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China is transitioning from a focus on adding renewable capacity to building a "new electricity system" that integrates high levels of variable energy. In 2024, China invested $625 billion USD in clean energy, significantly outpacing other major regions. This shift, combined with expanding electrification in industry, transport, and buildings, is contributing to a structural decline in fossil fuel generation. By the first half of 2025, combined wind and solar generation surpassed the combined output of hydro, nuclear, and bioenergy, and total installed capacity for these sources exceeded that of coal for the first time.

China's massive scale in producing solar, wind, batteries, and electric vehicles has significantly lowered global costs, with solar module prices falling over 70% between 2022 and mid-2025. This manufacturing capacity allows China to potentially supply the entire world's solar needs for 2030 as defined by the IEA. These affordable technologies are facilitating an 'energy leapfrog' in emerging markets across Africa, Asia, and Latin America, where some countries now have higher solar shares in power generation than the US. Consequently, China's own fossil fuel demand is approaching a plateau, and the global demand for fossil fuels is projected to be in structural decline by 2030.

In July 2025, the European Central Bank (ECB) announced a 'climate factor' to be added to its collateral framework, which will discount the value of assets used as guarantees by banks based on climate-related risks. The factor employs a three-tier analysis covering asset-level vulnerability (based on residual maturity), company-level transition risk (using carbon intensity and decarbonization targets), and sector-level stress (based on Eurosystem climate stress test data). While the measure aims to disincentivize the use of carbon-intensive assets, the author warns of methodological flaws in the company-level analysis—such as the use of carbon intensity over absolute emissions and a 'best-in-class' approach—that may shield some polluting companies. Currently, the factor applies only to marketable assets from non-financial corporations and affiliated entities, representing less than 5% of pledged collateral, though it may signal a broader shift in how European banks price climate risk ahead of its mid-2026 implementation.

The document outlines the phased compliance milestones for importers under the European Methane Regulation (MER), specifically regarding the monitoring, reporting, and verification (MRV) of imported oil and gas. It highlights the difficulty importers face in gathering production segment data not routinely shared in supply chains and proposes a hybrid approach to manage these requirements while minimizing market disruption.

Carbon Market Watch warns that allowing international carbon credits in the EU's 2040 climate target could lead to the outsourcing of 140 million to 430 million tonnes of emissions. The organization highlights two interpretations of the Commission's '3% of 1990 EU net emissions' proposal: a cumulative scenario (Scenario 1) and a build-up scenario (Scenario 2). Both would result in higher EU emissions than a fully domestic approach and impose significant costs—ranging from €7 billion to over €30 billion—diverting funds from domestic decarbonization and climate finance. The document further contends that such credits undermine the 2040 target, risk exacerbating inequalities in the Global South, and contradict previous impact assessments favoring a domestic 90-95% net emission reduction.

Carbon Market Watch argues that indirect cost compensation under the EU ETS should be phased out rather than expanded to new sectors. The organization identifies several flaws in the current State aid guidelines, including the use of fossil-fuel-only generation capacity to determine CO2 emission factors and a lack of transparency regarding which companies receive aid. It specifically warns that including primary plastics and organic chemicals in the compensation scheme would subsidize fossil-fuel-reliant production and undermine circular economy efforts.

The policy brief analyzes a June 2025 non-paper from 16 EU member states seeking reforms to the ETS2, the emissions trading system for buildings and road transport. The authors argue that while some suggestions—such as publishing more data and starting auctions early—are low-risk, proposals to modify the MSR2 trigger mechanisms, extend its lifetime beyond 2031, or strengthen price controls would increase the total volume of allowances in the market. Because MSR2 allowances are already additional to the emissions cap, the brief contends that these reforms would lead to higher greenhouse gas emissions, weaken the investment signal for decarbonization, and potentially jeopardize the EU's overall climate goals.

The Hail Creek coal mine in Australia's Bowen Basin has consistently underreported methane emissions since 2021, with independent airborne studies estimating emissions to be four to six times higher than official figures in 2022 and 2023. Major steel companies ArcelorMittal, Nippon Steel, and POSCO imported at least 4.3 Mt of coal from the mine in 2023 and 2024, potentially importing more than three times the methane emissions reported by the operator. This underreporting creates regulatory risks under the EU Methane Regulation, as actual methane intensity in 2023 (exceeding 9.5 tonnes CH4/kt) likely surpasses proposed EU limits, whereas reported data (4.8 tonnes CH4/kt) suggests compliance.

The report argues that major steel companies, including ArcelorMittal, Nippon Steel, and POSCO, overlook methane emissions from coal mining in their Scope 3 disclosures. It highlights that these emissions, particularly from 'gassiest' Australian mines, significantly increase the climate impact of blast furnace-based steelmaking and are not mitigated by downstream technologies like hydrogen injection or CCUS.

The report finds that methane from Australian coking coal adds an average of 10-17% to the short-term climate impact of blast furnace-based steelmaking, with some 'super-emitting' mines potentially doubling this impact. It highlights significant underreporting of methane emissions in Australia, specifically citing the Hail Creek mine, and notes that leading steelmakers like ArcelorMittal, Nippon Steel, and POSCO fail to disclose the methane footprint of their coal supplies. The document argues that cutting coal mine methane is a cost-effective near-term decarbonisation step, as over half of these emissions are avoidable using existing technology.

