Scaling the Industrial Transition 2025

Global carbon reduction policy landscape FIGURE 4 India India aims to decarbonize the steel sector via production-linked incentives (PLI), green hydrogen pilots and standardized green steel taxonomy. Japan Currently a voluntary ETS aiming for 46% GHG reduction by 2030. It will transition to mandatory ETS by 2026. EU CBAM: expanding coverage and refining emission methodologies to curb carbon leakage. ETS and ETS2: extending carbon markets to maritime, buildings, road transport and small industries, with tighter monitoring and methane reduction mandates. ReFuelEU: mandates rising use of SAF: 2% by 2025 and 70% by 2050. FuelEU: caps GHG intensity for large ships, targeting 80% reduction by 2050. EU Methane Regulation: enforces strict MRV, leak detection and bans routine flaring/venting in oil, gas and coal sectors. China China ETS: Expanded to cement, steel and aluminium sectors covering an extra 3 billion tonnes of CO2e. Revision of Marine Environment Protection Law (MEPL), Stage 4 fuel efficiency standards for heavy-duty vehicles, and launch of China Certified Emission Reduction (CCER) programme – China’s national voluntary carbon market linked to the ETS. Brazil Brazil finalized a regulated carbon market law in 2024, moving towards implementation. National Agency of Petroleum, Natural Gas and Biofuels (ANP) resolution (update to RenovaBio): Expands biofuel credits, incentivizing faster low-carbon fuel adoption. Future Fuel Law: Mandates escalating ethanol, biodiesel and SAF blend targets. United States Provides tax credits for clean hydrogen production (45V: up to $3/kg), carbon capture and storage (45Q: $85/ton) and clean fuels.* IMO Combines mandatory marine fuel standard and GHG emissions pricing – originally planned to be enforced from 2027, now postponed until 2028. Australia Safeguard Mechanism: mandates large emitters (>100,000 tCO2e/year) to cut emissions 4.9% annually. Climate related disclosures: mandatory ISSB-aligned climate reporting for large entities from January 2025. United States IRA 45V and 45QIMO IMO Net-zero Framework Japan Japan GX-ETSChina China ETS Amended MEPL Trucking Standards CCER Brazil Regulated carbon market ANP Resolution No. 984/2025India Green Steel MissionEU CBAM ETS ETS2 ReFuelEU FuelEU EU Methane Regulation Voluntary Mandatory All sectors Aviation Shipping Trucking Cement Steel Aluminium Primary chemicals Oil and gasFuture Fuel LawAustralia Australian Safeguard Mechanism Climate-related financial disclosures *One Big Beautiful Bill, passed July 2025, accelerated phaseout – moving construction deadline from 2033 to 2025 for full credit eligibility. Sources: US Department of Energy; US Energy Information Administration; Presidency of the Republic of Brazil; Mayer Brown; World Biogas Association; International Maritime Organization (IMO); European Commission; International Energy Agency (IEA); International Carbon Action Partnership; International Council on Clean Transportation; China Briefing; Ministry of Steel India; Australian Government, The Treasury; Asia Society. Scaling the Industrial Transition: Hard-to-Abate Sectors and Net-Zero Progress in 2025 18