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The briefing outlines four strategic priorities for the upcoming UN Climate Action and SDG Summits: ramping up ambition for systemic economic change, ensuring a just transition that protects vulnerable populations, scaling high-impact solutions across six key sectors, and establishing inclusive long-term goals for carbon neutrality and equity.

China's industrial sector, responsible for over 70% of national carbon emissions, is pursuing deep decarbonization through five primary trends: improving energy efficiency via stricter regulations, scaling the recycling of steel and plastics, increasing industrial electrification to reduce coal reliance, piloting carbon capture, utilization, and storage (CCUS), and expanding hydrogen energy utilization.

The document assesses the failure of the EU Emissions Trading System (EU ETS) to reduce emissions in heavy industry due to free pollution permits and inadequate sectoral plans. It proposes a transition based on electrification, circular economy models, and breakthrough technologies like hydrogen-based steelmaking, while calling for the phase-out of free allowances and the introduction of green public procurement.

The Climate Bonds Initiative (CBI) employs a three-step screening process to identify and validate green bonds and loans for its database. This involves identifying self-labeled green instruments, verifying alignment with the Climate Bonds Taxonomy across eight sectors, and ensuring at least 95% of proceeds are allocated to eligible green assets. The methodology explicitly excludes fossil fuel energy and projects that extend the life of fossil fuel assets. Instruments are categorized as included, pending, or excluded, with a mechanism for reclassification based on new data or updated scientific criteria.

The document outlines five specific actions to decarbonize regional industry: methane containment, transitioning to clean industrial processes, implementing shared industrial flows (such as eco-industrial parks), decarbonizing ports and airports, and transitioning to clean industrial vehicles. It provides a framework for regional authorities to eliminate waste, electrify processes, and implement regulatory penalties for emissions, supported by references to policies from jurisdictions such as California, Brazil, and Hong Kong.

The production of basic materials, including cement, iron, steel, aluminium, and chemicals, accounted for approximately 25% of global CO2 emissions in 2014. The author contends that deep decarbonisation has been limited by a lack of knowledge regarding climate-friendly alternatives and a policy focus on carbon leakage risks. To overcome this, the brief identifies three primary policy gaps: incomplete incentives for recycling, a lack of short- and long-term markets for climate-friendly options, and missing signals regarding the phase-out of carbon-intensive production. Proposed solutions include green public procurement, project-based carbon contracts for difference (CfD), and a consumption charge on basic materials integrated into the EU ETS. The document emphasizes that the European materials sector is in a 'precarious limbo' where investment decisions over the next 10 to 15 years will determine whether assets are closed or transitioned to climate-friendly options.

The report identifies that while decarbonisation opportunities exist, they are hindered by a low EU ETS carbon price, restrictive product benchmarks, and a lack of shared infrastructure. Stakeholders argue that the current ETS design encourages incremental improvements over breakthrough technologies and often penalises early adopters or those using low-carbon substitutes. Proposed solutions include updating benchmarks with recent data, expanding green public procurement, and integrating carbon pricing with trade policy to ensure global competitiveness.

The European manufacturing sector has seen minimal emission reductions, with industrial emissions in the EU falling by only 0.2% in 2016 and 1% since 2012. The author contends that the EU Emissions Trading System (EU ETS) fails to incentivise low-carbon transformation because it allows industries to profit from the system rather than pricing pollution effectively. This environment protects incumbents and hinders innovators, such as low-carbon cement producer Ecocem, whose solutions can reduce the carbon footprint of concrete by over 50%. To achieve the Paris Agreement goals, the document calls for a Low-Carbon Industrial Strategy to scale demand for low-carbon products and remove market barriers. It suggests specific technological shifts: using recycled scrap in electric arc furnaces for steel, substituting clinker in cement, and replacing fossil fuel-based feedstock with biomass in the chemical sector. The author highlights a regulatory imbalance where pollution payouts via free permits are over 15 times the amount allocated for innovation under the EU ETS reform after 2020, and suggests alternatives like a carbon border tax.

The report analyzes two pathways for China's coal transition: a PEAK-2030 scenario aligned with its INDC and a more ambitious PEAK-2025 scenario. It argues that an early peak is possible through stringent policies in the power, industry, and building sectors, while emphasizing the need to manage socio-economic risks such as stranded assets in the electricity sector and job losses in coal-producing regions. The analysis highlights significant co-benefits for air quality and public health, as well as the potential for reducing methane emissions from coal mining.

The document argues that South Africa must shift from a carbon-intensive export model to low-carbon manufacturing to avoid international trade barriers and leverage a global market for low-carbon products estimated at US$5 trillion. It details several technical approaches to achieve this, including eco-design, material substitution, additive manufacturing, and remanufacturing, while highlighting the systemic challenges of R&D, cost, and technological lock-in.

The authors argue that the Proposed Plan underestimates the readiness and effectiveness of Carbon Capture and Sequestration (CCS). They assert that CCS is technologically viable, citing sixteen integrated projects in North America and the necessity of the technology for deep decarbonization in industrial sectors like steel and cement. The coalition recommends that the Scoping Plan explicitly include CCS for both industrial and power sectors, identify potential synergies with the reduction of toxics and criteria pollutants, and remove regulatory barriers, such as the requirement that carbon capture occur onsite at crude oil production facilities.

The report argues that achieving the EU's 2050 climate targets requires a broad portfolio of innovative production processes, material substitution, and efficiency gains. It proposes an integrated policy approach combining EU ETS reform—specifically the 'inclusion of consumption' to ensure carbon price pass-through—with public procurement and targeted innovation support, such as carbon contracts for differences, to overcome investment risks and the 'technology valley of death'.

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 asserts that the proposed 2.2% annual emission reductions in the EU ETS are inadequate to meet the 2°C or 1.5°C warming targets, potentially leading to 2 billion tonnes more CO2 than the EU's Paris pledge. The briefing highlights that carbon prices remain too low to drive decarbonisation and that free permit allocations have allowed heavy polluters to profit, with over 24 billion euros made between 2008 and 2014. To address these failures, the author recommends steeper emission cuts, phasing out free allowances, and ensuring the next trading period starts at actual emission levels.

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 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 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.

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 report identifies a portfolio of low-carbon opportunities for the European steel sector, ranging from energy efficiency and fuel shifting to breakthrough technologies like Carbon Capture and Sequestration (CCS) and increased recycling. It argues that current EU ETS mechanisms, particularly free allocation based on historic volumes, fail to provide sufficient incentives for deep decarbonisation and high-value product innovation. The authors recommend a structural reform of leakage protection, specifically proposing a combination of output-based allocation and the inclusion of consumption in the EU ETS to create a credible business case for breakthrough technologies and material efficiency. The report also emphasizes the need for sustained public funding for process innovation to overcome the 'valley of death' in technology scaling and suggests strengthening links between steel producers and downstream consumers, particularly in the automotive and construction sectors, to drive demand for lightweight, high-strength steels.