Climate Change Regulation

📢 EU CBAM is Now Fully Operational: What You Need to Know On January 1, the EU’s Carbon Border Adjustment Mechanism (CBAM) came into full effect. Here are the key things sustainability, finance, and strategy teams should understand: 🔹 An overview CBAM is the first fully operational border carbon pricing system designed to prevent carbon leakage, the shifting of emissions-intensive production outside the EU, while protecting EU firms subject to internal carbon costs. 🔹 What has changed? Unlike prior pilots, the 2026 implementation bases costs on actual emissions intensity of imports. The EU has “externalized” carbon pricing beyond its borders, which has implications for supply chains and global trade flows, especially for goods like steel, aluminum, cement, electricity, fertilizers, and certain chemicals. 🔹 What do companies need to do? Importers and their non-EU suppliers will need to: - Map supply chains and embedded emissions - Coordinate with suppliers on verified emissions data - Assess carbon cost exposure and potential downstream price impacts 📈 The big picture CBAM goes beyond a compliance issue for firms and has real implications for supply chains and operating costs. Investors and businesses are beginning to factor in carbon pricing and supply-chain decarbonization into their financial decisions. We’ve been helping firms manage these shifts and respond strategically. Send me a message if you’d like to learn more. Visual courtesy of Carbonwise #CBAM #EURegulations #CarbonPricing #ClimatePolicy #SustainableTrade #ClimateRisk #SupplyChainEmissions #NetZero #ESG #ClimateFinance #Decarbonization

I'm delighted to announce the release of the Flagship Report of the Global Climate Policy Project at Harvard and MIT Working Group on Climate Coalitions on "Building a Climate Coalition: Aligning Carbon Pricing, Trade, and Development." We build on two important facts: 💡 Over 80% of emissions in the steel, cement, aluminum and fertilizers industries are _already_ covered by existing or planned carbon pricing systems. 💡 These industries account for over 20% of global carbon emissions. Our analysis shows that:   ✅ A climate coalition could cut emissions 7x more than current policies — equal to Canada’s annual emissions. ✅ It could raise nearly $200 billion per year in revenues, mostly from domestic carbon pricing. ✅ Price impacts on key materials would be modest, with minimal consumer effects. ✅ A graduated approach would allow low- and middle-income countries to join fairly, backed by technology transfer, finance, and capacity-building.   With #COP30 in Brazil on the horizon — and Brazil making this a signature initiative — the moment is ripe for countries to move from fragmented carbon border adjustments to a cooperative framework that advances climate, trade, and development together.   Read the full report here (same doc in 2 places):   ➡️ https://ceepr.link/3VmgC7g ➡️ https://lnkd.in/e6bhEhTR   I'm honored to partner with the phenomenal working group: Joseph Aldy, Candido Bracher, Vaibhav Chaturvedi, Kimberly Clausing, Christian Gollier, Frank Jotzo, Marcelo Medeiros, Athiphat Muthitacheroen, Axel Ockenfels, Mari Elka Pangestu, Daouda Sembene, PhD, E. Somanathan, Dustin Tingley, Jennifer Winter. And special thanks to the report team, led by Arathi Rao including Ruchee Bhatta, Kevin Hsu, Anna Neumann, Fanming Meng, Marilyn Pereboom and Naomi Shimberg who made this all happen. Thanks especially to the leadership of Ambassador André Aranha Corrêa do Lago, Finance Minister Fernando Haddad and his team led by Rafael Dubeux, including Cristina Reis and Jose Pedro Nevors for putting this proposal - which could meaningfully cut emissions and raise resources for adaptation and mitigation - on the agenda heading into #COP30. #ClimateAction #CarbonPricing #Trade #COP30 #ClimateCoalition

Understanding the carbon footprint of products is key to shaping effective climate policies, including and importantly in a global trade friendly way. Earlier this week at #COP29, I presented the Inclusive Forum on Carbon Mitigation Approaches’ (#IFCMA) new report tackling challenges in computing carbon intensity metrics and their application in trade-related climate policies. Carbon intensity metrics play an important role in assessing emissions associated with the volume of production of specific goods or sectors and have many potential applications. These metrics provide insights into progress on decarbonisation and are central to a growing range of trade-related climate policies, including green product standards and border carbon adjustments. The IFCMA’s analysis emphasises the need to address data gaps, prevent fragmentation in global supply chains and provide targeted support to SMEs and firms in developing countries. Our report provides a better shared understanding of these challenges and how they can be addressed to help boost international markets for low-carbon goods while ensuring fair and open trade to promote an inclusive, cost-effective transition. Currently with 59 members and the engagement of many more economies, the IFCMA can play a key role in bringing countries together to support international cooperation on the computation and use of carbon intensity metrics. Read the report here: https://oe.cd/5Ma | #OECDatCOP29

