Carbon Market Review: Capture, Removals and Reporting Rules Advance in Parallel

There is a familiar rhythm to the carbon market at the moment. Rulemakers in the largest emitting jurisdictions are still drafting, deferring or defending their frameworks in court, while the companies that will eventually have to comply carry on signing contracts, breaking ground and testing technologies around them. Neither side is waiting for the other, and most of what is being built remains at pilot, pre-engineering or first-contract stage.

California offers the clearest illustration. The state’s Air Resources Board has proposed pushing the first compliance deadline under its corporate greenhouse gas reporting regime from August to November 2026, releasing modified text for a fifteen-day comment window rather than the longer period the original proposal received. The more consequential part of the revision is easily overlooked: reliefs that had until now existed only in an enforcement notice would be written into the regulation itself, which matters because enforcement discretion can be withdrawn and regulatory text cannot. The rules reach companies above US$1 billion in global revenue for Scope 1 and 2 reporting and above US$500 million for climate-related financial risk disclosure, and since a great many of those businesses are headquartered elsewhere, the regime effectively sets a national baseline in the absence of a federal one. It has run behind schedule from the outset, litigation over both statutes is unresolved, and every deferral leaves less room before the considerably harder Scope 3 phase due in 2027.

China’s system is grappling with a different question. The Ministry of Ecology and Environment has consulted on draft allowance volumes for the national emissions trading system, covering power for two compliance years and steel, cement and aluminium smelting for 2026 — the first standalone annual allocation for those industries since their inclusion took the scheme beyond power generation. Coverage is not the issue; design is. Allowances are still issued in proportion to output, so aggregate emissions can rise as production does, and that is the reason most often given for Chinese prices sitting well below European ones. Policy documents point toward absolute cap control from 2027, combining free and paid allocation. The ministry has also acknowledged that there is currently no institutional means of responding when supply and demand fall out of step or prices move abnormally, something Tianjin’s municipal scheme has begun to pilot.

At the UN level, the Paris Agreement Crediting Mechanism has opened a three-week consultation on its draft clean cooking methodology, alongside a draft tool for grid emission factors. This is less a policy shift than the clearing of a queue. More than 2,000 projects have applied to transition from the Kyoto-era mechanism and cannot issue credits until approved methodologies exist, and clean cooking makes up a large share of them, particularly among African developers. The draft sets efficiency thresholds distinguishing improved stoves from baseline devices, tightens the definition of a qualifying household so that non-compliant ones generate nothing, and cancels reductions outright where reversal risks apply. Cookstove crediting has drawn sustained criticism for over-crediting, and campaigners argued during an earlier consultation that the framework improves on what came before while still leaving room for the same problem where the science is thin. Gold Standard and Verra have been reviewing the same framework in parallel, so alignment would spare developers a good deal of duplicated work.

In the US, the argument has moved to the courts. Twenty state and local attorneys general are challenging an Environmental Protection Agency revision that lets newly installed commercial refrigeration equipment use refrigerants with a global warming potential of up to 1,400 until 2032, in place of a 150-to-300 limit that was due to apply from January 2026. Their case rests on the American Innovation and Manufacturing Act, which mandates an 85% cut in hydrofluorocarbon production and consumption by 2036, and on the contention that the agency never demonstrated the affected industries could not have met the original schedule. There is a commercial argument running alongside the legal one, namely that a delayed transition risks leaving supply and demand for these refrigerants misaligned.

Away from the regulators, industrial capital has kept moving on its own timetable. Essar Group has laid out a £4.3 billion programme for the Stanlow refinery covering two low-carbon hydrogen units of roughly 350MW and then above 700MW, hydrogen-ready power generation, capture routed into the HyNet network, and a methanol-to-jet plant sized for more than 200,000 tonnes of sustainable aviation fuel a year. Over £1 billion of that is approaching final investment decision, and the site already runs a hydrogen-ready refinery furnace credited with around 16,600 tonnes of annual savings. In Germany, a ministerial visit to Salzgitter AG marked progress on SALCOS, the hydrogen-based steelmaking programme backed by €1.3 billion of federal and state funding, with the first phase due in 2027 and initial green steel deliveries expected next year. The company took the opportunity to repeat what it has said before: the economics turn on stable regulation and competitive power prices, not on the technology.

