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Welcome to Sandbag’s April newsletter!
Sandbag continues to deepen its work on the CBAM, the EU ETS, and industrial decarbonisation.
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In this edition, we share insights from our latest position paper, technical briefs, and our work on the CBAM's impact on exports from Algeria and South-East Asia. We also highlight our ongoing advocacy to strengthen the EU ETS framework.
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Our latest updates
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Website Updates
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We are happy to announce that we have updated our website and we invite you to explore the new design! Stay tuned for new pages, e.g. on our impact and our advocacy.
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CBAM
Defending the CBAM
On 4 January, the French Prime Minister asked to temporarily withdraw fertilisers from the list of CBAM-covered goods to fight off inflation of fertilisers in Europe. A few days later, the Trade Commissioner Maroš Šefčovič followed by proposing to remove fertilisers as a first application of the proposed Article 27a.
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Sandbag promptly reacted by showing why this was the wrong approach. On 11 February, we published a more in-depth analysis on the drivers of fertiliser price increases. Our analysis shows that the CBAM is not to blame, as it will only have a small impact in the short term. This note was circulated extensively and quoted by MEP Mohammed Chahim, rapporteur for the CBAM at the European Parliament, who opposed this use of Article 27a. On 3 March, the Climate Commissioner Wopke Hoekstra ruled out the suspension of fertilisers, providing some much needed clarity for the fertiliser industry.
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However, the fight is not over as the European Parliament and Council are still on the case. The Commission’s proposed amendments (including Article 27a, but also on circumvention and exports) are currently being reviewed by Parliament. In a position paper, we proposed that instead of a short-term exemption of fertilisers, the EU should explore the long-term addition of agricultural products to the list. CBAM, not less, is the solution.
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CBAM and Carbon Pricing in South-East Asia
(13 April 2026)
This report by Carbon Market Watch, with analysis by Sandbag, examines potential CBAM costs for Japan, South Korea, Vietnam, Indonesia, and the Philippines, based on their trade exposure, production outlooks, and progress toward implementing a domestic carbon price signal.
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opt-in solution to CBAM circumvention and complexity
(7 April 2026)
The Commission’s legislative proposal to amend the CBAM could be improved, to prevent circumvention. We propose an opt-in mechanism for using systematic default values, and an assessment of other extensions to agricultural products.
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The EU CBAM gives a boost to Algeria’s iron exports
(20 February 2026)
On 16 and 17 February, Sandbag contributed to a conference in Algiers hosted by the German development agency GIZ and the Algerian Ministry of Hydrocarbons and Mines. This conference brought together relevant stakeholders to share information and address, e.g., potential issues with CBAM’s implementation, as well as discuss sector specific impacts of the CBAM.
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We held a workshop on the impact of the CBAM on Algerian iron and steel exports to the EU. We find that while the overall impact of CBAM is limited for Algeria, it will be negative for long steel products and beneficial for direct reduced iron.
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CBAM and Fertiliser Inflation in 2026: The facts behind the numbers
(10 February 2026)
Sandbag’s technical brief analyses how little the EU’s CBAM is likely to affect fertiliser prices in 2026. Estimates suggesting that the EU’s Carbon Border Adjustment Mechanism (CBAM) could increase fertiliser prices by up to 30% have brought a central question into focus: how significant is the inflationary impact likely to be?
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was also picked up by MEP Mohammed Chahim here and here.
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EU ETS
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Defending the EU ETS
The EU ETS is facing growing political pressure. Proposals to weaken the ETS, delay the phase-out of free allowances, or suspend the ETS altogether risk undermining investor confidence, slowing electrification and circularity, and reducing public revenues from carbon auctions. This comes at a time when policy stability is essential to deliver Europe’s climate and competitiveness goals.
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In February, the Italian government raised alarm about the high electricity costs incurred by the country’s industry, passed a decree to let the State reimburse the carbon costs paid by the country’s CCGT gas power plants, and, ahead of a Council meeting on 19 March, asked for the immediate suspension of the EU ETS pending a solution to these high costs.
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Sandbag found out that Italy’s decree replicates a mechanism that is readily available in the EU ETS called indirect cost compensation (ICC). ICC is designed to shield industrial electricity users from their carbon costs. Our analysis found that while Italy's decree replicates the ICC, the country is in fact under-using the existing mechanism. Luckily, the Council did not suspend the EU ETS.
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Other attacks on the ETS have started to cause real damage to the system’s integrity when the Commission proposed to reform the system’s Market Stability Reserve. reaction to this reform here, which we produced after running simulations on its impact.
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We expect more damage to the ETS may be on the way, as some key Member States and MEPs have asked to raise the system’s cap and generally reduce carbon prices as a false (and counter-productive) solution to the oil and gas crisis.
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Fund: High potential, but slow progress and little impact on emissions reduction
(23 March, 2026)
Citing Sandbag’s report from 2022, a report by the European Court of Auditors notes that the rating system rewards over-optimistic estimates. As this methodology is used for two of the five award criteria, it is a serious structural flaw.
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Don’t Ruin the EU ETS! Joint NGO Letter to the European Council
(11 March 2026)
Ahead of the European Council on 19–20 March, we’ve joined a coalition of 35 civil society organisations urging EU leaders to safeguard the EU Emissions Trading System.
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CCS/U
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Chemicals and CCS/U: Exploring the role of carbon capture in the sector’s transition to ‘circularity’
(2 March 2026)
Sandbag’s new technical brief explores the potential role of carbon capture, storage and/or utilisation (CCS/U) for Europe’s chemicals sector. With the European chemicals industry positioning itself as “the carbon managers”, this brief examines what role CCS/U will realistically play in the sector, looking at both production and end-of-life stages.
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Sandbag in the News
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Think tank suggests lower, country-level default values to ease EU CBAM burden
(9 April 2026)
Carbon Pulse cited Sandbag’s latest position paper on the CBAM, referring to Sandbag’s proposal on the systematic use of default values.
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Country-, product-specific rules could sharpen EU toolbox against CBAM circumvention: think tank
(9 April, 2026)
Contexte cited Sandbag’s latest position paper on the CBAM, referring to Sandbag’s proposal on the systematic use of default values.
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EU sets initial price for carbon border tax
(7 April, 2026)
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Ends Europe cited Sandbag’s latest position paper on the CBAM, referring to Sandbag’s proposal on the systematic use of default values.
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Carbon capture only a niche fix for EU chemicals sector, think tank says
(2 March 2026)
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Carbon Pulse reviewed Sandbag’s latest technical brief on Chemicals and CCS/U.
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FEATURE: EU weighs softer ETS benchmarks to shield industry from higher carbon costs
(24 February 2026)
Carbon Pulse interviewed Sandbag for its feature on EU ETS benchmarks. With the European Commission about to update the free allocation benchmarks, industry groups are piling up pressure to get them as high as possible.
Although changing the methodology that determines benchmark values is not possible under the current EU ETS Directive, there is some leeway in determining which industrial plants to include in the calculation. We are already signs of strain in this process, with hydrogen production being a notable example.
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You can read all of our publications on our website here.
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We want to hear from you!
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Do you have feedback on our newsletter? Let us know!
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Stay informed on Europe’s decarbonisation journey — follow Sandbag for the latest analysis, insights, and policy updates.
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