Blog posts
The EU CBAM: a two-way street between the EU and Africa
The Carbon Border Adjustment Mechanism CBAM is often misunderstood as a trade policy whereas it is actually a climate policy. Its only objective, as stated in Article 1 of the CBAM Regulation, is to replace the current system of free allocation of emission allowances to EU-based manufacturers under the EU carbon market.
Electrification or electrical decarbonisation? We need both!
We agree with the European Commission’s general diagnosis that increasing the share of electricity in overall energy consumption is necessary to achieve deep decarbonisation. However, it is not sufficient. If overall energy use increases, or if electricity generation does not decarbonise rapidly, then electrification may fail its decarbonisation role.
Sandbag’s Response to the CBAM Calls for Evidence
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.
CBAM impact on US trade: an analysis
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.
The EU CBAM: A Two-Way Street to Climate Integrity?
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.
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.
Strengthening the CBAM — by default
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.