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The document analyzes the implementation of Article 6 of the Paris Agreement, focusing on the distinctions between the bilateral/multilateral trades of Article 6.2 and the UN-overseen global market of Article 6.4. It highlights critical loopholes, including the risk of double counting in aviation offsetting (CORSIA), the lack of oversight for Article 6.2 trades, and the potential for 'junk' credits from the Clean Development Mechanism (CDM) to transition into the new system. The author argues for stricter authorization processes, mandatory transparency, and a 'firewall' between carbon markets and the new climate finance package being negotiated at COP29.

The document defines carbon dioxide removal (CDR) as the physical extraction and permanent storage of atmospheric CO2. It argues that CDR must supplement, not substitute, deep emission reductions of over 90%. The handbook evaluates six negative emissions technologies and practices (NETPs)—biochar, BioCCS, DACCS, enhanced weathering, afforestation/reforestation, and soil carbon sequestration—detailing their technical readiness, permanence, and environmental trade-offs. It emphasizes the need for robust 'cradle-to-grave' carbon accounting, separate targets for reductions and removals to avoid mitigation deterrence, and the integration of the Planetary Boundaries framework to ensure Earth system stability. The text also critiques current EU legislation, such as the Carbon Removal Certification Framework (CRCF) and the Common Agricultural Policy (CAP), for lacking ambition and failing to distinguish between permanent and temporary storage.

The document defines carbon dioxide removal (CDR) as the physical extraction of CO2 from the atmosphere and its permanent storage. It argues that CDR must be a complement to, not a substitute for, aggressive emission reductions (over 90%). The guide evaluates six negative emissions technologies and practices (NETPs)—including Bio-CCS, DACCS, and biochar—while critiquing current EU policies for failing to distinguish between permanent removals and temporary biological sequestration. It advocates for a diversified portfolio of CDR methods, rigorous life-cycle accounting, and a governance framework based on the 'planetary boundaries' to avoid ecological trade-offs.

The document assesses the effectiveness of the EU ETS and CORSIA in addressing aviation emissions, finding that both schemes fail to cover non-CO2 effects and that CORSIA's reliance on low-quality offsets and a high baseline limits its climate impact. It recommends extending the EU ETS to all flights departing from the European Economic Area (EEA) by 2027.

The report finds a substantial divergence in ambition between the EU ETS and CORSIA. While the EU ETS is moving toward 100% auctioning of allowances by 2026 and high carbon prices, CORSIA relies on offsetting emissions above a baseline, resulting in significantly lower emissions coverage and a much weaker price signal. The EU may expand the EU ETS to extra-EEA flights by 2027 if CORSIA is deemed insufficient to meet climate goals.

The author contends that temporary carbon sequestration, such as carbon farming, is unsuitable for market-based mechanisms because it cannot store CO2 for the century-long timeframe required to meet Paris Agreement goals. The text criticizes the EU's proposed Carbon Removal Certification Framework for failing to exclude offsetting and double counting, while highlighting the technical inaccuracies of current monitoring, reporting, and verification (MRV) techniques. Instead of 'nature credits', the document proposes rewarding sustainable land management through a reformed Common Agricultural Policy (CAP) and a dedicated EU fund for nature restoration.

Carbon Market Watch strongly opposes integrating greenhouse gas removals (GGRs) into the UK ETS, asserting that emissions and removals are not equivalent and that such a move would cause mitigation deterrence. The organization argues that GGRs are a weaker form of mitigation and that their inclusion could lead to an overreliance on cheap, unsustainable options. If integration were to occur, they insist on maintaining the gross cap, issuing allowances ex-post, and implementing a strict permanence framework. They specifically oppose the inclusion of woodland units due to their lack of permanence and the 'carbon debt' they create. Instead, they recommend 'indirect inclusion' where ETS revenues fund GGR projects, or the creation of a separate Removals Trading Scheme.

Carbon Market Watch criticizes VCMI's revised Scope 3 Framework, asserting that it allows companies to pollute up to 25% beyond their annual scope 3 decarbonisation targets until 2038. The organization argues this flexibility undermines the Paris Agreement's 1.5°C goal and creates a 'green fig leaf' for climate laggards, particularly in sectors that are easier to decarbonise than the hard-to-abate industries the framework was intended for.

The policy brief outlines three core principles for the implementation of the EU's Social Climate Fund (SCF): ensuring meaningful public participation, prioritising structural solutions over temporary relief to avoid fossil fuel lock-ins, and mobilising additional financing beyond the mandatory 25% contribution. It argues that the SCF's budget of EUR 65 billion is insufficient to tackle the root causes of energy and transport poverty and calls for the redirection of ETS revenues and the elimination of fossil fuel subsidies to support vulnerable households.

Carbon Market Watch (CMW) evaluated four market-based measure (MBM) proposals for the IMO's GHG strategy. The 'Pacifics' proposal (Belize et al.) was ranked highest (82/100) due to its high levy of $150/tCO2e and strong support for climate-vulnerable nations. The EU/Japan proposal scored 62/100, while the Bahamas et al. and Canada proposals both received a 'C' grade (49/100 and 46/100 respectively) for lacking specificity in funding and contribution levels. A proposal by Angola et al. was excluded from the scoring as it was deemed a technical fuel standard rather than a market-based economic measure.

