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The research finds that proposed Phase II NAPs likely result in an oversupply of allowances, potentially leading to very low carbon prices and a 'dead market'. This surplus is exacerbated by the potential inflow of CDM/JI credits, which would shift the cost of Kyoto compliance from the private sector to government treasuries.

The document analyzes how climate policies, particularly the Kyoto Protocol, affect the competitiveness of firms and sectors. It distinguishes between the 'non-Party problem'—where firms in non-participating countries (like the US) gain an advantage—and the 'implementation problem'—where differing national allocation plans within a region (like the EU) create internal imbalances. Using Canada and the EU as case studies, it suggests that while some energy-intensive sectors like aluminum are vulnerable, overall GDP impacts are predicted to be small, and potential negative effects may be offset by technological innovation induced by regulation.

The document is a teaching guide designed to simulate negotiations over a proposed European Union carbon tax. It combines negotiation theory—drawing on works by Raiffa, Bazerman, Neale, Fisher, and Ury—with a technical game-theory model to show how cooperation can lead to mutually beneficial outcomes. The guide discusses the challenges of unilateral climate policy, specifically the risk of 'leakage' where emissions shift outside the EU, and the potential for carbon tax revenues to be used for fiscal reform to reduce unemployment.

The author contends that EU climate policies, including CBAM, EUDR, and maritime regulations, are unilaterally imposed and threaten African economic development. The text highlights risks such as an $11 billion annual loss for exporters under EUDR and a potential 0.91% reduction in Africa's GDP due to CBAM. It further criticizes the EU-ETS and FuelEU Maritime for increasing freight costs for African consumers and extracting USD 3–5 billion annually without reinvesting in African sustainability. The document recommends that the EU redirect revenues from CBAM and the Innovation Fund to support Africa's green transition and align maritime measures with the IMO's Net-Zero Framework.

The signatories call for a 68% reduction in ETS emissions, the phase-out of free allowances by 2030, and the introduction of stricter conditionality for any remaining free allowances to ensure they support clean production rather than acting as subsidies for high-emitting sectors.

The document provides a matrix of how different climate mitigation policies impact developing countries. It highlights that while mechanisms like the Clean Development Mechanism (CDM), REDD+, and technology transfer generally offer positive outcomes for growth and investment, other policies like border tax adjustments can lead to reduced trade and lower global growth. The effects of carbon taxes and emission trading schemes are mixed, depending on factors such as carbon leakage and the allocation of revenues.

The document examines how Peru's regulatory framework for the timber industry facilitates illegal logging, which in turn threatens the success of REDD+ (Reducing Emissions from Deforestation and Forest Degradation) efforts. It highlights that illegal logging may account for up to 80% of exported timber and that 68.3% of supervised logging concessions have been cancelled or are under investigation for serious violations. The author argues that project-level improvements are insufficient to prevent 'leakage' (emissions shifting to other areas) or ensure 'permanence' (long-term emission reductions) without national-level legal reform and clearer international guidelines from the UNFCCC on Safeguard Information Systems (SIS).

The research paper evaluates nine climate policy scenarios to determine the most effective way to address carbon leakage in the EU ETS. Using the CASE II model, it compares full auctioning against various border adjustment (BA) and output-based allocation (OB) strategies. The findings suggest that while full auctioning leads to a leakage ratio of 10%, border adjustments are the most efficient at reducing this ratio, often resulting in negative leakage (spillovers) where emissions in the rest of the world actually decrease. Output-based allocations also reduce leakage but are less efficient than border adjustments and can lead to higher carbon prices.

The document examines why border adjustment (BA) measures are largely absent from Japanese climate policy despite concerns over international competitiveness. It finds that Japan's reliance on voluntary emission reduction plans is inconsistent with BA, and stakeholders view such measures as technically infeasible and incompatible with WTO rules. Instead, Japan advocates for multilateral agreements that include emission commitments for major emerging economies to address carbon leakage.

The document assesses the challenges of the EU's proposed CBAM based on incurred emissions, noting that it fails to fully address carbon leakage for exports and value chains. It proposes an alternative 'climate contribution' based on standardised carbon intensity factors, which would act as an excise charge that can be passed along the supply chain and waived for exports. This model, combined with Carbon Contracts for Difference (CCfDs) funded by CBAM revenues, is presented as a way to create immediate investment incentives for climate-neutral production of materials like steel, cement, and aluminium.

The document evaluates two policy instruments designed to transition the European basic materials sector to net zero by 2050. Carbon Contracts for Difference (CCfDs) are presented as a way to reduce investment risk and government costs by guaranteeing a fixed carbon price for low-carbon projects. The Climate Contribution is proposed as a weight-based charge on materials (like steel and cement) to ensure a consistent carbon price signal while maintaining carbon leakage protection. The analysis suggests that CCfDs can lower the required carbon price for investment and that the Climate Contribution could generate approximately EUR 17-21 billion in annual EU revenues with minimal, progressive impacts on household consumption in Germany and Poland.

The report evaluates Carbon Contracts for Difference (CCfDs) and a Climate Contribution as tools for decarbonising the basic materials sector in Germany and Poland. CCfDs act as hedging instruments that lower the carbon price threshold required for clean technology investments and reduce the net present value of government funding. The Climate Contribution, a weight-based charge on materials, is estimated to generate EUR 17-21 billion in EU-wide revenues while remaining progressive and having a minimal impact (below 0.5%) on household consumption expenditures.

The report critiques CBAM designs based on incurred emissions due to legal, administrative, and economic risks, such as resource shuffling and export leakage. It proposes a three-pillar alternative: a 'climate contribution' charge on basic materials, dynamic free EU ETS allowance allocation conditional on transition plans, and Carbon Contracts for Difference (CCfDs) to fund the incremental costs of clean production. This framework aims to provide effective carbon price signals across the value chain and support an inclusive transition across all EU industrial regions.

The document argues that the EU's 2030 framework must combine price-based instruments with structural and behavioural policies to drive decarbonisation. It suggests reforming the EU ETS to better signal long-term scarcity and phase out coal, introducing new auctioning and project-based mechanisms for non-ETS sectors to ensure liquidity and transformation resources, and establishing a streamlined governance mechanism for Member State coordination through national decarbonisation plans.

The document examines how carbon pricing affects different household income levels across developed and developing countries. It argues that while carbon pricing can be regressive—disproportionately impacting low-income households who spend more of their income on energy—these effects can be neutralized or turned into net benefits through strategic revenue recycling, such as lump-sum rebates or targeted subsidies. The briefing highlights that in very low-income countries, carbon pricing can actually be progressive due to limited fossil fuel access among the poorest. It provides case studies from the EU ETS, the US Regional Greenhouse Gas Initiative (RGGI), South Africa, and Iran to illustrate various implementation and mitigation strategies.

The report examines the transition of the European basic materials sector (cement, steel, paper, aluminium, chemicals) toward carbon neutrality by 2050. It identifies that these sectors account for approximately 16% of European GHG emissions. Through analysis of Hungary, Poland, and Spain, the document highlights a prevalence of short-term policy focuses on carbon leakage and energy costs over long-term structural transformation. It proposes a policy package consisting of carbon pricing mechanisms (Border Tax Adjustments or Inclusion of Consumption), low-emission and circularity standards, and Contracts for Differences (CCfDs) to incentivise breakthrough technologies and ensure a cost-competitive supply of low-carbon electricity.

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 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.