NEW ANALYSIS: Meeting European climate goals will require a stark contraction in fossil gas use. But in many countries gas grid planning is based on the assumption of infinite gas grid use. Despite the substantial implications for gas grid users and infrastructure, current grid planning does not adequately reflect this new reality. This misalignment poses a substantial barrier to the transition towards a sustainable energy system and underscores the need for more holistic planning. Alignment of energy infrastructure planning with other planning processes could better support climate and social goals. Regulations regarding heat planning, for instance, have significant consequences for gas grid infrastructure development, heating appliance regulations and consumer burdens. Infrastructure planning processes also do not yet address the support needed to ensure vulnerable energy users are able to fully participate in the transition to cleaner, more efficient technologies. Our study provides comprehensive information on the current state of the gas grid, its development, and the regulatory framework in selected European countries, and identifies current regulatory barriers for the phase-out of fossil gas. It concludes with recommendations on how Member States could better align energy infrastructure planning with the attainment of national and EU climate targets: - Adopt a national phase-out target and give energy regulators a net zero mandate. - Make the regulatory framework fit for the gas phase-out. - Adopt integrated heat and grid planning. - Plan future gas infrastructure based on realistic assumptions about future availability of zero-carbon heating technologies. - Track and collect harmonised data at the EU level. - Protect vulnerable customers. More in our Regulatory Assistance Project (RAP) & Oeko-Institut e.V. report released today.

AR7 confirms it’s still price first…but not price only. OK I’m in Kuala Lumpur, but I still catch what is happening…and the time difference allows me to read it before you lot wake up!! Fixed & floating are diverging. If you work in this space, investor, developer, or advisor, it’s worth pausing to take a breath and read between the lines. Fixed offshore wind, for example, now faces a stricter, less flexible auction format. Just one sealed bid. No flexible bids. No wiggle room. You miss the mark on price, you’re oot! As they say back home. And if the auction gets close to the new Maximum cap? Your bid could be technically viable, cost-effective, and shovel-ready… but still lose. That’s new. For floating, the door remains open, if you know how to phase. AR7 explicitly allows Phased Floating Offshore Wind Units, up to 1.5GW, with capacity and delivery window flex built in. That matters. It signals the govt wants floating in the game, but controlled, cost-capped, and industrially paced. And then there’s the headline that no one’s quite talking about: the zonal split between “Offshore Wind” (zones 13–27) & “Offshore Wind Scotland” (zones 1–12). OK, it’s not zonal pricing, Ed has ruled that out. But it is a workaround. A structural kludge to deal with the distortion of TNUoS charges, which continue to punish Scottish projects by £7–9/MWh, often more. What’s happening here is CfD architecture attempting to do the job of market reform, compensating for a transmission regime that still hasn’t been sorted. And if you’re wondering, yes, that distortion is now baked into the rules: - Fixed projects in Scotland will be assessed separately, potentially with their own pot, ASP, or budget cap - Unconsented projects can now enter (with caveats)…offering hope for those stuck in planning purgatory, especially north of the border - But the strike-price-only logic still dominates. No industrial uplift, no guaranteed floating ringfence…yet - AR7 isn’t a revolution. It’s a recalibration. The potential problem IMO is that it’s trying to do too many things at once: enable floating, protect fixed, de-risk budget exposure, soften grid locational bias… all while staying within Treasury’s comfort zone. Implications? - Projects now face higher uncertainty in auction outcomes, clearing is not just about price, but where you connect and what cap you fall under - Developers need to sharpen bid strategy. The tolerance for mistakes just shrank - For floating, flexibility is an edge, but don’t mistake it for preference. - For policy wonks, it’s a reminder: until TNUoS is reformed, you’ll keep needing these behind-the-curtain adjustments AR7 is a step forward. But it also exposes the tension at the heart of UK energy policy, between market discipline and industrial strategy. If you want to chat about the implications, or help sharpen your AR7 case, please reach out to me or Amy Dowdeswell our UK Country Manager for OWC.

