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Carbon Market Watch

CMW

Carbon Market Watch is a non-profit expert in carbon pricing and EU climate policy.

Lobbying Activity

Meeting with Aleksandra Baranska (Cabinet of Executive Vice-President Teresa Ribera Rodríguez) and Climate Action Network Europe and

12 Jan 2026 · Social Climate Fund, ETS 1 revision and ETS2

Meeting with Sebastian Tynkkynen (Member of the European Parliament)

3 Dec 2025 · Ilmasto- ja ympäristöasiat

Meeting with Katri Kulmuni (Member of the European Parliament)

2 Dec 2025 · ETS

Meeting with Martin Günther (Member of the European Parliament) and Fern

4 Nov 2025 · Carbon Removals Certification Regulation methodology

Meeting with Pär Holmgren (Member of the European Parliament) and Transport and Environment (European Federation for Transport and Environment) and

1 Oct 2025 · EU Emissions Trading System (EU ETS)

Carbon Market Watch Opposes EU Nature Credits Scheme

30 Sept 2025
Topic — EU roadmap proposing voluntary nature credit certification methodologies for biodiversity funding.
Message — The organization urges the EU to reject voluntary nature credits in favor of binding regulation, phasing out harmful subsidies, and ensuring public funding guarantees nature-positive action. They demand categorical exclusion of offsetting from any scheme.123
Why — This would prevent greenwashing and ensure companies pay for environmental damage through enforceable rules.45
Impact — Small farmers lose as only large landowners can afford implementation costs and benefit from certification.67
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Meeting with Jutta Paulus (Member of the European Parliament)

30 Sept 2025 · EU ETS

Meeting with Matthieu Moulonguet (Cabinet of Commissioner Wopke Hoekstra)

29 Sept 2025 · Emissions Trading System and aviation

Meeting with Lena Schilling (Member of the European Parliament)

29 Sept 2025 · Carbon Credits and Human Rights

Response to Carbon removals, carbon farming and carbon storage - certification methodologies for permanent carbon removals

22 Sept 2025

Carbon Market Watch urges the Commission to not adopt the Delegated Act (DA) in its current form. While the text has improved since earlier versions (e.g. toxicity safeguards for biochar), more work is still needed. Several key political questions must be answered scientifically. Don't rush the methodology through, but head back to the drawing board and allow for time to get it right. The methodology could overestimate removals, and mislabel biomass-consuming activities as automatically removing carbon from the atmosphere. Projects with little to no climate impact, or that could even exacerbate climate change, risk being certified alongside high-quality projects. This will have severe implications for the EUs climate and energy framework - including potentially the EU ETS. Oeko-Institut has warned that the current draft methodologies, continue to set a much lower standard than the Paris Agreement Crediting Mechanism and best practice in the voluntary carbon market, and that, as it stands, the vast majority of CRCF units will not represent any actual emission reductions or removals. In addition, Oeko-Institut researchers state that [t]he proposed CRCF methodologies are among the lowest quality methodologies that [Öko-Institut has] reviewed so far, and that [w]ithout fundamental improvement of the methodologies, the CRCF could seriously undermine EU climate action. We attach a deeper dive into some of the core issues with the three methodologies in this draft DA: - The draft fails to comply with the legal requirements of the CRCF. In particular, the proposed methodologies breach binding provisions on scientific integrity, environmental safeguards, and full life-cycle accounting - Additionality criteria are lacking, ignoring any potential future EU or member state level removals policy, and the emergence of public subsidies. - All biomass is wrongly deemed carbon-neutral (building on the definition written in the problematic Renewable Energy Directive RED). Even though the CRCF legal text goes beyond the RED in terms of how it considers biomass accounting and sustainability. Leakage concerns (such as indirect land use change) should either be quantified and addressed, or, at the very least, the most damaging sources of biomass must be banned (forest biomass, imported biomass and dedicated crops). The CRCF risks ecosystem degradation through demand (indirect or direct) for new land and biomass. The cascading principle must also be explicitly applied - Long-term monitoring and liability is severely lacking from the biochar sections, even though the CRCF legal text states that any permanent removal methodology has to be consistent with the CCS Directive - Without a defined and environmentally sound use case, it is impossible to consider whether these methodologies are fit for purpose as the purpose remains hypothetical and unknown. The Commission missed out on a once-in-a-decade opportunity to propose a permanent removal target in the revision of the EU Climate Law, ignoring the advice of their own scientific advisory body (the ESABCC) In addition, the draft DA contains no provisions on how it will be brought in line with best or latest available scientific evidence (such as on ILUC quantification and biochar permanence). There is no timeline or list of issues which must be monitored so that the methodologies can ratchet-up over time. For example, the upcoming IPCC work on CDR will look into many similar concepts. The lack of a revision process and timeline means that weak rules will become harder to change, as vested economic interests grow. If the final DA does not address these overarching and key issues, it will likely be legally challenged, creating uncertainty for developers, investors, and any potential use cases of units. In addition, any projects or units certified will be considered low-quality, undermining overall trust in the CRCF and any climate policy that builds upon it.
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Meeting with Marcos Gonzalez Alvarez (Acting Head of Unit Climate Action) and European Environmental Bureau and Germanwatch

11 Sept 2025 · Short assessment of the next Multi-annual Financial Framework (MFF) proposal in relation to the Social Climate Fund (SCF) Regulation.

Carbon Market Watch demands EU climate neutrality by 2040

10 Sept 2025
Topic — This initiative proposes amending the European Climate Law to establish a 2040 target.
Message — The organization calls for domestic climate neutrality by 2040 and the creation of three separate climate targets. They strongly oppose using international carbon credits or integrating removals into the emissions trading system.123
Why — Strict domestic targets would prevent billions in EU funds from being diverted to international offsets.4
Impact — Sectors seeking cheap compliance options lose the ability to use low-cost international carbon credits.5
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Meeting with Pierpaolo Settembri (Cabinet of Commissioner Apostolos Tzitzikostas)

9 Sept 2025 · MEETING WITH CARBON MARKET WATCH

Meeting with Gerben-Jan Gerbrandy (Member of the European Parliament, Shadow rapporteur) and European Environmental Bureau and Climate Action Network Europe

2 Sept 2025 · 2040 climate target

Meeting with Niels Fuglsang (Member of the European Parliament, Rapporteur for opinion)

1 Sept 2025 · Revision of climate law

Meeting with Peter Liese (Member of the European Parliament) and ZVEI e.V. - Verband der Elektro- und Digitalindustrie

27 Aug 2025 · Austausch

Meeting with Lena Schilling (Member of the European Parliament, Shadow rapporteur) and Transport and Environment (European Federation for Transport and Environment) and

27 Aug 2025 · 2040 Targets

Meeting with Matthieu Moulonguet (Cabinet of Commissioner Wopke Hoekstra), Miguel Jose Garcia Jones (Cabinet of Commissioner Wopke Hoekstra) and

27 Aug 2025 · Carbon Farming and Carbon Removal Certification

Meeting with Polona Gregorin (Head of Unit Climate Action)

7 Aug 2025 · Discussion on aviation in the EU ETS

Meeting with Lena Schilling (Member of the European Parliament, Shadow rapporteur) and Transport and Environment (European Federation for Transport and Environment) and

24 Jul 2025 · 2040 Targets

Carbon Market Watch Urges End to Industrial Free Carbon Allowances

4 Jul 2025
Topic — Evaluating the effectiveness of the European Union's carbon market and its stability reserve.
Message — The group demands an end to free pollution permits for heavy industries. They want carbon pricing expanded to all departing flights and smaller ships. They insist that carbon removals must not replace actual emission cuts.1234
Why — Ending free allowances would force industry to finally respond to carbon price signals.5
Impact — Industrial polluters would lose billions in subsidies and face higher costs for carbon.67
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Carbon Market Watch urges funding shift away from CCS

