Sandbag has submitted responses to the EU’s CBAM calls for evidence, addressing emissions reporting, adjustment for free allocation, and carbon prices paid abroad. We highlight risks such as loopholes and unequal treatment, and propose practical solutions to strengthen CBAM’s effectiveness and fairness.
Sandbag’s September 2025 research note explores the impact of the EU’s CBAM on US exports. It finds that even with expanded scope, the financial impact remains marginal, and US carbon pricing could turn net costs negative.
Supported by the Konrad-Adenauer-Stiftung, Sandbag’s report examines the impact of the EU’s Carbon Border Adjustment Mechanism (CBAM) and the gradual removal of free allowances on third-country exporters. The joint implementation is expected to raise production costs for both EU and non-EU producers, leading to higher prices for CBAM-covered goods in the EU.
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).
The consultation aims to address concerns that the CBAM has loopholes that could distort competition between products manufactured in the EU (covered by the EU ETS) and imported goods. Our response sets out proposals for how the design of the CBAM could be improved in these regards.