81% emission reduction by 2035 for the UK! The UK’s strengthened climate commitments under the UN Framework Convention on Climate Change set a new target of reducing greenhouse gas emissions by at least 81% from 1990 levels by 2035. This ambitious goal, which exceeds the previous 68% reduction target for 2030, indicates a strong shift towards deeper decarbonisation, positioning the UK as a global leader in climate action. 1. Regulatory and Compliance Pressures: UK businesses, particularly in high-emitting sectors like energy, manufacturing, and transport, will likely face stricter environmental regulations. Increased investment in clean technologies may be required to meet these targets, including the adoption of low-carbon options like hydrogen and carbon capture. 2. Incentives and Opportunities in Clean Energy: Government support for clean energy, such as lifting restrictions on onshore wind and funding for carbon capture, creates opportunities in renewable energy sectors. Companies investing in sustainable tech and infrastructure are likely to benefit from increased support. 3. Energy Costs and Security: The aim for a net-zero power grid by 2030 suggests businesses could see a more stable energy supply. In the short term, energy costs may rise as the transition unfolds, especially for businesses reliant on fossil fuels, though renewable sources could eventually lower long-term costs. 4. Carbon Pricing and Financial Impacts: Higher carbon prices under the UK’s Emissions Trading Scheme mean higher costs for carbon-intensive operations, creating financial incentives to decarbonise. Businesses that act quickly may benefit from selling carbon credits, offsetting some transition costs. 5. Supply Chain Adaptation: Businesses may need to adjust supply chains to reduce their environmental impact, potentially sourcing from lower-emission suppliers and adopting circular economy practices. 6. Global and Competitive Positioning: The UK’s ambitious targets could give businesses a competitive advantage globally by aligning with these standards, especially as similar targets may emerge in other regions. 7. Workforce and Skills Development: The shift to green energy and sustainable infrastructure will require a skilled workforce, creating opportunities for businesses to invest in green jobs, training, and innovation. In summary, the UK’s enhanced climate commitment will drive businesses towards faster decarbonisation, potentially raising operational costs tied to carbon and requiring changes in energy sourcing, investment, and workforce development. While some businesses may face short-term challenges, those that adapt quickly could find growth opportunities in clean energy and sustainable technologies. #sustainability #ghgemissions #co2reduction #esg #decarbonisation #co2 #emissions

First comprehensive warming allocation framework shows why international climate support must complement domestic action. A new study develops a quantitative framework for allocating global warming contributions under the Paris Agreement, addressing a critical gap in how non-CO₂ emissions are considered in climate equity assessments. The researchers establish three distinct interpretations of fairness principles drawn from international environmental law, incorporating equality, polluter-pays, ability-to-pay, and beneficiary-pays principles. The analysis shows that 84-90 countries, including all major developed nations, had already exhausted their fair shares of the 1.5°C warming budget by 2021 across all allocation approaches. This finding holds even when considering alternative starting years for historical responsibilities and different socioeconomic indicators. The implications are profound for global climate policy. The research demonstrates that even these countries' most ambitious domestic emission reductions would be insufficient to meet their fair share. This suggests that developed nations must pursue aggressive domestic reductions and substantially support mitigation efforts in developing countries through technology transfer, capacity building, and climate finance. Kudos to the authors Mingyu Li, Setu Pelz, Robin Lamboll, Can Wang, and Joeri Rogelj.

According to the latest Emissions Gap Report 2024 by the UN Environment Programme report and 2024 NDC Synthesis Report by the UN Climate Change, global greenhouse gas (GHG) emissions hit a staggering 57.1 gigatons of CO₂ equivalent in 2023—a 1.3% increase from 2022. This trajectory underscores that we’re moving further off course from necessary reductions. Key takeaways from the report reveal: • Reduction Challenge: To limit warming to 1.5°C, emissions must fall by 42% from 2019 levels by 2030, a stark contrast to current national policies. Even the dramatic 2020 pandemic shutdown achieved only a 5% reduction, underlining the scale of our challenge. • G20's Responsibility: With 77% of global emissions, G20 nations bear significant responsibility. For real progress, G20 members must decarbonize faster, and the seven members yet to peak emissions need urgent action. • Carbon Budget Warning: The remaining carbon budget to stay below 1.5°C is estimated at only 200 GtCO₂. At current rates, we risk depleting this by the end of the decade, projecting a warming closer to 2.5°C - 3.0°C. Pathway Forward? While it’s improbable, achieving a 1.5°C pathway remains technically possible: • Renewable Acceleration: Solar and wind could drive 27% of emissions reductions by 2030, with tech advancements making this more attainable.  • Forestry Practices: Enhanced forestry and land use could account for 20% of needed reductions.  • Efficiency Shifts: Demand-side changes, like increased efficiency and electrification in transport, buildings, and industry, are crucial. The call to action couldn’t be louder! Now is the time for scalable, coordinated efforts across governments, industries, and individuals. Let’s work together to close this gap and protect our future. #ClimateAction #Sustainability #NetZero #UNEP