4 Jul 2025
Topic — Evaluation of the European Union's Innovation Fund operations regarding climate action technologies.
Message — Carbon Market Watch argues more funding should support technologies encouraging material savings. They propose making material saving a mandatory criterion for project selection.12
Why — This would prevent wasteful spending on industrial projects failing to meet climate goals.34
Impact — Large polluters in the cement sector lose exclusive access to multi-billion euro grants.56
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Carbon Market Watch Warns Industry Could Dominate EU Carbon Farming Certification

1 Jul 2025
Topic — EU rules on certification schemes and audits for carbon removal.
Message — The organization requests mandatory on-site visits, random allocation of certifiers, and independent complaints processes. They argue that allowing operators to choose certifiers creates perverse incentives and risks cherry-picking.123
Why — This would strengthen oversight of carbon removal claims and prevent industry capture.45
Impact — Industry operators lose flexibility in choosing certifiers and face higher compliance costs.6
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Meeting with Sirpa Pietikäinen (Member of the European Parliament) and Climate Action Network Europe

16 Jun 2025 · EU climate policy

Meeting with Mohammed Chahim (Member of the European Parliament) and Climate Action Network Europe

4 Jun 2025 · 2040 EU climate target

Meeting with Patrick Child (Deputy Director-General Environment) and

3 Jun 2025 · Exchange of views on LIFE

Meeting with Tiemo Wölken (Member of the European Parliament) and Transport and Environment (European Federation for Transport and Environment)

7 May 2025 · ETS II and the Social Climate Fund (Staff level)

Meeting with Michael Bloss (Member of the European Parliament) and Climate Action Network Europe and

30 Apr 2025 · Klimapolitik

Meeting with Tiemo Wölken (Member of the European Parliament) and Bellona Europa

10 Apr 2025 · UNFCCC Art. 6 and the 2040 target (staff level)

Meeting with Rasmus Nordqvist (Member of the European Parliament)

25 Mar 2025 · Carbon emissions and carbon removals

Meeting with Alice Kuhnke (Member of the European Parliament, Shadow rapporteur) and European Environmental Bureau and

5 Mar 2025 · Green Claims

Meeting with Delara Burkhardt (Member of the European Parliament, Rapporteur) and European Environmental Bureau and

13 Feb 2025 · Green Claims

Meeting with Alexandre Paquot (Director Climate Action)

11 Feb 2025 · Treatment of biomass as carbon neutral in the Carbon Removals and Carbon Farming Certification Framework

Meeting with Ingeborg Ter Laak (Member of the European Parliament)

27 Jan 2025 · Carbon removals

Meeting with Carola Rackete (Member of the European Parliament)

11 Sept 2024 · Real zero targets and seperate EU 2040 Climate Targets

Carbon Market Watch urges immediate non-CO2 aviation reporting

29 Jul 2024
Topic — Updating EU rules for monitoring and reporting aviation greenhouse gas emissions.
Message — Carbon Market Watch demands mandatory reporting for extra-EU flights starting January 2025. They argue the proposed delay for long-haul routes is an unacceptable step back.12
Why — Faster data collection enables earlier introduction of measures to reduce aviation's climate impact.34
Impact — Climate protection efforts suffer as warming effects from long-haul flights remain unmonitored.5
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Carbon Market Watch urges EU to end carbon offsetting loopholes

11 Jul 2024
Topic — Evaluation of rules governing carbon emissions and removals from land use and forestry.
Message — The group demands ending mechanisms that allow emissions to be offset by land removals. They also want to prevent double-counting of carbon storage by countries and companies.12
Why — This would prevent companies from using land-based sinks to delay real industrial emission cuts.3
Impact — Logging and bioenergy industries would face stricter limits on harvesting forest biomass for fuel.4
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Meeting with Michael Bloss (Member of the European Parliament) and Transport and Environment (European Federation for Transport and Environment) and

2 May 2024 · Green Industrial Deal

Carbon Market Watch Slams Weak Free Emission Allocation Rules

20 Dec 2023
Topic — The European Commission is revising rules for free greenhouse gas emission allowances.
Message — The organization demands the rejection of the proposal because it fails to apply a single benchmark for key products. They urge stricter calculations for production levels to prevent the overallocation of free permits to heavy polluters.12
Why — Stronger rules would accelerate industrial decarbonization by ensuring heavy polluters finally pay.34
Impact — Heavy industries would lose significant subsidies and the windfall profits from excess permits.5
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Meeting with Laura Ballarín Cereza (Member of the European Parliament, Shadow rapporteur)

14 Dec 2023 · Green Claims

Meeting with Ville Niinistö (Member of the European Parliament, Shadow rapporteur) and Climate Action Network Europe and Fern

6 Nov 2023 · Carbon removals

Meeting with Tiemo Wölken (Member of the European Parliament, Shadow rapporteur)

20 Sept 2023 · Carbon Removals (Staff level)

Meeting with Ville Niinistö (Member of the European Parliament, Shadow rapporteur)

20 Sept 2023 · Carbon removals

Carbon Market Watch calls for ban on misleading neutrality claims

20 Jul 2023
Topic — New EU rules aim to stop greenwashing by requiring proof for environmental claims.
Message — The organization demands an explicit ban on carbon neutrality and offsetting claims. These claims are scientifically unproven and frequently mislead consumers about climate impacts.12
Why — A total ban would fulfill the organization's primary objective of stopping greenwashing.3
Impact — Companies using cheap offsets would lose their ability to claim climate neutrality.4
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Carbon Market Watch urges tougher carbon reporting for metal imports

11 Jul 2023
Topic — This consultation addresses reporting obligations during the transitional phase of the Carbon Border Adjustment Mechanism.
Message — CMW requests that indirect emissions for steel and aluminium be included to mirror existing EU electricity standards. They argue that the definition of scrap must exclude internal production waste to encourage genuine recycling. Finally, they warn that simplified calculations could create loopholes for importers to report lower emissions.123
Why — These changes would ensure carbon pricing effectively drives investment into cleaner production processes and business models.4
Impact — Foreign exporters using unsustainable biomass or high-carbon electricity would lose their current competitive advantage.56
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Meeting with Emma Wiesner (Member of the European Parliament, Shadow rapporteur)

30 May 2023 · panel om koldioxidinfångning

Meeting with Tiemo Wölken (Member of the European Parliament, Shadow rapporteur) and Fern and Ecologic Institute

30 May 2023 · Event on "The CRCF and the EU climate targets: Opportunities and shortcomings"

Meeting with Ville Niinistö (Member of the European Parliament, Shadow rapporteur)

24 May 2023 · Carbon removals

Meeting with Tiemo Wölken (Member of the European Parliament, Shadow rapporteur)

19 Apr 2023 · Carbon Removals (staff level)

Carbon Market Watch Demands Separate Targets to Protect Climate Action

2 Mar 2023
Topic — The European Commission proposes a regulatory framework for certifying sustainable carbon removal solutions.
Message — Removals must supplement deep emission reductions rather than serving as offsets for polluters. Policymakers should establish a dedicated separate target and exclude temporary storage methods like carbon farming. The framework must ensure permanent storage for at least two centuries to be considered valid.123
Why — This ensures the framework prioritizes climate integrity rather than creating revenue for specific actors.45
Impact — Industrial polluters would lose the opportunity to delay real emission reductions through cheap offsetting schemes.6
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Meeting with Emma Wiesner (Member of the European Parliament) and GEODE - The voice of local energy distributors across Europe

