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The report highlights that the EU is a net importer of CO2 emissions, with consumption-based emissions (CBEs) significantly exceeding territorial emissions. While the EU has focused on territorial targets, the authors argue that addressing CBEs is essential for global climate goals. Through case studies of Sweden, Denmark, and France, the report identifies a lack of standardized monitoring and binding targets as primary barriers. It recommends that the EU establish binding CBE targets, standardize carbon accounting, and expand policies like the Carbon Border Adjustment Mechanism (CBAM) and the EcoDesign Regulation to drive sustainable consumption and production globally.

The EU's Carbon Border Adjustment Mechanism (CBAM), effective October 2023, imposes carbon tariffs on imports to prevent carbon leakage and encourage global decarbonisation. The document argues that the CBAM will disproportionately harm African countries, particularly least-developed countries (LDCs), by reducing GDP and exports of key materials like aluminium, iron, and steel. It highlights concerns regarding the mechanism's equity, its potential conflict with WTO non-discrimination rules, and the EU's plan to use revenues for internal debt rather than supporting LDCs. The brief recommends that the AfCFTA negotiate for exemptions, a slower phase-in period, and the exclusion of indirect emissions, while urging the EU to increase climate finance and technology transfers to Africa.

The EU Emissions Trading System (EU ETS) is a cap-and-trade mechanism designed to reduce greenhouse gas emissions in the power, heavy industry, aviation, and maritime sectors by pricing pollution. It operates by setting a decreasing cap on total emissions, divided into EU Allowances (EUAs), which companies can trade or buy at auction. While the system has raised over €152 billion since 2005, its effectiveness has been historically hampered by an oversupply of permits and the extensive use of free allocations to prevent 'carbon leakage'. A separate system, ETS2, will be introduced in 2027 to cover buildings and road transport. The document highlights concerns regarding the environmental integrity of the current cap relative to the EU's carbon budget and the lack of transparency in how member states spend auction revenues.

CATF supports the CFTC's oversight of voluntary carbon markets but argues that current crediting protocols are insufficient to prevent market manipulation and over-crediting. The organization recommends adding 'durability' and 'vintage' as essential commodity characteristics and requiring project-level transparency rather than relying on general protocol disclosures. CATF further urges the Commission to strengthen criteria for additionality, quantification (specifically leakage avoidance and business-as-usual baselines), and the mitigation of reversal risks, particularly for nature-based projects. Finally, it emphasizes the need for independent third-party verification to avoid conflicts of interest between project developers and verifiers.

Carbon Market Watch (CMW) opposes the current draft of the Free Allocation Regulation (FAR) revision, stating it increases free allowances for industrial sectors and contradicts the political mandate of the EU ETS Directive. CMW identifies critical failures in steel and cement benchmarking, the use of median production levels for Historical Activity Level (HAL) calculations, and an insufficiently ambitious reduction in free allowances for process emissions.

The briefing analyzes four 2023 U.S. Congressional bills: the PROVE IT Act, which focuses on emissions intensity data; the Foreign Pollution Fee Act, which proposes fees on imports exceeding U.S. emissions averages; the Clean Competition Act, which suggests charges for both domestic and imported goods exceeding benchmarks; and the MARKET CHOICE Act, which proposes a broad carbon tax with border adjustments.

The statement criticises the EU for granting billions of euros in free emission allowances to heavy industry, which it claims contradicts the 'polluter pays' principle. It contrasts the high value of these industrial subsidies with the capped funding of the Social Climate Fund, intended to protect vulnerable citizens from the costs of the new ETS2 system for buildings and transport.

The report examines the potential for international cooperation to mitigate the risks of unilateral border carbon adjustments (BCAs), such as 'green protectionism' and trade retaliation. It evaluates the G7 Climate Club, GASSA, and the OECD's IFCMA using a framework of 'input legitimacy' (inclusiveness and institutional strength) and 'output legitimacy' (effectiveness in achieving five specific goals). The analysis finds that while none are currently ideal for BCA cooperation, the IFCMA shows the most promise due to its focus on data and comparability. The report warns that domestic political priorities and existing policy path dependencies, such as the EU's established CBAM, hinder the creation of a unified international approach.

The report identifies 30 companies, termed the "emissions aristocracy," that were responsible for over 50% of total EU ETS emissions in 2022. While the power sector has seen significant emission reductions since 2013 due to the absence of free allowances, heavy industries like steel, cement, and petrochemicals have experienced stagnant progress. The author argues that free allowances create windfall profits and remove the financial incentive to innovate, calling for a transition to full auctioning by 2030 to ensure the polluter pays principle is upheld.

