P2N0 - Edition 42 - News And Views On The Drive Towards Net-Zero GHG Emissions

• The State of Energy Innovation 2026: On February 17, 2026, the International Energy Agency (IEA) published The State of Energy Innovation 2026 . The inaugural publication from the IEA on the state of energy innovation was published in 2025. The report emphasises the benefits that can be realised by policy settings that offer support to the private sector to develop and to promote technologies that are competitive economically and that contribute to energy security.

• AFOLU GHG emissions: One of the themes that is emerging in 2026 is the need for increased focus on the GHG emissions that arise from agriculture, forestry and other land use (AFOLU). As those devising policy settings have realised that which works to avoid, reduce and remove (ARR) GHG emissions across other sectors of economies, there appears to be a growing realisation that policy settings need to be developed to address GHG emissions arising from AFOLU; GHG emissions arising from AFOLU account for around 20% of global GHG emissions annually. The policy settings to address GHG emissions from AFOLU are distinct from carbon credit and offset initiatives, rather there is a need for policy settings to achieve ARR of GHG emissions across the AFOLU sector. In this context, the good folk at phys.org have produced an excellent article and accompanying infographic to provide a sense of GHG emissions arising from AFOLU globally (under phys.org, Most precise map yet of agricultural emissions charts a path to reduce hotspots ).

For those coming to AFOLU for the first time, the article is worth a read, and for those working in AFOLU sector, the publication is a good summary of the state of play.

• Electricity 2026, Analysis and forecast to 2030: On February 6, 2026, the IEA published Electricity 2026, Analysis and forecast to 2030 . The publication anticipates that demand for electrical energy globally will increase strongly to 2030, with annual average demand to increase by around 3.5% a year. The IEA emphasises the theme of the Age of Electricity in the publication.

The key points made in the Executive Summary of the publication are as follows:

• Emerging economies continue to drive growth in demand for electrical energy, and growth in emerging economies will account for around 60% of the increase in demand through 2030, including to respond to increased electrification and increased population growth and urbanisation;
• Demand for electrical energy is increasing, indeed it is accelerating, in developed economies, after 15 years of stagnation in increased demand;
• By 2030, it is forecast that half of the world's demand for electrical energy will be matched by nuclear and renewable energy capacity;
• Electrical energy output from nuclear energy generation capacity set a new record in 2025, and output is expected to continue to increase through 2030, for the most part, it is forecasted that the increase will arise in emerging economies;
• While the generation of electrical energy from coal-fired power generation will continue to fall as a percentage of output, through 2030, it will remain the largest source of electrical energy generation globally;
• Through 2030, for the most part, the increased demand for electrical energy is expected to be met by the development of new renewable, natural gas and nuclear power generation capacity;
• With the increased demand for electrical energy and the increased development of generation capacity to match demand, the need for investment in grid infrastructure augmentation, expansion and development has come into ever sharper focus; and The development of BESS capacity provides a significant source of short-term system flexibility.

Looking beyond 2030, IEA anticipates that GHG emissions from the generation of electrical energy will plateau at around 13.5 giga-tonnes of CO₂-e.

The publication is well-worth a read.

• EU continued dynamism:
• Review of the EU Carbon Market: During the first week of February 2026, there was a good deal of reporting in respect of the review of the EU carbon market, i.e., the emissions trading scheme (ETS) of the EU, including in respect of possible cessation of free allocated emission permits.

The EU ETS, established in 2005, places a price on carbon across the EU for corporations and organizations subject to it. The EU ETS applies in respect of around 40% of GHG emissions arising across the EU, with each emitter, to which the EU ETS applies, obliged to acquire a number of emissions permits equal to the mass of GHG emissions to which its activities give rise. Emissions permits are acquired by emitters either through primary auction market involving auctions undertaken by the EU or from the secondary carbon market in which emitters buy and sell emissions permits from each other. The revenue derived by the EU from the sale of emissions permits in the primary auction market is used by the EU to support the development of lower, low and no GHG emission technologies and projects.

Consistent with the carbon border adjustment mechanism (CBAM) on carbon leakage, the focus of the review of the EU ETS is to address carbon leakage, i.e., activities giving rise to GHG emissions being located outside the EU to avoid the application of the EU ETS, and, more broadly, to avoid what may be regarded as more stringent environmental and pollution standards of the EU compared to other countries. It is expected that the findings from the review of the EU ETS will be announced by the end of Q2 2026.

It would seem that the review has given rise to uncertainty in the secondary carbon market, impacting the price of emissions permits in the market.

• Methane voluntary compliance scheme: At the same time as the EU is reviewing the EU ETS, the EU is progressing the methane voluntary compliance scheme, with the publication of recommendations from the EC to suggest model provisions for the voluntary compliance scheme under the EU Methane Regulation . See Commission Recommendations on optional model clauses developed pursuant to Regulation (EU) 2024/1787 of the European Parliament and of the Council of 13 June 2024 on the reduction of methane emissions in the energy sector and amending Regulation (EU) 2019/942 .
• Continued discussion of CBAM: The discussion of CBAM continues, both as to the impact of it and practicalities of its implementation. The United Nations Economic Commission for Europe (UNECE) has published The Implications of the Carbon Border Adjustment Mechanism on the Energy Transition for Central Asia . The UNECE publication models the impact of CBAM. The publication concludes that: "For Central Asian countries, the EU CBAM presents a pressing external challenge for export orientated companies". In addition, the publication provides three recommendations, consistent with CBAM being here to stay. The publication is worth working through.
• Voluntary carbon removal methodologies set for EU: On February 3, 2026, the European Commission (EC) adopted the first carbon removals ¹ methodologies through a Delegated Act to operationalise the carbon removal section of the Carbon Removal and Carbon Farming Regulation (EU/2024/3012) ( CRFR ) .

To view the full article please click here.

Footnote

1.Carbon removals are innovative processes that capture carbon dioxide (CO₂) from the atmosphere and store it durably in geological, terrestrial or marine reservoirs, or in long lasting products.

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