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.
Category: Climate Financing
The EU ETS at a Crossroads
Sandbag’s latest submission to the EU ETS and Innovation Fund consultation calls for clearer rules on free allocation, stronger criteria for funding innovation, and safeguards against misleading carbon accounting practices.
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.
Fixing the Innovation Fixation
The EU’s Innovation Fund, launched in 2018, is the EU’s programme for funding cutting-edge low-carbon technologies. To be eligible, projects must be, according to the European Commission, highly innovative, cost-efficient, mature, scalable, and have a significant emission reduction potential. The Innovation Fund is financed using revenues from the Emissions Trading System (ETS), under which certain sectors have to buy emission permits (allowances) in order to be allowed to pollute.
Lost opportunity of carbon market reform leaves a lot to fix in ancillary laws
Sandbag warns that EU carbon market reforms raise ambition but fail to fix structural flaws: free allocation is phased out too slowly, CBAM coverage remains partial, benchmarks still reward polluting processes, and circularity is sidelined-risking inefficiency, distortions, and missed decarbonisation opportunities
Spend Smarter: A bit of advice on climate innovation financing
Report | Spend Smarter: A bit of advice on climate innovation financing Download the report Currently, most EU-managed climate innovation subsidies go to innovation (through the Innovation Fund). The EU’s Innovation Fund, launched in 2020, is one of the world’s...
Innovation’s Black Friday
The EU’s Innovation Fund, launched in 2020, is one of the world’s largest programmes funding innovative low-carbon technologies. The fund can cover up to 60% of a project’s costs, mostly upfront with few strings attached. Earlier this month, the IF’s third large-scale...
RePowerEU financing plan shows how market makes decarbonisation harder
Read Sandbag’s feedback to RePowerEU on the European Commission’s website. We welcome immediate action to reduce Europe’s dependency on Russian fossil fuels in the face of its aggression against Ukraine. However, the European Commission’s proposal reflects the...
RePowerEU: Fiddling with the Carbon Market puts the Climate at Risk
[See new analysis with EC, EP and Council proposals] The European Commission’s plan to raise revenues from the Emissions Trading Scheme (ETS) increases the risk to exceed the market’s emission limit. On May 18th the European Commission announced a plan to use Europe’s...
EU ETS Revenues: Who Receives What? The Trillion Euro Question
This brief gives an analysis of the EU ETS Revenues, and aims to highlight, under various scenarios, how much is allocated to industry, Member States, and the Union’s budget respectively. The European carbon market, currently under review, will likely generate...