28 Feb 2023 · Elmarknadsdesign

Response to Amendment to Registry Regulation

14 Feb 2023

Dear European Commission, Carbon Market Watch appreciates the opportunity to provide feedback on the proposed amendment to the EU Emissions Trading System (ETS) Registry Regulation. The Union Registry plays a key role in market monitoring and is a vital source of data for all stakeholders as it tracks trades, and ownership of allowances. It can be used for various types of research on market functioning relevant to inform consideration on how to improve and strengthen the European carbon market over time. However, there are data availability and quality issues with the Union Registry (and the functions described as the EU transaction log - EUTL) which make it challenging for researchers, time-consuming and limit the accuracy and scope of research. Carbon Market Watch supports the priorities elaborated by the Scientific Research Community to improve the Registry data and enable better market monitoring for all stakeholders (as outlined in Feedback from Members of the Scientific Research Community as an attachment to this feedback). From a civil society perspective, we underscore the need to ensure increased transparency and accessibility of all ETS data on greenhouse gas emissions and emission allowances, at installation, company and sector level. The Research Community notes that prevailing data challenges have made analyses relatively time consuming, imposed limitations on accuracy and scope, and, simply, reduced researchers interest to study the ETS. A key barrier to a better understanding of the functioning and performance of the EU ETS is the lack of available data for linking firms and company groups to individual ETS installations and accounts. This is due to missing or limited use of legal entity identifiers (LEIs). The use of LEIs should be mandated and retroactively applied to all ETS accounts. A second challenge is that ETS accounts are missing information needed for the identification of final allowance holders. The Registry Regulation should be amended in a way that allows for the identification of ultimate beneficial owners of emission allowances by introducing account segregation rules for EUA holdings. This would improve the ETS market monitoring by the relevant authorities. Carbon Market Watch also recommends the European Commission to shorten the 3-year embargo on allowance transfer and transaction data. Transactions for the previous year should be released annually on 1 May. Early access to the data should be granted to researchers for specific research purposes (a confidentiality agreement can be applied if needed). We are also concerned with the missing information on transactions in the Registry, as flagged by the Research Community. The Union Registry should allow analysts to identify reliably when a transaction actually took place, what the nature of this transaction was, and the venue where the transaction took place. Improving these shortcomings would enhance the overall understanding of the functioning of this market, improving its credibility and accountability. We believe that the Registry Regulation presents an important opportunity to improve the public accountability of the EU ETS. We urge the Commission to consider the attached feedback from Members of the Scientific Research Community and ensure that the proposed and upcoming amendments to the EU ETS Registry Regulation prioritizes transparency, access to data, and better data quality. Thank you for the opportunity to provide feedback on this issue. Sincerely, Carbon Market Watch Contact: sam.vandenplas@carbonmarketwatch.org
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Meeting with Tiemo Wölken (Member of the European Parliament, Shadow rapporteur) and Bellona Europa

8 Feb 2023 · Union certification framework for carbon removals

Meeting with Mick Wallace (Member of the European Parliament, Shadow rapporteur)

2 Feb 2023 · Carbon credit certification scheme

Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and BUSINESSEUROPE and

20 Dec 2022 · ETS

Response to Fitness check of how the Polluter Pays Principle is applied to the environment

9 Dec 2022

The ETS Directive (2003/87/EC) is one of the key EU climate policies which aims to reduce greenhouse gas (GHG) emissions from the power, industry and aviation sectors. It puts a price on GHG pollution, thereby incentivising decarbonisation of business practices. In 2020, the ETS covered 36% of the total GHG emissions in the EU. In contrast to its intended purpose, the ETS has dramatically failed so far to enforce the Polluter Pays Principle (PPP) and substantially reduce GHG emissions, especially in the energy-intensive industry as well as the aviation sectors. ETS sectors considered to be at risk of carbon leakage - a hypothetical situation where European companies shift their production to countries with less stringent or no climate policies in order to reduce their costs - are exempted from paying for their emission allowances. Even sectors that are not deemed at risk of carbon leakage receive up to 30% of their emission allowances for free. Especially heavy industries such as steel and iron, cement, and petrochemicals - deemed to be at risk of carbon leakage - have been receiving 100% of their emission allowances for free, based on product benchmarks. So far, these industries have failed to substantially reduce their emissions: heavy industry emissions have almost stagnated since 2005, decreasing only by 4 % between 2005 and 2021. A study of the European Court of Auditors has highlighted that the allocation of free allowances undermines decarbonisation efforts of the sectors receiving them. In the fourth phase of the ETS, which started in 2021, heavy industry will receive more than 95% of their emission allowances for free - representing a total of 6.5 billion emission allowances. This is a significant breach of the implementation of the polluter pays principle as it corresponds with foregone auctioning revenues worth 400 billion Euros at a current carbon price of 80/ton. Instead of paying the price of the pollution caused by their own business activities, those industries are not held accountable to pay a price for the vast majority of their carbon pollution. As shown in a report published by CE Delft, these industries have instead even generated huge windfall profits from receiving emission allowances for free under the ETS. The steel and iron industry profited most, generating 16.1 billion Euros in windfall profits between 2008 and 2019, followed by refineries with 11.3 billion Euros, the cement industry with 10.3 billion Euros and petrochemicals with 5 billion Euros. In addition to being a profit from pollution, windfall profits mute the carbon price signal, thereby reducing the incentives for climate action and industrial decarbonisation. Polluting for free in the light of the climate crisis is unacceptable. The allocation of free allowances to sectors at risk of hypothetical but unproven carbon leakage undermines the effectiveness of the PPP and its efficiency in ensuring a just transition. Handing out free pollution permits is an inherent market failure that slows down decarbonisation in the respective sectors by hampering the internalization of the cost of GHG pollution by the polluters themselves. To increase effectiveness of the PPP under the EU ETS as well as its efficiency in ensuring a just transition towards a decarbonised economy, free allocation must be phased out as soon as possible with or without the introduction of a Carbon Border Adjustment Mechanism (CBAM). This is a viable and fairer approach that would ensure the effective implementation of carbon pricing and spur investments in sustainable and climate friendly technologies and practices. 100% of ETS auctioning revenues have to be earmarked to be spent on climate action in the EU and internationally, including in the respective sectors. Please find the references attached in the PDF.
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Meeting with Peter Liese (Member of the European Parliament, Rapporteur)

8 Dec 2022 · ETS

Meeting with Frans Timmermans (Executive Vice-President) and Climate Action Network Europe and

15 Nov 2022 · Progress of COP27 negotiations

Meeting with Lukas Visek (Cabinet of Executive Vice-President Frans Timmermans)

15 Nov 2022 · Carbon Removal Certification Framework

Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and European Environmental Bureau and

14 Oct 2022 · ETS

Meeting with Michael Bloss (Member of the European Parliament) and European Environmental Bureau and Sandbag Climate Campaign

5 Oct 2022 · ETS

Meeting with Biljana Borzan (Member of the European Parliament, Rapporteur) and European Environmental Bureau and

9 Sept 2022 · Empowering consumers for the green transition

Meeting with Peter Liese (Member of the European Parliament, Rapporteur for opinion) and Climate Action Network Europe and Sandbag Climate Campaign

8 Jul 2022 · REPowerEU

Meeting with Pascal Canfin (Member of the European Parliament) and Transport and Environment (European Federation for Transport and Environment) and

20 Jun 2022 · Fit for 55

Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and Climate Action Network Europe and

20 Jun 2022 · ETS

Meeting with Diederik Samsom (Cabinet of Executive Vice-President Frans Timmermans), Stefanie Hiesinger (Cabinet of Executive Vice-President Frans Timmermans)