𝗣𝗼𝘄𝗲𝗿 𝗚𝗿𝗶𝗱 𝗖𝘆𝗯𝗲𝗿𝘀𝗲𝗰𝘂𝗿𝗶𝘁𝘆: 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀 Securing the power grid isn't just about firewalls and monitoring tools — it's about aligning with global standards and regulatory frameworks to ensure resilience and compliance. 𝙆𝙚𝙮 𝙍𝙚𝙜𝙪𝙡𝙖𝙩𝙞𝙤𝙣𝙨/𝙂𝙪𝙞𝙙𝙚𝙡𝙞𝙣𝙚𝙨:  In the US: ✏️ NERC CIP (Critical Infrastructure Protection) for bulk electric systems ✏️ Executive Orders 13636 & 14028 for improving cybersecurity in critical sectors ✏️ NIST 800-82 & NIST 1800-32 for ICS security best practices In Germany ✏️ IT Security Act and B3S Standards for critical infrastructure protection ✏️ BNetzA Security Catalogue specifically for the energy sector In Europe: ✏️EU Cyber Security Act ✏️NIS2 Directive for network security ✏️EU Cyber Resilience Act for product security In India: ✏️CERT-In Guidelines for protecting critical infrastructure ✏️National Critical Information Infrastructure Protection Centre (NCIIPC) — ✏️Framework for safeguarding sectors like power, telecom, and transportation CEA (Central Electricity Authority) Guidelines for power sector cybersecurity International Standards: ✏️ IEC 62443 — Focuses on securing industrial automation systems ✏️ IEC 62351 — Focuses on securing protocols used in energy systems ✏️ ISO/IEC 27001/2 & ISO/IEC 27019 — Covers governance, policy aspects, and operational completeness. Why Does This Matter? The increasing convergence of IT and OT systems means power grid operators must balance operational efficiency with security mandates. Following these standards helps organizations: 🔹 Improve threat detection and response 🔹 Ensure secure product development and maintenance 🔹 Establish comprehensive governance policies Which standards or frameworks do you find most effective in strengthening power grid cybersecurity? #CyberSecurity #PowerGridSecurity #CriticalInfrastructure #ICS #IEC62443 #NERC #NIS2 #OTSecurity

Following my recent meeting with Azerbaijan’s Energy Minister Parviz Shahbazov, whose country will hold the COP29 Presidency in Baku this November, I have prepared a thought leadership piece for the upcoming intergovernmental discussions. To align countries in achieving the goals of the Paris Agreement, I have defined all global economies into three categories, which I named the 'ENS Economies': 1. Enablers: Actively pursuing net-zero emissions, these economies lead in adopting green technologies, policies, and innovative financing methods that support the green transition. They also make it difficult to finance carbon-producing projects. 2. Slow Movers: Reluctant to accelerate the energy transition due to: • High Capital Costs: Investment needed for a greener economy can lead to “green inflation,” making the status quo more appealing in the short term. • Dependency on Carbon Economy: Economies reliant on carbon income face economic challenges in transitioning, potentially reducing GDP growth and competitive advantage. • Income from Taxation: Governments prefer carbon taxes, which generate revenue, over costly financial subsidies for the green transition. Only affluent nations can offer industry incentives like the US's Inflation Reduction Act, impacting energy transition investments. 3. Non-Movers: Struggling due to poor conditions and low credit ratings, these economies face challenges in: • Accessing capital • Acquiring technology and expertise • Developing infrastructure for the energy transition Aligning these streams is challenging. It requires identifiable benefits for all parties and fairness in the process. One solution is developing an international, globally accepted carbon trading market. The international community has become more protectionist, hindering trade, cooperation, and alignment. Countries should be able to trade carbon credits across borders without barriers. A clear and equitable system is needed to align global efforts on carbon emissions. This system could use a scoring method considering each country's historical emissions since industrialisation. The heavier carbon producing and emitting economies would assume greater economic responsibility by contributing into an international carbon reduction fund. This fund would be managed by multilateral banks. The fund would support poorer economies in achieving net zero with defined targets. Countries providing financial and technical innovation and resources to enable net zero should benefit by receiving discounts on their financial contributions to the international fund. I would advocate COP29 should adopt this framework to reach international alignment. This is an extract of a more detailed article: if you would like to receive the full article please email: contact@stirlinginfrastructure.com #COP29 #EnergyTransition #NetZero