific mitigation policies and coordinating sub-national data.

The report analyzes the steel sector's transition to a low-carbon future, noting that while current carbon pricing (like the EU ETS) has had limited impact on plant location and investment, deeper emissions cuts will require breakthrough technologies such as carbon capture and storage (CCS). It emphasizes the need for collaborative research, development, demonstration, and deployment (RDD&D) and suggests a 'coalition of the willing' among major steel-producing nations to maintain competitiveness while decarbonizing.

The report argues that carbon pricing is likely to improve air quality in California because the most feasible GHG abatement strategies—such as energy efficiency and fuel switching—also reduce local air pollutants. Using data from the European Union (EU) Emissions Trading Scheme (ETS), the authors find a statistically significant negative relationship between carbon prices and emissions of both GHGs and local air pollutants (sulfur dioxide, nitrogen oxides, and particulate matter). Notably, EU oil refineries showed stronger reductions in local air pollutants than the average industrial facility. While cogeneration is identified as the only strategy that could potentially increase local emissions, the report suggests that existing air quality regulations and new source reviews in California should prevent such outcomes. The authors recommend that California regulators use industrial audits to maximize synergies between GHG and LAP abatement and consider financial incentives for high-benefit projects in poor air quality areas.

The cement sector is a major global CO2 source, with emissions projected to reach 4.0 Gt by 2030. While emissions intensity is declining due to the adoption of best available technology (BAT) and alternative fuels, these gains are offset by rising production volumes, particularly in China. The report argues that current carbon pricing, such as the EU ETS, is insufficient to drive the breakthrough technologies needed for a low-carbon future, such as carbon capture and storage (CCS) and new low-carbon cement forms. It suggests that a combination of public-private financing, revised building standards, and Border Carbon Adjustments (BCAs) is necessary to prevent carbon leakage and incentivize deep decarbonization.

The document assesses the transition from the GATT's 'gentleman's club' model to the WTO's formal rules-based system, highlighting how the principles of consensus and the Single Undertaking have become obstacles to progress. It argues that the rise of emerging economies and the increased complexity of trade issues—including domestic regulation and climate change—have rendered the current system obsolete. The author evaluates several reform options, including weighted voting, an executive committee, and plurilateral agreements, ultimately suggesting that a 'critical mass' or plurilateral approach may be the most practical way to maintain the WTO's relevance.

The report argues that the EU ETS is failing due to a massive oversupply of allowances caused by the 2008 economic recession and industrial overallocation. Sandbag identifies a total excess of 3.1 billion tonnes (Gt) of allowances, including 2.2Gt from obsolete demand forecasts and 0.9Gt from industrial overallocation. The document highlights that 78% of the net surplus is concentrated among ten steel and cement companies, which have generated significant revenues from selling surplus permits. To remedy this, the report recommends the permanent cancellation of 3.1Gt of allowances from Phase 3 auctions, the establishment of a more ambitious Phase 4 carbon budget aligned with 2050 goals, and the introduction of mechanisms like a "heat exchanger" and a strategic demand-correction reserve to protect the system from future exogenous shocks.

The research paper evaluates the economic and emissions impacts of increasing the EU's 2020 GHG reduction target to 30%. Using the E3MG model, it focuses on three energy-intensive sectors: iron and steel, aluminium, and cement. The findings indicate that while a 30% target significantly increases EU ETS allowance prices, there is no evidence of substantial carbon leakage through import substitution. Border adjustment measures partially protect EU output but have a negligible macroeconomic impact, as the affected sectors collectively account for less than 1% of EU GDP.

The paper evaluates the EU ETS allocation method—specifically the New Entrants Reserve (NER) and grandfathering—against output-based allocation (OBA), full auctioning, and border adjustments in the cement industry. It finds that while the EU ETS method effectively tackles carbon leakage, it creates economic distortions between new and existing plants, leading to lower overall welfare compared to border adjustments or OBA. The analysis suggests that the EU ETS method's primary advantage is its lower distributional impact on consumers and producers.

The report argues that a universally applied market-based instrument (MBI), specifically a cap-and-trade scheme, is the most effective and politically feasible way to address emissions from international transport. To comply with the principle of common but differentiated responsibilities (CBDR), the report proposes a governance structure where revenues or allowances are selectively disbursed to ensure no net incidence on developing countries. The remaining value would be transferred to the Green Climate Fund and used for fuel-efficiency improvements. The author concludes that an emissions trading system (ETS) is superior to levy-based systems because it avoids being classified as an international tax and does not require the direct funding of an international organisation or the hypothecation of national fiscal revenues.

The report evaluates the first two phases of the EU ETS, finding that while it successfully capped emissions, its actual abatement impact was modest (40–80 MtCO2/yr) and heavily influenced by the 2008-2009 financial crisis. It notes that the system failed to drive large-scale long-term low-carbon investment due to price volatility and over-allocation. The analysis also highlights significant 'windfall profits' in the power and industrial sectors resulting from free allowance allocations and the pass-through of carbon costs to consumers. The document concludes by suggesting strengthening measures such as price floors and set-asides, and reviews similar emerging schemes in jurisdictions like Australia, China, and the USA.

The report uses three sector-specific engineering models to evaluate how carbon prices affect the competitiveness and leakage risk of Spain's cement, steel, and oil refining industries. It finds that coastal cement regions and the oil refining sector are particularly vulnerable to leakage, while the steel sector's risk is mitigated by a high prevalence of Electric Arc Furnace (EAF) technology. The authors suggest that border tax adjustments are generally more effective and practical than output-based free allocations for reducing leakage in these sectors.

The report analyzes the global shift in carbon pricing dynamics away from a US-centric model toward Asia-Pacific initiatives, including Korea, Australia, and Chinese pilot schemes. It argues that while the US Federal government remains deadlocked, other industrialised nations must implement carbon pricing to avoid stranded assets and maintain international credibility. Using the EU ETS as a primary case study, the document highlights the effectiveness of cap-and-trade in delivering operational emission savings and the importance of 'easing policies' like free allocation to protect trade-exposed, carbon-intensive industries. It emphasizes that carbon pricing is a 'necessary but not sufficient' tool, requiring complementary measures such as energy efficiency programs and strategic revenue recycling to support low-carbon innovation. The author suggests that regional cooperation and the potential for 'border levelling' measures after 2020 may be necessary if global agreements fail.

The report argues that the EU ETS has failed as a driver for investment due to a surplus of emission allowances and collapsed prices, which are currently below €10/tCO2. To address this, the author proposes a three-part strategy: the set-aside of allowances to recalibrate the system, the implementation of a rising reserve price on auctions to create a price floor, and accelerated negotiations for post-2020 strategies. The document emphasizes that no single measure is sufficient to restore the strategic context needed for the estimated €1,000bn in energy system investments required over the coming decade.

The report argues that the EU ETS has failed to provide a sufficient carbon price signal for low-carbon investment due to a massive surplus of allowances caused by the recession and complementary energy policies. It proposes a triad of measures: setting aside allowances to recalibrate the market, implementing a rising reserve price on auctions to create a price floor, and accelerating negotiations for 2030 climate goals.