The report argues that methane emissions from coking coal mining are a significant but under-accounted 'blind spot' in the steel industry's climate impact. It highlights that coking coal is more methane-intensive than thermal coal and that Australian mines, which supply over half of the global seaborne coking coal market, consistently underreport these emissions. Using IEA data and GWP20 metrics, the report estimates that mining emissions can add 10% to 17% to the emission intensity of blast furnace steel, with some 'gassiest' mines potentially doubling the climate footprint. It concludes that nearly half of these emissions could be abated using existing technologies at a cost lower than the market price of Australian Carbon Credit Units.

The EU is seeing growth in cleantech manufacturing and solar capacity, but the overall pace of transition remains insufficient. Significant financing gaps, fossil fuel dependencies, and misaligned agricultural policies continue to obstruct the path to climate neutrality.

The document examines how Brazil and South Africa use carbon pricing, green bonds, green taxonomies, and central bank regulations to fund their transitions to net zero by 2050. It highlights the inadequacy of current international climate finance, noting that developing countries pay significantly more for multilateral development bank finance and that most climate funding arrives as loans rather than grants. The brief details South Africa's carbon tax and Just Energy Transition Partnership (JETP), and Brazil's voluntary carbon market and sovereign sustainable bonds. It argues that BRICS nations should use peer learning to scale these tools and collectively advocate for the restructuring of the World Bank and IMF to ensure more affordable and equitable finance for the Global South.

The report examines the financial and regulatory incentives needed to accelerate the decarbonisation of China's steel industry. It highlights a significant investment gap, noting that while pilot regions like Hebei have introduced sector-specific taxonomies and transition plan templates, national-level frameworks remain underdeveloped. The document argues that current incentives are insufficient for steelmakers due to high upfront costs and for financial institutions due to a lack of unified identification standards. It recommends expanding public subsidies, refining the capacity replacement policy to include carbon intensity criteria, and creating demand-side incentives for purchasers of low-carbon steel.

ClientEarth advocates for the UK government to mandate the development, disclosure, and implementation of transition plans aligned with the Paris Agreement. The organization argues that a 'comply or explain' framework is insufficient and that mandatory requirements are necessary to prevent 'greenwashing' and 'say-do gaps'. It specifically highlights the need for pension schemes to manage systemic climate risk through Paris-aligned anchors and robust stewardship. ClientEarth further asserts that legal risks for directors are often overstated due to the 'dishonesty standard' in English law, and that alignment with the 1.5°C goal is essential for the UK to fulfill its international obligations following the 2025 ICJ Advisory Opinion.

ClientEarth argues that environmental safeguards are constitutional obligations, not administrative burdens, and that the EU should address implementation bottlenecks—such as lack of staffing and poor digitalisation—rather than deregulating. The document specifically opposes the discontinuation of the SCIP database, the simplification of the EU Deforestation Regulation (EUDR), and the weakening of the Industrial Emissions Directive (IED) or Nature Restoration Regulation (NRR). It emphasizes that robust environmental assessments provide legal certainty and risk mitigation for investors.

ClientEarth argues that CSOs in the EU, particularly those focused on environment and climate, face a deteriorating environment characterized by shrinking civic space, legal harassment (SLAPPs), and financial insecurity. The document criticizes the European Commission for restricting public access to documents and prioritizing corporate interests in 'strategic dialogues' over civil society. It calls for a binding framework for civil dialogue, systemic consultation at all legislative stages, and increased funding for protection mechanisms like the Aarhus Rapid Response Mechanism. Specific national examples of repression are cited in Poland, France, Italy, Germany, and Hungary, while Finland and Denmark are noted for positive engagement models.

The briefing details the 2024 revisions to the Industrial Emissions Directive (IED), focusing on expanding access to justice, strengthening non-compliance and suspension mechanisms, increasing penalties, and introducing a new compensation right for health damages. It emphasizes alignment with the Aarhus Convention and provides recommendations for Member States to ensure these provisions are effective and dissuasive in practice.

ClientEarth critiques the European Commission's 'Roadmap towards Nature Credits', warning that a market for biodiversity credits could undermine EU environmental law if not strictly separated from regulatory obligations and offsetting. The organization argues that the biodiversity financing gap—estimated at 19 billion euros per year in the EU—should first be addressed by scaling up public funds and redirecting the 48 billion euros in annual harmful subsidies. ClientEarth recommends that any future credit system be strictly outcome-based, exclude 'business-as-usual' practices, and prohibit the use of credits for ecological compensation (offsetting) to avoid 'net loss' of biodiversity. It further highlights the scientific complexity of measuring biodiversity compared to carbon, cautioning against reductionist proxy metrics that could lead to greenwashing.

The document outlines a strategic framework to transition the global financial system toward deforestation- and conversion-free (DCF) models. It details specific mandates for policymakers to reform fiscal policies and subsidies, for central banks to embed nature-related risks into prudential supervision, and for financial institutions to scale capital toward sustainable land use and regenerative agriculture. The report emphasizes that aligning financial flows is essential to meet climate and biodiversity targets, citing the loss of 6.7 million hectares of tropical primary forests in 2024 as a critical risk to economic stability.