The Foreign Pollution Fee Act proposes ad valorem charges on imports across 15 broad categories, including steel, aluminum, and solar panels, based on their greenhouse gas (GHG) intensity relative to U.S. production. The author argues the Act is administratively complex and serves as a protectionist tool, noting that it lacks credits for carbon prices paid in exporting countries and imposes onerous requirements for foreign producers to prove lower emissions. While it offers special treatment for low-income countries through International Partnership Agreements (IPAs), the author contends the bill's primary focus is on restricting imports from China and Russia rather than environmental protection.

The report identifies critical methodological failures in Verra's REDD+ carbon credit system, specifically regarding overestimated baselines, underestimated leakages, inflated carbon accounting, and ignored permanence risks. It concludes that these credits do not represent real emission reductions and should not be used to offset fossil fuel emissions, recommending a shift from 'offsetting' to 'contribution' funding for forest conservation.

The report identifies systemic failures in Verra's REDD+ methodologies, specifically regarding baseline inflation, underestimated leakage, exaggerated carbon accounting, and underestimated reversal risks. It argues that these flaws allow project developers to maximize credit issuance through 'convenience' selections rather than scientific accuracy. The document concludes that REDD+ credits do not represent real emission reductions and should not be used to offset fossil fuel emissions, recommending a shift toward 'contribution' claims and stricter, independent oversight.

The report finds that REDD+ projects under Verra's methodologies systematically over-credit their climate benefits due to inflated baselines, underestimated leakage, and exaggerated forest carbon stocks. It further argues that social safeguards are often treated as a 'check-box activity,' failing to protect vulnerable forest communities from displacement and rights violations. The authors conclude that REDD+ is ill-suited for generating carbon offsets and recommend a shift toward a contributions-based approach and rights-based safeguards.

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 document argues that while harmonizing all border carbon adjustments (BCAs) is impossible due to diverse national carbon pricing methods, international cooperation is essential to manage the proliferation of these instruments. It highlights that a diversity of BCAs increases uncertainty and administrative burdens for traders in sectors like steel, aluminum, cement, and fertilizers, which are critical for the export revenues of many developing countries. The brief suggests that strategic international discussion is a necessary alternative to trade disputes within the World Trade Organization's dispute settlement system.

The document examines the challenges of implementing border carbon adjustments (BCAs), focusing on the need for international cooperation to standardize embedded emissions calculations, determine geographical exemptions, establish credits for foreign climate policies, and decide on the use of revenues. It evaluates various multilateral, regional, and bilateral venues for these discussions, noting that while the WTO is a primary site of tension, substantial multilateral progress is currently lacking.

The document analyzes border carbon adjustments (BCA) as tools to prevent carbon leakage and support domestic carbon pricing. It details a 'decision tree' of design options, including trade flow coverage, geographic exemptions, emission scopes (Scope 1, 2, and 3), and methods for calculating embedded emissions. The brief highlights the tension between environmental objectives and industrial protectionism, noting that fragmented national BCA regimes could create a 'spaghetti bowl' of conflicting requirements that increase administrative burdens for exporters and strain international trade and climate cooperation.

The report examines the G7 Climate Club, an intergovernmental forum aimed at achieving global net-zero emissions by mid-century. While acknowledging its goals, the author argues that the Club's structure—particularly its focus on rapid decarbonisation and potential trade restrictions—could undermine African development. Key concerns include the economic reliance of African nations on hydrocarbon exports, the high cost of transitioning to low-carbon industrial processes, and the risk of trade protectionism through mechanisms like the Carbon Border Adjustment Mechanism (CBAM). The report highlights a history of unfulfilled G7 financial pledges to Africa and recommends a co-design approach that prioritises technology transfer, climate justice, and financial support over strict carbon accounting and trade sanctions.

The document outlines the need for sustainability science to integrate geopolitical realities, warning that the deconstruction of the multilateral trade system and the race for green technology could marginalize developing nations. It emphasizes that the EU must address cross-border climate risks, particularly within the food system, and ensure that the transition to a net-zero food system maintains food security and preparedness. Furthermore, it highlights the extreme vulnerability of the 46 least developed countries (LDCs), which suffer disproportionately from climate change despite minimal emissions, and urges careful design of trade mechanisms like Carbon Border Adjustment to avoid harming these nations.

The report examines the trend of incorporating GRP and IRC provisions into regional trade agreements (RTAs), with a detailed analysis of the United States–Mexico–Canada Agreement (USMCA). It highlights how the USMCA differs from other agreements like the CPTPP and CETA by making GRP provisions binding, prescriptive, and wide-ranging. The document specifically explores the USMCA's approach to stakeholder engagement and transparency, while warning developing countries about potential 'regulatory chill,' administrative strain, and the disproportionate influence of private sector lobbying.