16 Jun 2022 · Exchange on recent developments in relation to the EU ETS

Meeting with Diederik Samsom (Cabinet of Executive Vice-President Frans Timmermans), Stefanie Hiesinger (Cabinet of Executive Vice-President Frans Timmermans)

16 Jun 2022 · ETS

Meeting with Michael Bloss (Member of the European Parliament) and WWF European Policy Programme

14 Jun 2022 · ETS

Meeting with Pascal Canfin (Member of the European Parliament) and WWF European Policy Programme and Climate Action Network Europe

7 Jun 2022 · Fit for 55

Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and BUSINESSEUROPE and

23 May 2022 · ETS

Meeting with Michael Bloss (Member of the European Parliament) and Transport and Environment (European Federation for Transport and Environment) and

20 May 2022 · ETS

Carbon Market Watch warns certification scheme risks legitimising offsetting

2 May 2022
Topic — EU regulation for certifying carbon removals to scale sustainable deployment
Message — The organization demands the certification mechanism set strict conditions ensuring only high-quality removals qualify, including comprehensive life cycle assessments and permanent storage monitoring. They argue removals must supplement rather than replace emissions reductions and oppose using certified units for offsetting in trading schemes like the ETS.123
Why — This would prevent their climate advocacy being undermined by false equivalences between emissions and removals.45
Impact — Climate goals lose if offsetting diverts resources from emissions reductions to questionable removal schemes.67
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Meeting with Michael Bloss (Member of the European Parliament) and WWF European Policy Programme and Heinrich Böll Stiftung e.V.

20 Apr 2022 · ETS

Meeting with Jytte Guteland (Member of the European Parliament) and Transport and Environment (European Federation for Transport and Environment)

1 Apr 2022 · ETS Revision

Meeting with Mohammed Chahim (Member of the European Parliament, Rapporteur) and Climate Action Network Europe and World Wide Fund for Nature - Netherlands

1 Apr 2022 · CBAM & ETS2

Meeting with Vera Tax (Member of the European Parliament, Shadow rapporteur)

14 Dec 2021 · General exchange of views

Response to Revision of the Energy Tax Directive

18 Nov 2021

Aviation and shipping fuels do need to be taxed. The climate crisis is urgent, and the IPCC Special Report on 1.5°C makes it abundantly clear that global GHG emissions need to drop by 45% at least this decade. Fossil fuel consumption from international transport is a significant contributor to climate breakdown. At the international level, lack of ICAO and IMO action is not helping these sectors ramp up their transition to a zero-carbon future. Taxing aviation and shipping fuels is to be welcomed. Both sectors have high abatement costs, which requires a stable and predictable carbon price signal - in that sense an ambitious Energy Taxation Directive that taxes fuels used in these sectors based on their climate impact would be an excellent complement to the EU Emission Trading System. There is no valid economic rationale for continued exemptions, moreover, fair and effective carbon pricing through taxation on fuels extends and/or strengthens the polluter pays principle, and provides an additional incentive (on top of EU ETS, Fuel EU maritime and ReFuel aviation) for decarbonizing these sectors through zero-carbon fuels and reducing consumption of fossil fuels through energy efficiency gains. However, the current proposal contains too many and too generous exemptions and phase-in periods. For example, aviation fuel taxation for extra-EU flights and maritime voyages is left to Member States instead of mandated (as for intra-EU transport). This leads to a race-to-the-bottom between Member States as the aviation industry will create the impression that imposing a national tax will lead to competitor hubs/ports gaining competitive advantage. The EU should avoid such a race-to-the-bottom by setting stringent and EU-wide minimal levels. In addition, it is absurd that non-advanced biofuels are supported through overly lenient transition periods. Shipping The Energy Taxation Directive needs to be strengthened in order to support the FuelEU Maritime proposal with regards to the transition to cleaner fuels and more energy efficiency. The minimum rates per gigajoule are extremely low, and will not provide an incentive for change in this sector. The added cost of these rates pales in comparison with normal variability in shipping fuel prices, and is therefore inconsequential and ineffective as an environmental tax. There is also no reason for natural gas and non-sustainable biogas to be treated differently from other non-sustainable fuels (such as heavy fuel oil). Natural gas might even have a higher climate change impact than heavy fuel oil due to methane leakage. Also, promoting LNG leads to a high-carbon lock-in for a sector that needs to reach zero emissions by 2050. LNG will not help the sector decarbonize, and favourable taxation might do more harm than good. Aviation The phase-in is extremely lenient; it will take till 2033 before the minimum levels of taxation are even reached for some of the fuels (such as carbon-intensive kerosine). Other fuels that are not zero-GHG would see zero taxation till 2033 (including not advanced sustainable biofuels and biogas). This limits the impact of the ETD on the aviation sector for this decade - a crucial decade for tackling GHG emissions that are causing the climate crisis. There is no need for a 10-year transitional period, especially for carbon-intensive fuels such as kerosene. The blanket exemptions for business, cargo-only and pleasure flights are absolutely unnecessary and not conducive to the needs of the transition the aviation industry needs to go through.
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Response to Carbon Border Adjustment Mechanism

17 Nov 2021

The Carbon Border Adjustment Mechanism (CBAM) could offer a better hope of decarbonisation in energy-intensive industries than free allowances, and could create a first-mover advantage for EU industry in the global race to decarbonisation. However, this will only be possible if this tool is designed to provide real incentives for industries within and outside Europe to reduce their emissions, and demonstrates recognition and understanding for other countriesʼ need and right to develop. The proposal included several positive elements that can be built upon in the upcoming legislative process. Basing the system on actual and verified emissions is the fairest possible approach and one that accounts for all emissions generated during production. Additionally, the price of certificates, set on a weekly basis, helps avoid market speculation and ensure convergence between EU emission allowances and CBAM certificates. Finally, having rules reducing the number of certificates available, as well as no export rebates, encourages fairness and other countries to adopt comparable climate policies. As well as some positives, there are numerous elements of the proposal that should be revised moving forward. To improve the European Commission’s proposal for a CBAM, Carbon Market Watch makes the following recommendations: First, the crossover time between the phase out of free allowances and the CBAM, starting in 2026, is extremely damaging. The decade-long combination of measures allows Europe’s heavy industry to continue to pollute well past 2030. Moreover, the reduction of CBAM certificate costs to reflect the free allocation of allowances to EU producers would severely limit this instrument’s effect in encouraging climate action outside the EU, as currently over 95% of industrial emissions are covered by free emission allowances. The overlap between CBAM and free allowances should be removed. Second, the exclusion of bulk chemicals (except fertilisers) should be reconsidered. CBAM should focus on ETS sectors that contribute significantly to climate change and have high trade levels with the EU. The exclusion of bulk chemicals from the CBAM discards the issue of plastic pollution and sends a negative impression of the EU’s position on this issue worldwide. Moreover, postponing the decision to include indirect emissions until at least 2026 is a missed opportunity. The CBAM should cover direct AND indirect emissions from the start to result in a larger environmental benefit as it would provide importers with an incentive to adopt cleaner production processes and to develop renewable energy. Third, not giving special consideration to small islands and the world’s least developed nations in the implementation of the CBAM sends a signal that the EU does not recognise other countries’ differentiated capabilities and their own right to develop. The EU should implement mitigating measures in an attempt to aid their development and engage in a dialogue on what technical, financial and capacity support measures could be taken to manage CBAM negative impacts, and help decarbonise their economies. Fourth, the allocation of revenues from the CBAM to repay the Next Generation EU facility is at odds with the nature and objective of the CBAM, and would raise legal challenges under WTO rules. To ensure the EU increases its contribution to the development as well as the decarbonisation of developing countries, a substantial share of the CBAM revenues should be recycled towards international climate finance and support for developing countries. Finally, the CBAM should be designed to drive GHG emission reductions globally and avoid creating perverse incentives for European producers. It should therefore exclude export rebates for European companies exporting outside the EU. It is therefore crucial that the European Commission’s proposal to exclude export rebates be upheld. For more details on our recommendations, please see the briefing attached.
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Response to Strengthing the Market Stability Reserve linked to the review of the EU Emissions Trading System

