Carbon Market Weekly: Regulators, Corporates and Registries Recalibrate Carbon Pricing and Credit Rules
One recurring theme is the balance regulators are trying to strike between protecting industrial competitiveness and preserving the integrity of the price signals and credits that underpin the net zero transition. The European Commission has published a revision of the EU Emissions Trading System that slows the pace of the annual emissions cap decline, extends free allocation of allowances for industry and channels billions of euros into an Industrial Decarbonisation Bank, while also widening the scheme’s reach into aviation and shipping. The reform recalibrates the Linear Reduction Factor down to 3.7% a year for 2031–2035 and 1.7% for 2036–2040, from the current 4.3%, and halves the trigger threshold for the Market Stability Reserve, changes intended to give industry more time to adjust but which have drawn mixed reactions. A coalition of ten member states pushed for an even longer cap extension and a pause on phasing out free allowances, while environmental groups and some steelmakers argue the changes risk weakening the incentive the carbon price is meant to provide. Individual companies have taken differing positions on the detail: Outokumpu has urged that the ETS remain a strong and predictable pricing tool and warned that delaying the free-allowance phase-out could undermine the Carbon Border Adjustment Mechanism, while Salzgitter’s chief executive has cautioned that relief measures for energy-intensive industry after 2030 could affect the business case for low-carbon steelmaking projects such as SALCOS, at a point when around 90% of Europe’s decarbonisation projects have yet to reach final investment decision.
The reform’s maritime provisions extend the ETS’s existing anti-evasion rules to smaller vessels and broaden the list of non-EU ports whose use can reset a ship’s emissions liability, alongside a new mechanism modelled on aviation policy to narrow the cost gap between conventional bunker fuel and lower-carbon alternatives. The World Shipping Council welcomed the revenue-reinvestment approach and the fuel mechanism but warned some port rules could unfairly penalise transhipment hubs, while port bodies including the European Sea Ports Organisation argued the package does not earmark enough shipping-generated ETS revenue, estimated at around €7.65 billion a year, for port-level decarbonisation infrastructure. In a related but separate strand of the reform, the Commission has proposed embedding the aviation offsetting scheme CORSIA into EU law through to 2035, which Base Carbon and other market participants have described as a signal of longer-term demand: CORSIA futures for the Phase 1 compliance period rose by roughly 39% in the fortnight following the announcement, against a backdrop in which industry estimates put global demand for eligible credits as high as 1.6 billion units by 2035, compared with the roughly 40 million Phase 1-tagged credits currently in existence. Base Carbon has confirmed that its entire Rwanda cookstoves credit inventory is now CORSIA-eligible, while the International Civil Aviation Organization has separately confirmed the American Carbon Registry’s power-sector crediting programme as CORSIA-eligible, which the registry describes as the first time a jurisdictional, sector-wide crediting approach for electricity generation has been confirmed eligible under the scheme.
Aviation and shipping: fuel, credits and infrastructure
Aviation’s decarbonisation push is visible well beyond the credit market. Air Canada and Airbus have launched a jointly funded Sustainability Co-Investment Platform, committing up to roughly CAD 13.7 million to help bring a Canadian sustainable aviation fuel (SAF) project to a final investment decision, while also having Air Canada track and retire SAF environmental attributes on Airbus’s behalf to cover its staff’s business travel emissions. In the UK, ETFuels has picked the port of Immingham in the Humber for a commercial-scale refinery converting green hydrogen-based e-methanol into SAF, a project expected to create around a thousand construction jobs and four hundred permanent roles once operational. Australia’s nascent SAF sector received a boost too, with HAMR Energy securing up to A$32 million in conditional funding from the Australian Renewable Energy Agency to develop a methanol-to-jet refinery at Port Adelaide using plantation forestry residues, a project it says could avoid around 390,000 tonnes of CO2 equivalent a year and support the equivalent of 4.5 million passenger journeys’ worth of fuel. Elsewhere in the fuels space, Japan’s ENEOS has signed a strategic, non-binding agreement with Germany’s eFuel One to import green hydrogen-based e-gasoline from a planned Lower Saxony plant, part of Japan’s broader strategy of securing long-term clean hydrogen and derivative fuel imports.