Carbon Market Watch (CMW) assessed several market-based proposals for international shipping decarbonization, scoring them based on alignment with the 1.5°C Paris Agreement goal, emission reductions, and equity. The analysis highlights that while the IMO's 2023 strategy aims for net-zero emissions by 2050, current measures are insufficient. CMW identifies the proposal by Canada as the strongest (Score A+), citing its high carbon levy of 150 $/tCO2e, while criticizing the Bahamas et al. proposal (Score C) for its reliance on a flexibility compliance mechanism that disincentivizes decarbonization.

Carbon Market Watch (CMW) assessed several market-based measure (MBM) proposals for the international shipping sector, using a methodology developed by CE Delft. The evaluation focused on alignment with the Paris Agreement's 1.5°C goal, immediate emission reductions, support for vulnerable nations and workers, and funding for research and development. The analysis highlights that current IMO strategies are insufficient for 1.5°C alignment and that only proposals with high carbon levies—such as those from Canada and Austria et al.—provide a strong enough price signal to drive the transition to zero-emission technologies.

Carbon Market Watch evaluated several greenhouse gas (GHG) pricing proposals for the International Maritime Organisation (IMO), scoring them based on criteria such as emission reduction potential, support for vulnerable nations, and revenue use for R&D. The analysis finds that while some proposals, such as those from Canada and Belize et al., show strength in levy levels and support for vulnerable nations, others, like the Bahamas et al. proposal, are insufficient as they do not function as robust market-based measures. The document argues that meeting the IMO's net-zero goals by or around 2050 requires ambitious levies and strong enforcement to incentivise zero-emission technologies.

The voluntary carbon market (VCM) operates through a complex system of carbon credits, derivatives, and intermediaries. While intended to fund emissions reductions, the market is characterized by a lack of financial transparency and a tendency to prioritize cheap credits over impactful ones. Credits can be traded multiple times on a secondary market, where financial gains accrue to intermediaries rather than project developers. Trading occurs via spot markets for immediate delivery or through futures, forwards, and options for future settlement. Debt instruments, such as bonds, also provide upfront project financing. Data from 2023 indicates that industrial projects typically attract larger retirement volumes compared to projects with co-benefits like clean cookstoves.

Carbon Market Watch argues that the Article 6.4 sustainable development tool should rely on its own internal principles and criteria for risk assessments rather than external national or international regulations to ensure consistency and integrity. The organization also identifies a loophole in the Do-No-Harm Risk Assessment flowchart and criticizes the conditional recognition of Indigenous legal systems based on their consistency with national legislation.

Carbon Market Watch warns that heavy industry is projected to consume 60-80% of Flanders' EU ETS revenues between 2024 and 2030 through indirect cost compensation subsidies. The author argues these subsidies support the status quo and lack environmental safeguards, noting that a 2021 Deloitte report found no expected impact on employment or relocation if such subsidies were reduced. The document proposes capping industrial funding at 30% of ETS revenue to protect funds for transport and housing transitions.

The EU Carbon Border Adjustment Mechanism (CBAM) is a regulatory tool designed to prevent 'carbon leakage' by applying a carbon price to specific imported goods, matching the price paid by EU producers under the EU Emissions Trading System (EU ETS). The mechanism covers cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. It involves a transitional monitoring period starting in October 2023, followed by a definitive phase-in in 2026. Importers must purchase and surrender non-tradeable certificates based on the embedded emissions of their goods. The document highlights the necessity of phasing out free ETS allowances to ensure the CBAM's effectiveness and discusses the potential for reinvesting CBAM revenues into climate mitigation in developing economies.

The EU Emissions Trading System (EU ETS) requires companies in power, heavy industry, aviation, and shipping to purchase emission allowances via auctions, with revenues distributed to 30 covered countries. While the 2023 reform mandates that revenues be spent on climate-related activities, historical data from 2013-2021 shows €25 billion was not spent on climate action and €12 billion went to projects that were not climate-sensible or could have increased emissions. The system utilizes a mix of auctioning and free allocations to prevent carbon leakage, though free allocations for aviation will end in 2026 and for heavy industry by 2034. Key funding mechanisms supported by these revenues include the Innovation Fund, expected to raise over €57 billion by 2030, and the Modernisation Fund, expected to invest €69.5 billion in 13 lower-income member states between 2021 and 2030.

Carbon Market Watch supports the draft Delegated Act on permanent carbon capture and usage (CCU) within the EU ETS, praising its strict permanence criteria and 'white-list' approach for products. However, it warns that the 'end of life' criteria must account for CO2 release via deterioration and calls for greater transparency in how products are added to or removed from the approved list.

The Social Climate Fund (SCF) is an EU initiative designed to alleviate energy and transport poverty resulting from the introduction of the ETS2 carbon pricing system for buildings and road transport. Operating from 2026 to 2032, the fund will provide approximately €86.7 billion in targeted support to EU member states, primarily for lower-income groups and micro-enterprises. Funding is allocated based on need, with Poland, France, Italy, Spain, and Romania receiving the largest shares. To access funds, member states must submit Social Climate Plans (SCPs) by June 2025, which must include impact assessments and decarbonisation strategies. While the SCF supports green investments and limited temporary income support, it is not intended to solve the root causes of existing energy and transport poverty.