8 Nov 2021

The revision of the EU ETS represents a huge opportunity to strengthen the Directive to ensure it is in line with the 1.5˚C target under the Paris Agreement. However, the Commission proposal includes two major shortcomings that should be reconsidered. The EU wide 55% greenhouse gas reduction target by 2030 is incompatible with the goals of the Agreement, and it should be upgraded to 65%. In addition, the free handouts of emission allowances to large polluting industries represent a market failure which will lead to continued windfall profits to the sectors concerned. Carbon Market Watch presents its priorities to improve the Commission proposal for strengthening the market stability mechanism (Market Stability Reserve) below. The Commission proposal to maintain the Market Stability Reserve (MSR) intake rate at 24% (instead of reducing it to 12%) until 2030 and cancelling allowances held in reserve above 400 million both help strengthen the MSR. However, the tool is weakened by the inclusion of aviation and maritime emissions that reduce the amount of allowances absorbed by the MSR and its parameters are not strong enough to absorb re-emerging oversupply of emission allowances in the coming years. The Commissions model used for the MSR analysis includes baseline data adapted for the already planned phasing-out coal-fired power plants. This is based on estimates from Carbon Market Watch of the size of this downwards shift in demand for emission allowance. However, for these estimates, the Commission notes at least some of the phased-out coal is likely to be replaced with gas or other fossil fuels and therefore assumes that only half of the effect of the coal phase out will make its way to baseline emissions. This assumption is questionable and a likely overestimation of baseline emissions. For example, in the last 12 months, EU countries generated a higher proportion of their electricity mix from wind and solar than they did in 2018. While fossil fuel generation dropped by 5%, electricity market shares of wind and solar increased by 4%. The revision of the MSR must support a meaningful price signal and ensure stability and resilience of the EU carbon market, including in case of predictable external shocks such as the phase out of coal and lignite power plants and post-Covid economy rebound. For example, if the next German government agrees to a faster timeline for phasing out coal and lignite use in the power sector, this will lead to outdated assumptions and an underestimation of the oversupply of allowances compared to the impact assessment as developed by the Commission. A higher intake rate and more dynamically declining thresholds for the MSR should be considered. In order to strengthen the MSR, the following key elements should be considered: 1. The intake rate should be increased to 36% from 2024 onwards. As shown by the Oeko-Institut 2021 study on the MSR, a combination of such a higher intake rate together with a one-off reduction of the cap, can help to accelerate the system’s responsiveness to sudden increases in emission supply. 2. All allowances held in the MSR for more than 3 years should be cancelled. This provision is an improvement building on the Commission proposal and would ensure market predictability as well as the environmental integrity of the EU ETS. It would entail the permanent cancellation of allowances from the system, thus avoiding the risk of future oversupply returning to the market. 3. The MSR thresholds should decline to zero by 2030. This more dynamic design of thresholds would be more aligned with enhanced climate ambition and the actual hedging needs of the power sector. Since the hedging demand of power companies is likely to fall as the sector continues to decarbonise, the upper and lower thresholds that trigger the MSR intake rate should decrease over time and reach zero by 2030. Please find more background information in the briefing attached.
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Carbon Market Watch urges end to free industrial pollution permits

8 Nov 2021
Topic — The consultation reviews the EU Emissions Trading System to meet higher climate goals.
Message — The group wants to phase out free allocation of allowances to energy-intensive industries. They recommend a cap resulting in a 70% decrease in emissions by 2030.12
Why — Adopting these rules would achieve the organization's goal of fulfilling the Paris Agreement.3
Impact — Energy-intensive industries would lose the windfall profits they currently get from free permits.4
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Carbon Market Watch demands immediate end to free aviation permits

7 Nov 2021
Topic — The consultation reviews emissions trading rules and carbon offsetting for international aviation.
Message — The group calls for an immediate end to free pollution permits by 2024. They want the EU carbon market to cover all international flights. Finally, they argue that charging airlines for pollution helps reduce societal inequality.123
Why — This proposal would generate billions in public revenue to help reduce societal inequality.45
Impact — Airlines would lose massive subsidies and pay much higher costs for their emissions.6
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Response to Land use, land use change and forestry – review of EU rules

5 Nov 2021

Carbon Market Watch welcomes the opportunity to respond to the LULUCF proposal. We would suggest improvements in three main areas: 1. AFOLU pillar Combining non-CO2 agriculture emissions from the ESR with land-based sinks from the LULUCF under an AFOLU pillar is problematic for several reasons: A. It will not incentivize emissions reductions in the agriculture sector, where progress has been slow. Focused policies would be more effective than offsetting, and the lack of action from member states under the Effort Sharing Regulation cannot be an excuse to hide agriculture emissions behind sinks in the AFOLU pillar. B. There are significant cost differences between LULUCF sinks and non-CO2 agricultural removals. Cost-efficient decarbonization will therefore lead to continued emissions and an overreliance on reversible biological sinks, and not bring the EU closer to low residual emissions and climate neutrality, and net-negative emissions soon after. C. It pushes a false fungibility between permanent emissions from agriculture, and non-permanent, reversible and very vulnerable sinks. The current separation between the ESR and the LULUCF files should be maintained (and even strengthened, see below), and any reference to an AFOLU pillar in the longer term should be deleted from the proposal to not undermine incentives for climate action in the agriculture sector. 2. Offsetting and flexibilities We don’t have the luxury of time to waste on offsetting and loopholes (also known as flexibilities) as these do not contribute to achieving net emission reductions. The IPCC makes it clear that we need rapid and deep emission reductions across all sectors before 2030 - offsetting undermines fulfilling that. A key reason for that is that offsetting is a zero-sum game. In addition, emissions and removals are hard - if not impossible - to measure accurately across the land-use sector. The flexibility between the ESR and the LULUCF must be deleted if the EU is to take its responsibility on addressing the climate breakdown seriously. The Commission proposal doubles down on flexibility with the ESR by adding an ‘additional reserve’ in case net-removals in the LULUCF exceed the proposed 225 million tonnes target. The proposal even adds that removals from land could further offset other industries such as transport at a “later stage”. Both the existing and the new flexibility with the ESR sectors undermine much-needed action to reduce emissions in the transport, buildings and agriculture sectors. Any avenue for offsetting emissions in those (and other sectors) using land-based sinks should be dropped from the text. 3. Carbon storage products Carbon storage is only useful to limit global heating if it can be guaranteed to last several centuries. Short term storage (such as in harvested wood products) has only minor benefits, (a) delaying emissions and (b) displacing fossil-fuel (based) products. That means it should not be considered carbon storage in the LULUCF proposal. In addition, research by the JRC shows that : “until 2050, the potential additional benefits from harvested wood products and material substitution are unlikely to compensate for the reduction of the net forest sink associated with the increased harvesting”. References to ‘carbon storage products’ should be dropped from the proposal, instead of implying that all harvesting wood products are permanent stores of carbon and should qualify as removals. Only permanently stored, and atmospherically sourced, greenhouse gases can be considered removals.
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Carbon Market Watch urges caution on EU carbon removal framework

