The European Commission has been running a public consultation and call for evidence on the design of the EU ETS and the Innovation Fund. Both are open until 8 July 2025. Questions include the treatment of aviation, shipping, indirect cost compensation, the CBAM, extension to municipal waste, carbon removals and carbon utilisation.
Our main messages:
-
Simplify the EU ETS by phasing out free allocation
-
Aviation: put a seat belt on EUA supply
-
Free allocation: switch from process to products
-
Link indirect cost compensation to carbon-free electricity only
-
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
-
Keep carbon removals out of the ETS
-
Do not shift CCU carbon accounting down value chains
-
Limit linking with other ETS
Read our EU ETS response
Read our Innovation Fund response
8 July 2025
Read More:
Better safe than sorry: regional carbon pricing as a safety-net policy
Sandbag spoke in favour of a regional carbon price at the French government event last week
ETS reform completed – But alignment with the Paris Agreement will take more work
Today, the EU Council has finally endorsed the ETS reform, the final stage before it becomes law – but already, further reform is being discussed.
Minding the gap requires building bridges
The moment when 196 countries signed on to this Agreement and the ratification threshold was met in 2016, the Requiem for inappropriately low carbon prices started playing in the background.