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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.

The European power sector saw a record increase in renewables generation in 2015, yet CO2 emissions fell by only an estimated 0.5% due to offsetting increases in coal generation in several countries and a rebound in electricity demand. While the UK experienced a collapse in coal generation, this was countered by growth in the Netherlands, Spain, and Poland. The report forecasts a further 21% drop in EU ETS emissions from 2014 to 2020, suggesting the EU is on track to surpass its 20% economy-wide CO2 cut target.

EU coal emissions rose 6% from 2010 to 2013, contributing to 18% of total EU CO2 emissions. This increase was driven by fuel-switching from gas to coal in Germany, the UK, and Poland, which together account for 66% of coal-based emissions. While renewables and falling demand reduced overall fossil generation by 4.3% per year, the low carbon price under the EU Emissions Trading System (ETS) failed to prevent coal's resurgence. The report warns that the Industrial Emissions Directive (IED) may not force expected closures because of cheaper compliance technologies and the introduction of capacity markets, particularly in the UK and Poland, which risk locking in high-carbon infrastructure into the 2030s. Modelling suggests that if coal remains cheaper than gas, emissions will fall only 3% by 2016, though the potential for fuel-switching will increase by 2020. Sandbag recommends urgent ETS reform, mandatory carbon intensity reporting, and targeted CCS funding.

The report argues that current international climate targets often rely on incoherent 'effort-sharing' models rather than ethical budget-sharing. It proposes a framework where the global greenhouse gas budget to 2050 is back-calculated from 1990 and divided among nations based on their 1990 share of the global population. Under this model, the EU would have a budget of 204 billion tonnes, of which 57% was used by 2012. The author advocates for international emissions trading of fossil and industrial CO2 to reconcile national responsibilities with cost-effective abatement opportunities. For the EU, the report suggests a domestic trajectory aligned with the 2050 Low Carbon Roadmap (-25% by 2020, -40% by 2030, -60% by 2040, and -80% by 2050) as a minimum unilateral commitment.

The report argues that the EU ETS has failed to drive domestic emissions reductions due to a cap set against inflated projections and a flood of low-quality offsets. It finds that the system is now cancelling out approximately 700 million tonnes of abatement from other EU policies. The author recommends the permanent removal of 1.7 billion allowances from Phase 3 auctions to restore environmental integrity and increase Europe's 2020 climate target to 30% below 1990 levels.

The report argues that the EU ETS is failing due to a massive oversupply of allowances caused by the 2008 economic recession and industrial overallocation. Sandbag identifies a total excess of 3.1 billion tonnes (Gt) of allowances, including 2.2Gt from obsolete demand forecasts and 0.9Gt from industrial overallocation. The document highlights that 78% of the net surplus is concentrated among ten steel and cement companies, which have generated significant revenues from selling surplus permits. To remedy this, the report recommends the permanent cancellation of 3.1Gt of allowances from Phase 3 auctions, the establishment of a more ambitious Phase 4 carbon budget aligned with 2050 goals, and the introduction of mechanisms like a "heat exchanger" and a strategic demand-correction reserve to protect the system from future exogenous shocks.

The report finds that the EU ETS is significantly oversupplied, with industrial sectors accumulating large surpluses of permits while the power sector faces a shortfall. This imbalance, exacerbated by the 2008 recession, threatens to weaken the Phase 3 cap by approximately 1.9Gt. The author highlights abuses in international offsetting, where surplus-holding installations use offsets for profit (arbitrage) or to subsidize foreign competitors. To rectify this, the report recommends a 1.7Gt set-aside of Phase 3 permits, a steeper annual cap reduction of 2.4% by 2016, and increased transparency in reporting installation ownership and waste gas transfers.

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 report identifies 'Carbon Fat Cats'—companies that received excessive free emissions permits under Phase 2 of the EU ETS (2008-2012). It finds that the top ten companies held 35 million surplus permits in 2008, valued at €500 million, with projected surpluses reaching 230 million permits (€3.2 billion) by 2012. This over-allocation in industrial sectors like iron, steel, and cement means that a small number of power companies, specifically RWE and EON, must deliver the majority of the scheme's net emissions reductions. The report argues that this creates competitive distortions and undermines climate targets, recommending higher ambition (a 30% cut by 2020), limited access to overseas offsets, and the cancellation of Member State reserves.