7 Oct 2021
Topic — EU framework for certifying and developing carbon dioxide removal and carbon farming.
Message — The organization requests keeping emission reductions separate from carbon removals with distinct targets and instruments. They oppose including carbon capture and utilization in the EU ETS and warn against offsetting industrial emissions with farm-based carbon storage. They urge defining what constitutes real and permanent carbon removal.123
Why — This would prevent large industries from transferring compliance burden to farmers through offsetting schemes.45
Impact — Industrial emitters lose ability to use cheaper carbon farming credits instead of reducing emissions.6
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Meeting with Thierry Breton (Commissioner) and European Environmental Bureau and

28 Apr 2021 · Exchange on the preparation of the update of the industrial strategy.

Meeting with Joan Canton (Cabinet of Commissioner Thierry Breton) and European Environmental Bureau and

19 Apr 2021 · Industrial Strategy

Response to Land use, land use change and forestry – review of EU rules

26 Nov 2020

Carbon Market Watch - Response to Inception Impact Assessment on LULUCF Regulation Carbon Market Watch (CMW) supports increasing the climate ambition of the LULUCF Regulation so it can promote climate action, while providing much needed co-benefits in other environmental fields (especially biodiversity and restoration of ecosystems). CMW also supports the feedback from Climate Action Network Europe and Fern. 1. Make the LULUCF regulation compatible with the goals of the Paris Agreement. The LULUCF Regulation could become a powerful tool to increase carbon dioxide removal (CDR) in the EU while providing many co-benefits, including for rural communities. CMW agrees that climate-neutrality will need significant CDR across the EU, and that the LULUCF sectors have a major role to play in sequestering greenhouse gases (GHGs) from the atmosphere. The LULUCF Regulation should contribute to a 65% emissions reduction by 2030 and to reaching climate neutrality by 2040. 2. LULUCF offsets in ETS/ESR would undermine emission reductions CMW has strong reservations against using carbon trading, offsetting or Emission trading (ETS)/Effort Sharing Regulation (ESR) loopholes to achieve this important objective. ETS/ESR loopholes and LULUCF offsets would seriously undermine the absolute primary objective of EU climate policy: urgent, deep and sustained emission reductions throughout our society and economy. GHG sequestration in the LULUCF sector should not in any way hamper decarbonization in other sectors. In that regard, CMW calls for closing off the LULUCF loophole in the ESR Regulation, and for keeping the promotion of LULUCF sinks separate from emission reduction efforts. Natural sinks are not equivalent in any way to emission reductions, and fungibility between the two should be avoided. The EU climate framework should not allow for any ‘out of sector’ flexibility mechanisms/loopholes. CMW therefore strongly disagrees with Option 2 in the Inception Impact Assessment (“strengthen the flexibility with the Effort Sharing Regulation”). It is important to note that in the EU ETS offsetting loopholes have been steadily closed in past EU ETS revisions due to the adverse impacts they had on EU ETS functioning, price setting, and decarbonization efforts in the power and industrial sectors. 3. Use Common Agriculture Policy funding for incentivizing LULUCF sequestration Common Agriculture Policy funds should be used to incentivize halting the degradation of, and restoring and expanding sinks throughout the EU, instead of relying on credits for LULUCF sequestration that can be used in the ESR or ETS sectors. The LULUCF Regulation should not rely on the forthcoming Carbon Farming and Carbon Removal Certification Mechanism initiatives for providing climate incentives, especially as the monitoring, reporting and verification (MRV) methodologies and accounting frameworks related to permanence of sequestration (and linked liability) are likely to be complex and controversial. 4. Impose rigorous life-cycle assessments With regards to bio-based economy, any use of bio-based products for climate reasons should be accompanied by extensive life-cycle assessments to ensure that adverse impacts (for example deforestation in and outside the EU) and perverse incentives are limited. Only real climate solutions should be promoted instead of false and temporary ones. 5. Strengthen MRV requirements CMW supports strengthening the MRV requirements for the LULUCF sector. 6. Promote coherence with other policies Other policy objectives (especially CAP implementation and protection of ecosystems and biodiversity) should be made coherent with the goals of the LULUCF Regulation.
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Response to Updating Member State emissions reduction targets (Effort Sharing Regulation) in line with the 2030 climate target plan

26 Nov 2020

Carbon Market Watch - Response to Inception Impact Assessment on Effort Sharing Regulation (ESR) We regret that the Commission did not include a policy option that would ensure the current climate policy architecture is maintained in order to raise the emission reductions achieved by the Effort Sharing Regulation (ESR), Emissions Trading Scheme (ETS), and the LULUCF Regulation as three separate but mutually reinforcing policy instruments. The three options presented by the Commission in the Inception impact assessment are therefore unhelpfully limiting the scope of the impact assessment and risk to seriously damage the EU’s climate architecture and undermine emission reduction policies that have already proven successful in Europe. Repealing the ESR and walking away from binding national climate targets is unacceptable. These could jeopardise the achievement of the insufficient target of at least 55% emission cuts by 2030, which would seriously damage the EU’s credibility internationally. Carbon Market Watch stresses that nationally binding emission reduction targets under the ESR – including emissions from the agriculture sector – must be retained, and at a minimum brought in line with the new 2030 emissions reduction target. Governance of the targets should also be enhanced and the existing ‘flexibility’ mechanisms allowing the use of ETS allowances and land use credits should be phased out. 1. Maintain the Effort Sharing Regulation The Effort Sharing Regulation (ESR) is one of the main pillars of the EU’s climate policy framework and sets binding greenhouse emission reduction targets for all EU member states. Repealing this regulation as suggested in the Commission’s Inception Impact Assessment is irresponsible. It would disincentivise national governments to take national climate action and risks becoming a distraction from existing climate policies in sectors currently covered by the ESR. 2. Make the ESR targets compatible with the goals of the Paris Agreement. For the European Union to keep its commitment under the Paris Agreement, the National emissions reduction targets enshrined in the Effort Sharing Regulation (ESR) should contribute to a 65% emissions reduction by 2030 and to reaching climate neutrality by 2040. 3. Phase-out flexibilities and close the loopholes The ESR flexibilities have the aim of allowing targets to be met more cost-effectively. Some of them, however, undermine the carbon-free transition of the non-ETS sectors by allowing more greenhouse gases to be emitted in these sectors up to 2030. This applies to the flexibilities with the EU ETS and the land-use sector. These loopholes allowing the use of ETS allowances and land use credits should be phased out. In the case of the land-use sector, the promotion of LULUCF sinks should be kept separate from emission reduction efforts by Member States in other sectors. Natural sinks are not equivalent in any way to emission reductions, and fungibility between the two should be avoided. The EU climate framework should not allow for any ‘out of sector’ flexibility mechanisms. Carbon Market Watch therefore strongly disagrees with any policy option that would strengthen flexibilities in the Effort Sharing Regulation. It is important to note that in the EU ETS, offsetting loopholes have been steadily closed in past EU ETS revisions due to the adverse impacts they had on EU ETS functioning, price setting, and decarbonization efforts in the power and industrial sectors. 4. Auctioning of ESR emissions allowances Currently, the annual emission allocation units (AEAs) under the ESR are allocated for free to EU Member States. In line with upholding the polluters pay principle in the EU Treaty, the Commission should consider auctioning of AEAs. The auctioning revenues can be used to fund further climate action and emission reductions, and could also be channeled to lower-income Member States to help support their zero-carbon transition investments.
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Meeting with Gaelle Garnier (Cabinet of Commissioner Thierry Breton) and European Environmental Bureau and

