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The Stockholm Environment Institute and the Swedish Steel Producers Association (Jernkontoret) are creating a methodology and toolbox—a 'societal value compass'—to guide the Swedish steel industry toward its 2050 vision of creating positive societal value. The tool integrates the 17 Sustainable Development Goals (SDGs) with capital theory (natural, real, human, and social capital) to evaluate how industry activities affect broader societal interests. The project involves cross-impact balance analysis of SDG targets, focus group consultations, and the development of a prototype to be tested through topical case studies. This framework aims to enhance the industry's global competitiveness and facilitate communication with investors, employees, and policymakers regarding its contribution to sustainability.

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.

The document argues that emission reductions of 80% or more are possible in Europe's energy-intensive industries through process, product, and business-model transformations, provided there is strong public policy support and funding for innovation.

The 2015 EU ETS emissions fell by 0.6% to 1802mt, driven by a 0.6% decrease in power and heat emissions and a 0.3% decrease in industrial emissions. Notable national trends include a 23% drop in UK coal power emissions and an 11% increase in Netherlands power emissions due to new coal plants. The report highlights a long-term trend of renewables displacing fossil fuels in the European power sector.

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 argues that the EU Emissions Trading System (EU ETS) has provided excessive subsidies to German heavy industry through free allowances, resulting in €4.5 billion in windfall profits for companies like ThyssenKrupp and ArcelorMittal from 2008 to 2014. It contends that these allocations cost the German government €29.7 billion in lost auction revenues and stifle innovation by reducing the incentive to decarbonize. The briefing recommends phasing out free allocations in favor of 100% auctioning and investing the proceeds into low-carbon technologies.

The document challenges the justification for granting free carbon allowances to EU industries to prevent 'carbon leakage' (production relocation). It argues that there is no compelling evidence of such leakage and that free allocations instead create windfall profits for companies, disincentivize low-carbon innovation, and deprive the public of auctioning revenues. The brief recommends a transition to 100% auctioning of allowances and a more stringent, transparent criteria for the carbon leakage list to ensure only truly high-risk sectors receive support.

The European steel and cement sectors face substantial surplus production capacity and limited reinvestment, hindering the adoption of low-carbon technologies. While energy efficiency and fuel-switching have provided some gains, breakthrough process technologies like carbon capture and storage (CCS) require significant public funding and a credible, long-term carbon price signal for both producers and consumers to be viable. The report argues that a comprehensive policy package—combining the EU ETS, innovation funding, and updated building standards—is essential to transition these capital-intensive industries toward sustainable, high-value production.

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 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 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 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 research evaluates the transition from voluntary to mandatory emissions trading in Japan using the CASE-ASIA model. It compares two primary designs—one including the electricity sector in the ETS and one applying a CO2 tax to it—across various allocation modes including full auctioning, border adjustments (BA), and output-based allocation (OBA). The findings highlight a critical trade-off between electricity prices and industrial product prices, noting that border adjustments for exports are essential for Japan due to its high export volume of steel and cement. While OBA is most effective at limiting production decreases, the study concludes there is no single superior design, and policy choices will depend on government priorities regarding revenue and competitiveness.

The document assesses how different BCA designs—specifically direct versus life-cycle emissions and varying carbon prices—would affect Chinese exports. It finds that while certain sectors like iron and steel are highly exposed, the overall economic impact on China's total exports would be limited, potentially reducing the incentive for exporters to lower emissions rather than divert trade.

The report identifies the 'Carbon Fat Cats'—ten companies, primarily in the steel and cement sectors, that amassed a combined surplus of 240 million emissions allowances between 2008 and 2010, valued at approximately €4.1bn. This over-allocation is attributed to inflated growth projections and the economic recession, allowing these firms to profit through windfall sales or banking permits for future use. In contrast, the power sector faces a significant deficit, effectively subsidising industrial surpluses. The report also highlights the use of cheap international offsets, some from direct rivals in China and India, which undermines industry claims regarding competitiveness and carbon leakage. Sandbag recommends increasing the EU emissions reduction target to 30%, implementing an allowance 'set-aside' for Phase III, restricting the use of offsets from rival industries, and improving data transparency regarding company ownership and waste gas transfers.

The document argues that Sectoral Approaches (SAs) are often misunderstood as top-down international carbon pricing schemes, whereas practical implementation requires a 'bottom-up' approach starting with domestic policies. Through case studies of the steel industry in China, India, and Japan, the author demonstrates that national priorities and sovereignty concerns make a single internationally agreed common solution unlikely. Instead, the paper suggests renaming SAs to 'SAAMs' to remove pejorative connotations and recommends that these measures co-exist with carbon taxes or Emission Trading Schemes (ETS) to drive the breakthrough technologies and RDD&D investment needed for deep decarbonization. The author concludes that while domestic schemes are more feasible, they should be linked internationally to manage trade competitiveness and leakage.

The report argues that significant emissions reductions in Japan's steel sector require breakthrough technologies or CCS, as current efficiency is already high. It proposes two SAAM variants: one based on a fully-resourced research, development, diffusion and deployment (RDD&D) plan, and another based on regulating CO2 limits for plants. The analysis suggests that the sector's financial resources could support a significant scale-up of RDD&D, though the high cost of implementing CCS remains a major hurdle. The report also reviews the role of the Nippon Keidanren's voluntary plans and international partnerships like the Asia-Pacific Partnership (APP) and the World Steel Association (WSA).

The document examines the Perform, Achieve and Trade (PAT) scheme, a market-based mechanism designed by the Indian government to improve energy efficiency across nine high-carbon sectors. It details the scheme's focus on energy intensity rather than absolute emissions, the use of Energy Savings Certificates (ESCerts) to incentivize performance, and the specific challenges and opportunities within the iron and steel industry. The author suggests that the PAT could help India meet its domestic GHG reduction targets and recommends a phased implementation, potentially starting with the iron and steel sector, to ensure technical and political feasibility.

The document argues that national-level analyses of carbon leakage underestimate the severe economic risks to Old Industrial Regions (OIRs), where heavy industry is highly concentrated. Using an applied general equilibrium (AGE) model for the Basque Country, the authors find that relocating 1.5% to 35% of iron and steel production could lead to a GDP drop of up to 2.26%. While such relocation reduces CO2 emissions, the implicit cost of this mitigation (187 to 202 €/Tco2) is significantly higher than technological alternatives like carbon capture and storage. The authors recommend that climate policies be carefully designed to avoid imposing undue burdens on sectors prone to relocation in OIRs.

The report examines carbon leakage—the migration of emissions to regions with laxer carbon pricing—specifically focusing on the EU ETS Phase III. It criticizes the European Commission's broad identification of 164 sectors at risk, arguing that the criteria used were too simplistic and failed to account for the 2008 economic recession or the actual auctioning rates. The authors suggest that leakage risk is actually concentrated in a few sectors, including steel, cement, and aluminium, and recommend tailored policy responses such as border adjustments for cement and investment subsidies for aluminium, rather than a one-size-fits-all approach of free allowance allocation.