Sandbag argues that a standalone UK ETS would be dysfunctional due to its small size and vulnerability to volatility and speculation. The organization recommends that the UK either remain part of the EU ETS or implement a carbon tax with a floor based on the average EU ETS price. Key proposals include expanding carbon pricing to fossil gas and fugitive methane, ending the zero-emissions treatment of large-scale biomass burning, and distributing carbon revenues to citizens as a 'climate dividend'.

The document outlines nine clean flexibility tools categorized into Store, Shift, Share, and Supply to balance power systems and reduce fossil fuel reliance. Key examples include China's 3.6 GW pumped storage station and California's 10 GW battery capacity.

The 2026 Global Electricity Review reports that in 2025, clean energy growth—driven primarily by solar power—met 100% of new global electricity demand, resulting in the first year since 2020 where fossil fuel generation did not increase. For the first time in the modern era, renewables exceeded coal, accounting for over one-third of global electricity generation. This shift was significantly influenced by declines in fossil fuel generation in China and India, both of which saw decreases in 2025. Solar energy's growth was 18 times greater than that of gas, and the deployment of battery storage is increasingly supporting the transition to 24/7 clean power, with countries like Chile and Australia leading in grid-scale storage.

This executive summary from Ember reports that wind and solar power reached 10.3% of global electricity generation in 2021. While clean energy sources collectively provided 38% of global electricity, the report highlights a concerning record increase in coal power and carbon emissions, driven largely by surging electricity demand in Asia.

Ember argues that Australia's 43% emission reduction target by 2030 is implausible without addressing coal mine methane (CMM), which dominates the energy sector's methane emissions. The submission urges Australia to join the Global Methane Pledge, improve its methane inventory to address potential underreporting, and adopt a 20-year emissions factor for domestic strategy to better reflect methane's short-term warming power.

The report analyzes the influence of fossil fuel funding on political decision-making, arguing that the industry uses financial leverage to obstruct climate action and maintain the dominance of carbon-intensive energy sources. It details the mechanisms of this influence, including direct funding to political parties and the role of industry-backed lobbying, and calls for greater transparency and a shift toward sustainable energy investments.

The document specifies that Ember's China Cleantech Exports Data Explorer utilizes data from the General Administration of Customs of the People’s Republic of China (GACC), categorized into six main clean tech groups: Solar PV, EVs, Batteries, Heating and cooling systems, Grid, and Wind. It provides the specific HS codes used for sub-categories, such as solar cells (85414300) and lithium ion batteries (850760), while noting that the reported export values may be lower than the total value chain as they exclude certain parts and raw materials.

The report evaluates the Effort Sharing Regulation (ESR), concluding that its -30% target for non-ETS sectors is insufficient to meet Paris Agreement goals and may only result in a 26.6% reduction due to flexibilities. It advocates for project-based transfers of Annual Emission Allocations (AEAs) to ensure additionality and avoid carbon lock-in in lower-income Member States. Specific opportunities for such projects are identified in the building, waste, and gas sectors of Bulgaria, Romania, and Hungary.

The document reports that clean electricity generated 38% of the world's power in 2021, surpassing coal. While renewables met all electricity demand growth in the first half of 2022, the report notes that unabated coal power must fall by 87% in the next nine years to align with 1.5C goals. Regional analysis highlights China's leadership in wind and solar, Europe's accelerated transition due to the gas crisis, and the significant role of coal mines as the largest source of energy sector methane.

The report identifies 67 planned coal-to-biomass projects in the EU that could increase biomass consumption by 607 PJ per year, potentially tripling the current levels of biomass burnt in coal power plants. This expansion would require approximately 36 million tonnes of wood pellets annually, which is similar to current global production. The authors argue that these projects are expensive, rely on public subsidies, and risk accelerating climate change because the CO2 emitted during combustion is not reabsorbed quickly enough to meet Paris Agreement targets. The report highlights that five countries—Finland, Germany, Ireland, Spain, and the Netherlands—are responsible for most of this potential growth, with the Netherlands accounting for 25%.

The document outlines the data sources and calculation methods for Ember's China solar export dataset. It details the use of General Administration of Customs of the People's Republic of China (GACC) data for export amounts and InfoLink Consulting Group for pricing. It explains how capacity in megawatts (MW) is estimated for panels, cells, and wafers, and notes that GACC data may record initial export destinations rather than final destinations.