Read our EU ETS response
Read our Innovation Fund response
Our main messages:
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Simplify the EU ETS by phasing out free allocation
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Aviation: put a seat belt on EUA supply
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Free allocation: switch from process to products
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Link indirect cost compensation to carbon-free electricity only
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Reform the Innovation Fund to:
– Better assess the carbon footprint of electricity use
– Reserve grants to technology risk
– Reserve scale-up subsidies to poorly capitalised sectors -
Market Stability Reserve: reduce the reinjection rate as well as thresholds
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Keep carbon removals out of the ETS
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Do not shift CCU carbon accounting down value chains
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Limit linking with other ETS
Read our responses on the European Commission’s website:
Related publications
May 25th 2023
More on the EU ETS and Climate Financing
Don’t Ruin the EU ETS! Joint NGO Letter to the European Council
Ahead of the March European Council meeting, we’ve joined a group of 35 civil society organisations calling on EU leaders to protect the integrity of the EU Emissions Trading System.
ICC reform and expansion risks diverting ETS revenues from real climate action
Sandbag and 14 other organisations urge the European Commission to reform, not expand, the ETS Indirect Cost Compensation scheme — warning that current proposals risk diverting climate funding into untargeted fossil subsidies.
State Aid for Indirect Carbon Costs: Reform before extending!
Sandbag responds to the EU’s consultation on State aid for Indirect Carbon Costs (ICC), calling for targeted reforms to better support clean electricity, avoid windfall profits, and align with the Carbon Border Adjustment Mechanism (CBAM).
Heat up industry, not the climate!
The European Commission has set out proposed terms and conditions for its auction on electrified /renewable industrial heat under the Innovation Fund (IF). We support the IF’s acknowledgment that indirect emissions are linked to the timing of electricity consumption rather than the source of electricity used. However, although it claims an intention to limit electricity use at hours of high marginal emission intensity, we are concerned that the proposed terms might lead to the opposite and significantly limit the scheme’s climate benefits.
Simulating CDR in the EU ETS: The Risks of Premature Integration
Sandbag has developed an ‘ETS + CDR simulator’ to help visualise and explore the impact that CDR integration could have on the ETS, assess the demand it could create for CDR, and highlight the potential consequences of this demand. This report uses the simulator to explore how different integration pathways could affect emissions reductions, carbon prices, and potentially lead to negative externalities.
Open letter against international credits integration into the EU 2040 climate target and NDC
A joint NGO letter calls on the EU to exclude international carbon credits from the 2040 target. The signatories urge a domestic-only approach to protect climate credibility and ambition.
Auction for industrial heat electrification: A positive step, but mind the induced emissions!
Industrial heat electrification is a key strategy for decarbonising energy-intensive industries by replacing fossil-based heat. We welcome the European Commission’s initiative to launch an auction to electrify industrial heat, while emphasising the need for careful design to prevent unintended increases in emissions due to electricity grid dynamics.
In or Out: What’s best for carbon removals and the EU ETS?
What will the future of the EU Emissions Trading System (ETS) look like as the emissions cap heads towards zero? Is integrating carbon dioxide removals (CDRs) into the ETS a solution to help the EU achieve its climate goals? Or would they compromise the integrity and functioning of the system? These questions are at the forefront of the Commission’s mind as they review different options for the future of the ETS ahead of the 2026 revision.
A closer look at 2023 emissions: steelmaking caused a quarter of industry pollution
This brief analyses 2023 emissions under the EU Emissions Trading System (EU ETS), using the latest data available from the EU Transaction Log (EUTL) . It particularly focuses on the iron and steel sector.
Feedback on the inclusion of permanent CCU in the EU ETS
Sandbag urges strict safeguards on permanent CCU within the EU ETS, calling for clear permanence standards, transparent product reviews, and faster removal of free allowances, while stressing CCU must complement (not replace) direct emission reductions.