Search Climate Insights Directory

An analysis of 52 Indian CDM projects registered by May 2006 reveals a systemic preference for barrier analysis over investment analysis, with significant gaps in transparency and evidence. The study finds that while 94% of projects use barrier tests, only 33% conduct investment analyses, and only 50% identify alternatives. Detailed case studies of JSW Steel and Bajaj Auto illustrate that the CDM Executive Board's additionality assessments are inconsistent, often depending on how information is 'packaged' by developers. The author concludes that validators frequently fail to critically evaluate barrier claims, potentially allowing non-additional projects to increase net global emissions.

The report assesses how the EU ETS affects industrial competitiveness, identifying that while most sectors can profit in the short term through free allowances and cost pass-through, a small number of carbon-intensive subsectors face significant risks. Using UK and German data, the authors develop 'Value at Stake' indicators to screen for exposed activities. The analysis concludes that leakage concerns are concentrated in a few subsectors, particularly cement and blast furnace steel, where high direct emissions and international tradeability create vulnerability. The report argues that free allocation can mitigate these risks but may create perverse incentives, suggesting that targeted policies or harmonized allocation across EU Member States are necessary to maintain economic performance while achieving emission reductions.

The report details the status of Belarus's efforts to engage in carbon markets, noting that while the country has developed a legal framework and a pipeline of projects totaling 13 MtCO2e, the pending ratification of its Annex B amendment to the Kyoto Protocol has pushed the government to prioritize Voluntary Emission Reduction (VER) projects. It highlights the creation of a Department of Climate Change and a planned Carbon Fund, while noting investor concerns regarding bureaucratic barriers and a lack of expertise among middle-level officials.

The Russian Federation proposed a two-track approach to climate targets: a 'Kyoto track' to simplify the bureaucratic process for countries joining Annex B, and a 'Convention track' to recognize and incentivize voluntary targets by Non-Annex I countries through finance and technology transfer. While Annex B parties generally supported the simplification of accession procedures, Non-Annex I countries expressed skepticism, fearing that voluntary targets could eventually be converted into binding commitments. The report notes that the proposal lacked detail on the allocation of emitting rights for new Annex B members and suggests the initiative may have been driven by internal Russian agency competition.

The document analyzes the proposed National Allocation Plans (NAPs) for the 2008-2012 period of the EU ETS, arguing that excessive free allowance allocation, particularly in the power sector, creates significant economic distortions. It finds that free allocations to new installations often act as subsidies for fossil fuel generation, potentially making coal power more profitable under the ETS than without it. The authors highlight a lack of harmonization across Member States, the underutilization of auctioning, and the risk of an 'early action problem' where historic-based allocations discourage immediate emission reductions. The paper suggests that reducing free allocations and increasing auctioning would improve cost-efficiency and support low-carbon investment.

The research finds that proposed Phase II NAPs likely result in an oversupply of allowances, potentially leading to very low carbon prices and a 'dead market'. This surplus is exacerbated by the potential inflow of CDM/JI credits, which would shift the cost of Kyoto compliance from the private sector to government treasuries.

The document proposes a paradigm shift in how pension funds approach net-zero transition planning. It critiques the reliance on modern portfolio theory and 'official' climate scenarios, which it claims are not 'decision-useful' due to their linear nature and long time horizons. Instead, it advocates for the application of 'EEIST Thinking'—rooted in complexity economics—to develop bespoke, qualitative scenarios that account for non-linear dynamics, tipping points, and systemic risks. The report introduces 'Ten Transition Planning Principles for Pension Funds' to move decision-making from a backward-looking, optimization-focused approach to one that is forward-looking and adaptive. It highlights the Universities Superannuation Scheme (USS) as a case study in applying these systemic views to investment strategy.

The briefing outlines a strategy to redirect global private savings toward 1.5°C compatible infrastructure, particularly in developing countries which represent 70% of investment needs. It proposes a coordinated approach to de-risk investments through public guarantees, the recognition of climate remediation assets as collateral by Central Banks, and the use of AAA multi-sovereign guarantees to encourage cross-border capital flows. The document emphasizes the need to reduce debt burdens in developing countries and integrate recovery policies with climate objectives and Sustainable Development Goals (SDGs) ahead of the 2023 Global Stocktake.

The research paper evaluates nine climate policy scenarios to determine the most effective way to address carbon leakage in the EU ETS. Using the CASE II model, it compares full auctioning against various border adjustment (BA) and output-based allocation (OB) strategies. The findings suggest that while full auctioning leads to a leakage ratio of 10%, border adjustments are the most efficient at reducing this ratio, often resulting in negative leakage (spillovers) where emissions in the rest of the world actually decrease. Output-based allocations also reduce leakage but are less efficient than border adjustments and can lead to higher carbon prices.