What has changed in carbon capture is where the carbon dioxide is meant to go. Metsä Group has begun pre-engineering on what would be Finland’s first commercial-scale biogenic capture plant at its Rauma pulp mill, around 100,000 tonnes a year, with the output sold to chemicals and synthetic fuels producers rather than stored. It has applied for state support through a reverse auction capped at 30% of investment cost, a decision is unlikely before early 2027, and the company is candid that demand for products made from captured biogenic carbon dioxide is the weak point in the plan. The same logic runs through the agreement between the Rhône Décarbonation project, led by Vicat, SPSE and Elengy, and H4 Marseille Fos, which secures half of the latter’s projected biogenic requirement for 2040 and connects cement emissions to future industrial users, albeit without an investment decision or construction timeline. Entropy Inc. has taken the more conventional route in Alberta, commissioning a 15MW turbine paired with post-combustion capture at Advantage Energy’s Glacier plant, lifting integrated capacity there to 45MW with a design target of up to 192,000 tonnes a year and assessed electricity intensity of 84kg of carbon dioxide per megawatt-hour. Its observation about the policy environment is worth noting: the complaint is not about the level of Canadian support but about how long it takes to access, and what that delay does to financing costs.

Removals remain small and selective. Hitachi, Mitsui O.S.K. Lines and Japan Airlines have agreed a direct ocean capture pilot on Kume Island, using a containerised land-based unit to draw carbon dioxide out of seawater, which holds it at concentrations far above those in air, with synthetic aviation fuel among the potential uses. Microsoft has contracted with CREW Carbon for up to 23,602 removal units from wastewater alkalinity enhancement, taking the developer’s book past US$40 million. The volume is modest set against the buyer’s bioenergy-with-capture deals, but the choice is telling: the technology retrofits existing municipal treatment plants and measures at defined inlet and outlet points, avoiding the dispersion and verification difficulties that have dogged open-ocean alkalinity work. After reports that the company had paused new purchases, deals of this kind suggest buying has resumed, at a slower pace and with a clear preference for measurement certainty over first-of-a-kind construction. In fuels, American Airlines and Infinium completed the first US commercial passenger flight on electro-SAF delivered through ordinary airport infrastructure, produced from waste carbon dioxide and renewable electricity, with an offtake agreement covering a Texas plant due on stream in 2027.

The rest of the activity sits in the plumbing. Envision Energy has delivered 1,000 tonnes of low-carbon ammonia environmental attribute certificates to PepsiCo APAC through a book-and-claim arrangement tracked on the S3 Markets registry, which lets fertiliser-related value chain emissions be addressed before physical low-carbon ammonia exists at any scale. ClimeCo has launched a platform using artificial intelligence to match Scope 3 hotspots with insetting opportunities, arriving just as revised corporate net-zero standards start giving market-based interventions formal recognition. ABB has taken a minority stake in LevelTen Energy, adding renewable procurement to an electrification and advisory business at a point when hourly and location-based matching rules are becoming more demanding. And JGC Corporation has joined a JOGMEC-commissioned demonstration led by Mitsubishi Electric, running to February 2027, which will test satellite methane detection against field measurement at a US facility and assess whether the results can carry weight under the Oil and Gas Methane Partnership framework.

The corporate disclosures put all of this in proportion. SKY Perfect JSAT has reached carbon neutrality for Scope 1 and 2, offsetting residual emissions of 120.5 tonnes of carbon dioxide equivalent, and now turns to its value chain. JCB has cut operational emissions by 82.4% against a 2013 baseline, ahead of its interim target on the way to net zero by 2030, while issuing around 500,000 partly plant-derived payment cards in Japan. Toyo-Morton has switched its Saitama factory entirely to carbon-offset city gas, covering roughly 300 tonnes a year through voluntary credits, having moved to renewable electricity back in 2022. These are real achievements, and they are also the easy part. The emissions that remain sit in supply chains, and the certificates, platforms, satellites and capture projects meant to reach them are still being tested rather than relied upon.

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