Maritime decarbonisation infrastructure is also advancing. Carbon Destroyer 1, Europe’s first dedicated offshore carbon dioxide carrier, has been shortlisted for the Maritime Ship of the Year award for its role in Project Greensand, Europe’s first operational offshore carbon storage scheme; the vessel can carry around 5,000 tonnes of CO2 per voyage and roughly 600,000 tonnes a year, illustrating the kind of specialist shipping capacity that dedicated carbon capture and storage (CCS) supply chains will increasingly need.
Carbon capture and storage: UK regulatory groundwork and project funding
The UK’s carbon storage sector has seen a burst of regulatory and financial activity. The North Sea Transition Authority has published three sets of operational guidance covering Storage Site Management Plans, Commissioning Plans and Metering and Measurement Plans, intended to standardise how licensees move from permitting into construction across projects including the Track 1 clusters at Teesside’s Endurance store and HyNet in Liverpool Bay, and the Track 2 schemes Acorn and Viking. The guidance follows a rapid expansion of licensing interest, with developers having applied for more than 2 million acres of North Sea acreage, and lands against a backdrop in which the UK has committed up to £21.7 billion to its first CCS clusters and the Climate Change Committee has concluded there is no credible route to net zero by 2050 without carbon storage. That funding commitment is beginning to translate into project-level progress: Harbour Energy has secured £65.5 million in UK government development funding for its Viking CCS scheme in the Humber, a project designed to capture around 4 million tonnes of emissions annually from the early 2030s and potentially unlock up to £7 billion of wider investment, moving it closer to a final investment decision within the current Parliament.
Corporate climate targets, disclosure and technology
A wave of corporate reporting this period illustrates both the progress being made and the widening scope of what companies are expected to measure. British Land has adopted new science-based targets extending to 2050, aiming to cut operational carbon intensity by 78% by 2035 and 97% by 2040, alongside absolute emissions cuts of 46% by 2035 and 90% by 2050, building on a 47% reduction in operational carbon intensity already achieved since 2019. Revvity has disclosed material Scope 3 emissions for the first time in its 2026 Impact Report, alongside a 16% cut in Scope 1 and 2 emissions against a 2022 baseline. LG Electronics reported 2025 emissions already below its 2030 target, supported by the first Science Based Targets initiative (SBTi) validation of a South Korean home appliance maker’s product-use emissions target, while Logitech reported a 33% cut in Scope 3 emissions and a 49% cut in Scope 1 and 2 emissions, alongside expanded product repairability and recycled-material use. These disclosures arrive as the SBTi itself undergoes a governance refresh, reconstituting its independent Technical Council under a new chair and a staggered renewal model intended to preserve institutional continuity as the organisation rolls out Version 2.0 of its Corporate Net-Zero Standard, which will govern how companies may use carbon credits as part of beyond-value-chain mitigation from 2027.
Supporting infrastructure for this reporting burden is also expanding. Carbon management software provider SINAI has launched an AI-driven tool that automates the conversion of utility bills into audit-ready Scope 1, 2 and 3 emissions data, aimed at removing one of the most time-consuming steps in corporate carbon accounting. Insurer-facing technology group Davies has rolled out a claim-level carbon tracking tool for property insurers, built on Verisk’s independently assured Property Claims Carbon Calculator, to help the sector quantify the emissions embedded in repairs and materials. In Japan, Ricoh has increased its investment in sustainability software firm ASUENE, deepening a partnership that already spans corporate decarbonisation planning in Tokyo and a Taiwan-Japan carbon alliance aimed at small and medium-sized enterprises.