8 Sept 2020 · Clean Hydrogen Alliance launch

Response to Climate Law

30 Apr 2020

Carbon Market Watch welcomes the European Commission’s proposal for a European Climate Law that will enshrine the EU’s climate neutrality target into law. However, the proposal for a Regulation falls short on the timeframe needed to deliver this goal, and lacks improvements which would impact climate action in the near term. We would like to make the following suggestions for improvement: 1. Goals and targets The explicit climate goal of the proposed law should be to deliver Europe's fair share of what is needed to keep global heating to 1.5°C. This is scientifically, economically and ethically the right target for the EU to aim at, both domestically and as a signal to the international community. While the climate neutrality target for 2050 is a big step in the right direction, it remains inadequate to solve the problem at hand. The Climate Law should update the 2030 target to 65% domestic greenhouse gas emission reduction compared to 1990 and include a 2040 climate neutrality target that ensures a steady decreasing trend in EU emissions, without relying on international carbon offsets. Clearly defined and legally binding sectoral and member states targets are also necessary if the EU is to show strong climate leadership. The Climate Law should specify the role of net-negative emissions after reaching climate neutrality. A quantitative target for sustainable removal and sequestration of atmospheric CO2 needs to be defined to incentivise absorption of CO2 as soon as possible. The expansion of natural carbon sinks should be included with a separate target as a no-regret measure to absorb CO2 in addition to rapid emission reductions. 2. Policy coherence The Climate Law needs to define the framework for policy coherence, specifying the roles of various policies that are to speed up our much-needed climate transition. The headline emission reduction target needs to translate into required action under the EU ETS and effort sharing targets, and there remains a need for additional policies and measures to push fast, sustainable and economically efficient climate action throughout various sectors. In this light, Carbon Market Watch calls for additional initiatives to encourage full decarbonisation of energy-intensive sectors like steel, cement and chemicals. From a carbon pricing perspective, it is crucial that the Climate Law ensures that current and new climate targets cannot be watered down by leaving any opening for the use of international carbon offsets for compliance, by either countries or private sector actors. At the same time, the Climate Law needs to close the door for perverse incentives which undermine the polluter pays principle by phasing-out all free emission allowances under the EU Emission Trading System (ETS). Just transition should be at the core of the Climate Law and the European Green Deal. The Climate Law should therefore support all actors in their efforts to ensure no one is left behind, and the economic benefits of the climate transition are shared among all EU citizens. 3. Ratchet and review Finally, a strong, transparent and independent monitoring, review and ratchet mechanism for assessing and improving the achievement of climate targets is critical. One issue that needs to be included is the principle of no backsliding on earlier commitments. The review should take place every five years in line with the Paris Agreement and in light of the latest scientific information available.
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Response to 2030 Climate Target Plan

15 Apr 2020

Implementing the Paris Agreement As the EU is a signatory to the Paris Agreement (PA), the 2030 Climate Target Plan should live up to the EU’s commitment to limit the global temperature rise to 1.5°C. Moreover, we remind the Commission that the European implementation of the PA has to reflect equity and the principle of common but differentiated responsibilities and respective capabilities. These principles, as enshrined in Article 2 of the PA, will need to be developed in more detail in the impact assessment by identifying remaining atmospheric carbon budgets, and giving an indication of how the EU intends to meet its fair share of global greenhouse gas (GHG) emission reductions by 2030, and every 5 years thereafter, in line with the 1.5°C limit. The IPCC report on Global Warming of 1.5°C has shown that ignoring this temperature threshold, entails severe additional risks to the global ecosystem and increases the chances of hitting systemic tipping points that could spiral global heating out of control. The UNEP Emissions Gap Report 2019 makes clear that global GHG pollution needs to be reduced by 7.6% per year, starting now, in order to limit global warming to 1.5°C. This directly correlates with a EU climate target of at least 65% by 2030. The impact assessment must therefore also consider emission reduction pathways beyond 55% by 2030 and an overall goal of climate neutrality by 2040 to keep the 1.5°C goal attainable. Carbon Market Watch underlines that the EU should aim for 65% GHG reductions by 2030 and climate neutrality by 2040 as the more responsible targets and fully in line with the ‘do no harm’ principle. Any legislation to implement these goals should include the ‘no backsliding’ principle of not falling behind on previous commitments, in order to ensure progressive climate commitments over time. Better rules to deliver climate action in all sectors The 2030 Climate Target Plan will inevitably impact the planned revision of implementing legislation, policies and measures to ensure the delivery of the strengthened 2030 climate and energy targets. The Commission needs to develop clear sectoral decarbonisation strategies, including milestones for 2030 and every 5 years thereafter, and clear action plans that demonstrate how these strategies will be achieved and financed in all sectors. In this context, Carbon Market Watch encourages the Commission to address: The potential effect of strengthened EU legislation to cover GHG pollution from international aviation and maritime sectors, especially in light of the lack of progress made by the International Civil Aviation Organization (ICAO) and International Maritime Organization (IMO) to agree and implement long term and ambitious greenhouse gas emission reduction strategies. The risks of extending the EU ETS to road transport and buildings as a distraction from existing decarbonisation measures in those sectors; the social consequences of shifting the burden of the required transition in those sectors on to citizens; how the incentive for national governments to take national action to tackle decarbonisation of road transport and buildings would be undermined. The need for emission reductions to be the primary focus, including by ending EU dependency on fossil fuels and elaborating a scenario for a 100% renewable energy supply. This implies that any accounting and target setting for sinks, removals or negative emissions is to be kept separate. A full cost and benefit assessment To inform how to increase the EU 2030 target in a responsible way and in line with the ‘do no harm’ principle, the Commission will need to compare the benefits of improved climate action with the costs of inaction. Any assessment of increased climate action needs to include a comprehensive quantification of direct benefits (e.g. employment, public health, reduced energy costs and import dependency) and avoided costs (e.g. environmental damage, healthcare costs, fossil fuel subsidies).
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Response to Climate Law

5 Feb 2020

Carbon Market Watch (CMW) welcomes the European Commission’s proposal for a European Climate Law (CL) to enshrine the EU’s climate neutrality target into law. CMW also welcomes the proposed functions of the CL as: 1) pushing for climate mainstreaming in all policies and, 2) setting the EU target in line with the scientific consensus on climate change. While the climate neutrality target for 2050 is a big step in the right direction, it does not go far enough. The CL must also include short and medium term targets or milestones to push for early climate action. In addition, the explicit climate goal of the proposed law should be to deliver Europe's fair share of what is needed to keep global heating to 1.5°C. This is scientifically, economically and ethically the right target for the EU to aim at, both domestically and as a signal to the international community. The CL should update the 2030 target to 65% GHG emission reduction compared to 1990 and include a 2040 climate neutrality target that ensures a steady decreasing trend in EU emissions. Clearly defined and legally binding sectoral targets are also necessary if the EU is to show strong climate leadership. Sectoral targets that should be included in particular are phase-out dates for all fossil fuel extraction and the end of sales of petrol and diesel cars. With respect to mainstreaming of climate change policy, the CL needs to define the framework for policy coherence, specifying the roles of various policies that are to speed up our much-needed climate transition. The headline emission reduction target needs to translate into required action under the EU ETS and effort sharing targets, and there remains a need for additional policies and measures to push fast, sustainable and economically efficient climate action throughout various sectors. In this light, Carbon Market Watch welcomes the scope of the European Green Deal to include initiatives to encourage full decarbonisation of energy-intensive sectors like steel, cement and chemicals through the planned initiatives on the EU Industrial Strategy, the Circular Economy Action Plan and the inclusion of a proposal to support zero carbon steel-making. From a carbon pricing perspective it is crucial that the CL ensures that current and new climate targets cannot be watered down by leaving any opening for the use of international carbon offsets for compliance, by either countries or private sector actors. At the same time, the Climate Law needs to close the door for perverse incentives which undermine the polluter pays principle by phasing-out all free emission allowances under the EU Emission Trading System (ETS). Just transition should be at the core of the Climate Law and the European Green Deal. The CL should therefore support all actors in their efforts to ensure no one is left behind, and the economic benefits of the climate transition are shared among all EU citizens. Finally, a strong, transparent and independent monitoring, review and ratchet mechanism for assessing and improving the achievement of climate targets is critical. One issue that needs to be included is the principle of no backsliding on earlier commitments. The goal of the monitoring mechanism should be ensuring the climate transition is underway and measurable - in the end only the fast and sustained reduction of GHG emissions matters. To summarize, the CL is a great initiative by the European Commission that is supported whole-heartily by CMW. However, the success of the Climate Law will depend on its ability to deliver increased greenhouse gas emission reductions in the short term! Our main concern is avoiding a series of pitfalls by including a) intermediate climate targets, b) framework for policy coherence and mainstreaming climate into other policy areas, c) a strong monitoring, review and ratchet mechanism and, finally, d) more ambitious climate targets that are in line with science and the Paris Agreement 1.5°C target.
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Meeting with Diederik Samsom (Cabinet of Executive Vice-President Frans Timmermans)