The research paper assesses the carbon footprint and economic drivers of China's aluminium and steel industries. It highlights that primary aluminium production contributes significantly to global GHG emissions, particularly when accounting for coal-fired electricity. The paper also examines how export VAT refund rates and trade policies influence the production and export of these metals, using data from the World Bank and China Custom House to illustrate trends between 2003 and 2008.

The document examines why border adjustment (BA) measures are largely absent from Japanese climate policy despite concerns over international competitiveness. It finds that Japan's reliance on voluntary emission reduction plans is inconsistent with BA, and stakeholders view such measures as technically infeasible and incompatible with WTO rules. Instead, Japan advocates for multilateral agreements that include emission commitments for major emerging economies to address carbon leakage.

The document outlines China's '1+N climate framework' and its goals to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. It identifies five key intervention areas for systemic transformation: power generation, energy distribution networks, transport, carbon sinks, and technology/energy policy. The authors argue that international collaboration, knowledge sharing, and philanthropic funding—which averaged $75 million per year between 2017 and 2020—can help overcome technical and financial barriers, create economies of scale for clean technologies, and improve the efficiency of China's national emissions trading scheme (ETS).

The document assesses the challenges of the EU's proposed CBAM based on incurred emissions, noting that it fails to fully address carbon leakage for exports and value chains. It proposes an alternative 'climate contribution' based on standardised carbon intensity factors, which would act as an excise charge that can be passed along the supply chain and waived for exports. This model, combined with Carbon Contracts for Difference (CCfDs) funded by CBAM revenues, is presented as a way to create immediate investment incentives for climate-neutral production of materials like steel, cement, and aluminium.

The report highlights the strategic link between food security and political stability in Europe, warning that climate-driven food shocks and geopolitical conflicts can fuel populism and undermine climate action. It calls for increased investment in multidisciplinary climate modelling, adaptive funding for rural communities, and a leadership role for the EU in promoting resilient global food systems to mitigate risks of social unrest and migration.

The report examines how carbon pricing and policy credibility influence private sector investment in low-carbon technologies. It argues that while carbon prices provide a necessary signal, the lack of long-term policy certainty often leads firms to adopt 'carbon ignorant' strategies or delay investment. The analysis highlights the role of capital costs, the importance of a predictable policy trajectory, and the necessity of combining carbon pricing with complementary policies to drive a systemic energy transition.

The report evaluates Carbon Contracts for Difference (CCfDs) as a financial instrument to reduce carbon-price risk for industrial companies in Germany, specifically within the steel, cement, and ammonia sectors. It finds that CCfDs can trigger investments in clean technologies at lower expected carbon prices than minimum carbon price schemes and can significantly reduce the net present value of government funding. The analysis suggests that combining CCfDs with other risk-reducing instruments, such as contracts for difference for renewable electricity, further lowers the necessary strike price. The report also discusses award mechanisms, arguing that negotiations may be superior to auctions for complex innovative projects to avoid 'low-balling' strategies and overcompensation.

The document evaluates two policy instruments designed to transition the European basic materials sector to net zero by 2050. Carbon Contracts for Difference (CCfDs) are presented as a way to reduce investment risk and government costs by guaranteeing a fixed carbon price for low-carbon projects. The Climate Contribution is proposed as a weight-based charge on materials (like steel and cement) to ensure a consistent carbon price signal while maintaining carbon leakage protection. The analysis suggests that CCfDs can lower the required carbon price for investment and that the Climate Contribution could generate approximately EUR 17-21 billion in annual EU revenues with minimal, progressive impacts on household consumption in Germany and Poland.

The report evaluates Carbon Contracts for Difference (CCfDs) and a Climate Contribution as tools for decarbonising the basic materials sector in Germany and Poland. CCfDs act as hedging instruments that lower the carbon price threshold required for clean technology investments and reduce the net present value of government funding. The Climate Contribution, a weight-based charge on materials, is estimated to generate EUR 17-21 billion in EU-wide revenues while remaining progressive and having a minimal impact (below 0.5%) on household consumption expenditures.

Climate Strategies argues that climate adaptation must move beyond a technical exercise to a justice-centered approach that addresses the structural drivers of vulnerability. Drawing on its South to South Just Transitions (S2S) programme, the submission highlights that adaptation actions can create winners and losers, risking the further marginalization of vulnerable populations if not managed through a Just Transition lens. The document identifies best practices in countries like South Africa, Australia, and the EU, while noting significant barriers in the Global South, such as data gaps on lived experiences and the disconnection between mitigation and adaptation policies. It calls for the JTWP to facilitate shared frameworks for operationalizing equity, tracking social outcomes, and mapping transboundary risks.

Climate Strategies proposes five operational avenues for the first 2025 JTWP dialogue, including a non-prescriptive governance framework, a case study repository, a resource database, justice-focused metrics, and a global governance architecture. For the second 2025 dialogue, it recommends addressing climate resilience, restorative justice, transition minerals, and deep dives into neglected sectors like food and health systems. The submission also suggests reforming the dialogue format to combine workshops with discussions to better facilitate the sharing of real-world practitioner experiences.