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The report examines the shift in global climate governance from the top-down targets of the Kyoto Protocol to the Nationally Determined Contributions (NDCs) of the Paris Agreement. It highlights the 'ambition gap' in current pledges and argues that the success of the agreement depends on integrating the actions of non-state actors—such as cities, regions, and businesses—into national frameworks. The document details specific subnational initiatives like the C40 network and Brazil's CB27, while providing a case study of Singapore's role in the negotiations.

The report examines the potential for 'policy crediting' to incentivize developing countries to implement or strengthen carbon pricing and energy subsidy reforms. Through case studies in Morocco, Indonesia, Mexico, and China (Beijing), the study finds that the financial value of carbon credits is generally very low compared to the fiscal gains from the base policies themselves, suggesting that credits are unlikely to be the primary driver for policy adoption. However, the report argues that crediting could still play a role by supporting mitigation at the 'policy margin' (complementary measures), funding the operational strengthening of ETS markets, or providing targeted compensation to vulnerable stakeholders. The authors highlight significant challenges in establishing baselines and monitoring, reporting, and verification (MRV) for policy-level reductions compared to project-level offsets.

Nigel Topping asserts that carbon pricing is a critical tool for meeting the Paris Agreement's objectives, noting that over half of national pledges submitted before COP21 reference market mechanisms. He highlights a growing global momentum, including China's planned national emissions trading scheme and the private sector's shift toward internal carbon pricing. Topping advocates for significantly higher price levels—specifically at least $30-40 per tonne to facilitate a switch from coal to gas—and promotes the updated Carbon Pricing Pathways to guide governments and investors toward prices sufficient to limit global temperature rises to below 2°C.

The document examines the role of carbon pricing within the EU's Effort Sharing Decision (ESD), which covers approximately 60% of EU emissions. It argues that while carbon pricing is a useful tool, it cannot deliver results alone and must be framed within a supportive policy context. The author critiques the EU Emission Trading System (ETS) for permit oversupply and warns against expanding the ETS into transport and heating, suggesting instead national carbon taxes, permit trading, or auctioning of permits. Specifically, auctioning half of annual reductions could generate over €9 billion between 2021 and 2030.

The report details a December 2015 workshop in Paris focused on 'low carbon clubs' or multijurisdictional cooperative approaches (MCAs). Participants argued that these clubs should aim to increase emissions reduction ambition and could use carbon pricing to fund technological innovation in sectors like gas, electricity, oil, and mining. The discussion highlighted the potential for linking diverse carbon markets through initiatives like the World Bank's Networked Carbon Markets (NCM) and emphasized the need for non-pricing incentives—such as technology transfer and capacity building—to encourage participation from developing nations and the Alliance of Small Island States.

The policy brief asserts that global climate success depends on the 20 largest emitting nations adopting a small set of high-impact policies across four sectors: electricity, buildings, industry, and transportation. It emphasizes that policy design is critical to avoid inefficiencies and suggests the use of 'Best Practice Networks' (BPNs) to provide technical expertise to governments to ensure these policies are effectively implemented.

The report argues that carbon pricing is a critical tool for meeting the Paris Agreement's goal of keeping global temperatures well below 2°C. It introduces 'Carbon Pricing Bands' to categorize price levels by their economic impact—ranging from 'Introductory' (up to $20) to 'Targeted' (above $80)—and presents four potential future trajectories: a 'Success Trajectory' leading to a low-carbon world, and three failure scenarios ('Sailing into the Cliff', 'Stormy Waters', and 'Running Aground') where temperatures rise by 3°C to 4°C due to inadequate or chaotic pricing policies. The update highlights post-COP21 developments, including the commitment of 90 nations to use market mechanisms and specific national actions in China, India, and Canada.

The document reports that Swedish energy-intensive industries generated approximately €729 million in windfall profits from the EU ETS between 2008 and 2014. These profits were driven by the surplus of free emission allowances, the use of low-cost international offsets, and cost-pass through to customers. The brief highlights that the Swedish government missed out on at least €1.9 billion in auctioning revenues due to these free allocations. It specifically identifies SSAB, Preem, and Cementa as the highest profiting corporations. The author argues that the risk of carbon leakage is unsubstantiated and that the current system reduces incentives for industrial decarbonization, recommending a phase-out of free allocations in favor of full auctioning.

The document argues that the EU ETS "carbon leakage" rules have led to massive windfall profits for French industrial companies while depriving the government of significant auctioning revenues. Between 2008 and 2014, French energy-intensive companies generated approximately €2.7 billion in windfall profits, with Bersillon, Total, and Lafarge being the top beneficiaries. The brief contends that these subsidies reduce incentives for decarbonization and that the Paris agreement will mitigate future leakage risks. It recommends phasing out free allocations in favor of 100% auctioning and implementing a tiered approach to target support only where truly necessary.

The document analyzes how German energy-intensive industries generated €4.5 billion in windfall profits from the EU ETS between 2008 and 2014 due to free emission allowances intended to prevent carbon leakage. It highlights that the German government missed out on €29.7 billion in auctioning revenues during this period. The brief identifies the iron and steel, refineries, cement, and petrochemicals sectors as the primary beneficiaries, specifically naming ThyssenKrupp and ArcelorMittal as top earners. It concludes that these subsidies reduce incentives for decarbonization and recommends phasing out free allocations in favor of auctioning to fund climate innovation.