Industrial decarbonisation and fuel switching
Heavy industry continues to test practical routes to lower emissions. Rio Tinto has signed a five-year deal with Australian bioenergy firm SuperChar to supply bio pellets, made from locally grown bana grass, for its Gladstone alumina refineries, with trials suggesting the pellets could replace up to 30% of the coal currently used in refinery boilers and cut Scope 1 emissions by up to 90,000 tonnes of CO2 equivalent a year at full contract volumes. In Ireland, Breedon Group has cut emissions at its Dublin Port Bitumen Terminal by 25%, or around 470 tonnes of CO2 annually, by converting from gas oil to natural gas with new boilers and flue gas economisers. In Southeast Asia, the International ESG Association and POSCO International have launched a research partnership to apply biochar technology across Indonesian palm plantations, aiming to build a “Soil as an Asset” model that measures and expands soil carbon storage while creating a pathway to future carbon credits.
Carbon markets and credit integrity
Questions of credit quality and market structure have featured prominently. Research from MIT Sloan School of Management, analysing more than 7,200 transactions covering around 11% of the global secondary carbon credit market, found that buyer identity explains 62% of the variation in credit prices, with the largest buyers paying 16–23% less than other purchasers and companies with public climate commitments not necessarily paying more for higher-quality credits, a finding that raises questions about how well the voluntary market’s pricing reflects genuine climate value rather than negotiating power. Independent ratings agency BeZero Carbon has taken a step towards addressing that transparency gap by issuing a rare ex-post rating, based on verified delivery rather than forward projections, of BBB to Agreena’s soil carbon project spanning 1.6 million hectares of European farmland, confirming its performance matched pre-issuance estimates. Certification body Puro.earth has issued the world’s first verified credits from a biogas-based bioenergy carbon capture and storage project, in Norway, where CO2 captured from a wastewater treatment plant serving more than 800,000 people is piped into permanent offshore storage via the Northern Lights joint venture. In Oregon, the Hood River County Tree Farm has issued its first credits under the enhanced Core Carbon Principles label, based on extending timber rotation ages well beyond conventional harvesting cycles, and in Ethiopia, the Oromia Forested Landscape Programme has become the first initiative under the World Bank’s jurisdictional forest finance scheme to formally issue credits, with 12.4 million tonnes of verified reductions now available for sale. At the smaller end of the market, Canadian composting operator SusGlobal has taken cumulative sales from its Belleville organic waste project to 73,464 verified credits.
Government carbon markets and international cooperation
National and sub-national carbon pricing regimes continue to evolve in different directions. California’s cap-and-invest programme has channelled $15.5 billion into climate projects since 2014, generating an estimated $44.4 billion in cumulative cost savings and supporting more than 143,000 jobs, with a recently adopted extension through 2045 due to take effect in September. Taiwan’s environment ministry is meanwhile consulting on a grace period for first-time carbon fee payers and a mechanism allowing high leakage-risk sectors to offset liabilities using early domestic project credits, a calibration exercise being weighed partly against the implications of the EU’s Carbon Border Adjustment Mechanism for Taiwanese exporters. In New Zealand, a report from the Climate Change Commission has warned that the pace of emissions cuts must more than double to keep the country’s climate budgets and 2030 methane target within reach, even as it points to cost savings already available from electric vehicles, rooftop solar and industrial heat pumps. New Zealand’s international posture, however, is expanding: it has agreed a climate cooperation framework with the Philippines exploring Article 6 carbon market provisions, even as its own emissions trading scheme continues to exclude offset credits, while opening a domestic consultation on standards for its future carbon and nature markets. Singapore’s own Article 6 procurement programme has moved into its second phase, advancing pre-qualified suppliers towards detailed project proposals as the city-state builds on a first round that delivered 2.175 million tonnes of credits from projects in Peru, Paraguay and Ghana, and as its carbon tax rises from S$25 to S$45 per tonne this year en route to S$50–80 by 2030.
Taken together, these developments touch on several distinct areas: policy design in Europe and the UK, aviation and shipping compliance markets, corporate disclosure practices, and questions around credit quality and pricing.
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