27 Jan 2020 · Speech on the European Green Deal at "LIFE PlanUp conference"

Response to A new Circular Economy Action Plan

20 Jan 2020

Carbon Market Watch welcomes the European Commission initiative to develop a New Circular Economy Action Plan. The Roadmap of this initiative is presented in view of the European Green Deal and the contribution of the EU’s industry to achieve a climate-neutral continent by 2050. It is therefore crucial that the Circular Economy action plan to be adopted together with the EU industrial Strategy is fully aligned with the aim of addressing the climate crisis and to ensure the European economy operates within ecological limits. The Roadmap for this initiative chooses to address “high-impact sectors” such as textiles, construction and electronics. However, the justification for this particular choice of sectors is lacking, as well as any qualification of the impact it seeks to address in these sectors. Carbon Market Watch would like to stress the need for the New Circular Economy Action Plan to focus in particular on resource and energy intensive industries such as steel, chemicals, and cement. Industrial circularity helps reduce greenhouse gas emissions and energy use, maintains security of supply, and enhances production while reducing costs. With total greenhouse gas emissions of 708 MtCO2 per year, resource and energy intensive industry is the third largest EU greenhouse gas polluter and emissions from heavy industry have not decreased since 2012. At the same time sectors like steel, chemicals, aluminium or cement, have the potential to reduce European emissions by 56% (300 MtCO2 ) in 2050, if they adopted fully circular economy models. This represents the second biggest CO2 emissions reduction potential after clean electrification. Most energy-intensive industries have already fairly high levels of circularity but these can still be improved throughout their value chain and would bring about even further CO2 emission reductions, for example: * Less than 40% of the current EU steel production is based on recycled steel. Increasing the share of recycled steel can cut emissions by 90% if using largely decarbonised electricity. * Only 10% of new plastic demand is met with recycled plastic products. There is much greater potential that should be exploited in plastic recycling by the chemical industry. It is estimated that emissions from both plastics production and end-of-life incineration could be further reduced by 56% through a combination of different solutions such as increasing plastics reuse, increasing mechanical recycling, and developing chemical recycling to recycle types of plastics that cannot be effectively recycled through mechanical recycling. * Cement and concrete are easier to recycle when the quality of the waste material improves. Cement producers and demolition companies must be encouraged to collaborate to ensure raw material returns to the cement plant. Almost all of the waste (90% ) from the construction sector can be revalorised. In order to achieve higher circularity of resource and energy-intensive materials, and thereby reduce greenhouse gas emissions, it is crucial that the New Circular Economy Action Plan includes the following elements: * Within the sustainable product policy, introducing an obligation for all semi-finished and finished products to contain a certain percentage of recycled materials, and targets to avoid contamination of waste streams (e.g. limit copper in steel scrap) would help reduce the quantity of raw material used and consequently reduce emissions. * Emission performance requirements should also be applied at material and product level. CO2 performance standards and Ecodesign can impose minimum performance standards on the production and consumption of energy-intensive materials. This will ensure greater uptake of zero-carbon and energy efficient solutions on the European single market. Acting across the value chain, these policies would enhance the circular use of materials.
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Meeting with Miguel Arias Cañete (Commissioner) and WWF European Policy Programme and

4 Jun 2019 · Debate on the strategic agenda and its relevance for climate and energy, NECP recommendations

Response to Carbon Leakage List 2021 - 2030

13 Nov 2017

Carbon Market Watch (CMW) is a not-for-profit organisation with a unique expertise on the functioning of carbon markets, advocating for fair and effective climate protection. Its network connects more than 800 NGOs and academics from 70 different countries from the global North and South. The assessment of the carbon leakage list for the post-2020 period will need to be informed by the performance of the carbon leakage provisions to date. So far, the excessively generous handout of free permits has resulted in over 25 billion euros windfall profits (e.g. the polluter has been paid, rather than having been made to pay) and in a standstill of industrial emissions for the past five years with no foreseen emission cuts in the coming decade. There has moreover been an absence of evidence of any carbon leakage occurrences in previous phases. Under the reform of the EU Emissions Trading System (EU ETS) for the post-2020 period, the free allocation approach will be prolonged which means that heavy industry is set to receive free pollution permits worth up to EUR 170 billion over the next decade. In this context, Carbon Market Watch believes that the current revision of the EU Emissions Trading System (EU ETS) for the post-2020 period will fail to make the EU ETS a viable instrument to decarbonise European industry. An industrial decarbonisation strategy and a genuine reform of the EU ETS in light of the Paris climate goals are hence urgently needed to bring Europe’s industry at the forefront of the global low-carbon transition and guarantee its long-term competitiveness. Carbon Market Watch's concrete recommendations on the inception impact assessment can be found in the attachment.
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Meeting with Miguel Arias Cañete (Commissioner) and Transport and Environment (European Federation for Transport and Environment) and

26 Sept 2017 · Clean energy package, cars and vans, international agenda

Meeting with Miguel Arias Cañete (Commissioner) and Transport and Environment (European Federation for Transport and Environment) and

11 Apr 2017 · mobility package 2017,ETS, ESR,Clean Energy Package

Meeting with Telmo Baltazar (Cabinet of President Jean-Claude Juncker) and European Environmental Bureau and

12 Jul 2016 · Climate Action and Energy

Meeting with Miguel Arias Cañete (Commissioner) and Transport and Environment (European Federation for Transport and Environment) and

11 Mar 2016 · Implications of the Paris Agreement in the EU climate and energy policies

Meeting with Miguel Arias Cañete (Commissioner) and Transport and Environment (European Federation for Transport and Environment) and

21 Jan 2016 · COP21 and oncoming legislative package

Meeting with Miguel Arias Cañete (Commissioner) and WWF European Policy Programme and

25 Nov 2015 · COP21 PARIS

Meeting with Miguel Arias Cañete (Commissioner) and

4 Sept 2015 · International climate negotiations and Commission Working Programme

Meeting with Miguel Arias Cañete (Commissioner) and

23 Jun 2015 · ETS review, Energy Union implementation and International Climate negotiations

Meeting with Miguel Arias Cañete (Commissioner) and

15 Jan 2015 · Follow-up to Lima and climate action diplomacy up to Paris / Energy Union (state of play)

Meeting with Miguel Arias Cañete (Commissioner) and

13 Nov 2014 · Lima climate talks; climate and energy priorities