The document analyzes the financial impact of 'carbon leakage' rules within the EU ETS in the Netherlands from 2008 to 2014. It finds that energy-intensive industries generated over €1 billion in windfall profits through surplus allowances, offsets, and cost-pass through to customers. Specifically, Tata Steel, Shell, and Chemelot are identified as major beneficiaries. The brief highlights that the Dutch government missed out on at least €6.4 billion in auctioning revenues due to free allocations, which it argues reduces incentives for industrial decarbonization. It recommends phasing out free allocations, introducing a tiered approach to carbon leakage, and increasing investments in climate-friendly innovation.

The document argues that the EU ETS 'carbon leakage' rules, which provide free emission allowances to prevent companies from relocating to countries with weaker climate policies, have instead generated over €3 billion in windfall profits for UK energy-intensive industries from 2008 to 2014. These profits were primarily driven by cost-pass through, surplus allowances, and the use of low-cost international offsets. The brief highlights that the UK government missed out on at least €16.3 billion in auctioning revenues due to these free allocations, reducing funds available for the low-carbon transition. It specifically identifies Tata Steel, Lafarge, Hanson Cement, and Total as the highest profiting corporations. The author recommends phasing out free allocations, introducing a tiered leakage approach, and increasing the share of auctioned allowances to 100% to avoid further subsidies for pollution.

The document analyzes how the 'carbon leakage' mechanism in the EU ETS allowed heavy industry in 19 European countries to earn over €24 billion in windfall profits between 2008 and 2014. It contends that these subsidies reduce incentives for decarbonization and deprive governments of auctioning revenues, while evidence for actual carbon leakage remains absent. The brief recommends phasing out free allocations in favor of 100% auctioning to fund low-carbon innovation.

The document assesses the impact of 'carbon leakage' rules within the EU ETS from 2008 to 2014, finding that free pollution permits resulted in over 4 billion in windfall profits for heavy industry. It highlights that these subsidies benefit specific sectors like iron, steel, and cement, and primarily accrue in countries such as Germany and the UK. The brief contends that these rules reduce incentives for decarbonization and deprive governments of approximately 137 billion in potential auctioning revenues. It recommends phasing out free allocations in favor of 100% auctioning to align with the polluter-pays principle and the global landscape following the Paris agreement.

The report argues that the EU ETS has failed to incentivise emissions reductions in the cement sector, instead acting as a production subsidy for high-carbon clinker. Due to coarse free allocation rules and an inaccurate carbon leakage list, the sector has accumulated significant allowance surpluses, with five major companies receiving nearly €1 billion in free allowances between 2008 and 2014. This has led to 'reverse carbon leakage,' where emissions are imported into the EU through clinker exports. The authors recommend introducing more granular production thresholds for allocation, a tiered system for leakage protection, and additional non-ETS policies to support carbon capture and non-Portland cement innovations.

The World Resources Institute asserts that the U.S. Supreme Court's pause on the Clean Power Plan (CPP) is a temporary measure and that the policy remains legally sound and economically beneficial. The CPP is identified as a critical tool for the U.S. to meet its goal of reducing emissions 26-28 percent below 2005 levels by 2025. According to EPA estimates, the plan's health and economic benefits, valued between $25 billion and $65 billion, significantly outweigh the compliance costs of $7 billion to $9 billion. The document notes that many states, including Virginia, Pennsylvania, Michigan, and Missouri, are already positioned to meet or exceed their targets through existing clean energy policies and infrastructure. Furthermore, it highlights a broader trend of climate action among U.S. cities, such as New York and Chicago, and major corporations like Walmart and Microsoft, while urging global adherence to the Paris Agreement.

Carbon Market Watch asserts that the EU ETS is currently ineffective, citing a carbon price drop below €6 per tonne as evidence. The organization calls for a steeper Linear Reduction Factor—suggesting an annual decrease of at least 4.2% to achieve decarbonisation by 2040—and the permanent cancellation of surplus allowances. It further argues that the concept of 'carbon leakage' is unsupported by evidence and that the proposed €160 billion in free pollution permits for heavy industry hinders low-carbon investment and risks creating windfall profits.

The European power sector saw a record increase in renewables generation in 2015, yet CO2 emissions fell by only an estimated 0.5% due to offsetting increases in coal generation in several countries and a rebound in electricity demand. While the UK experienced a collapse in coal generation, this was countered by growth in the Netherlands, Spain, and Poland. The report forecasts a further 21% drop in EU ETS emissions from 2014 to 2020, suggesting the EU is on track to surpass its 20% economy-wide CO2 cut target.

Michigan is required by the U.S. EPA to reduce power sector emissions by 33 percent below 2012 levels by 2030. The document argues that by adhering to its energy efficiency and renewable energy standards, and by optimizing the use of natural gas and coal plants, the state can reduce emissions by 36 percent below 2012 levels by 2030, exceeding its target by 9 percent.

The COP22 conference in Marrakech focused on establishing the 'rulebook' for the Paris Agreement, with parties agreeing to a 2018 deadline for its operationalization. Key outcomes included the approval of a work programme for transparency and adaptation, the announcement of US$81 million for the Adaptation Fund, and the launch of the Marrakech Partnership for Global Climate Action to catalyze pre-2020 efforts. Despite political uncertainty regarding the United States, the document notes a strong commitment from emerging economies and the private sector to pursue a low-carbon transition.