European Roundtable on Climate Change and Sustainable Transition
ERCST
ERCST is a Brussels-based think-tank which provides rigorous intellectual analysis of EU and international climate change developments and policies, by using the experience and research of its staff, as well input from stakeholders who participate in its activities.
ID: 971029940352-73
Lobbying Activity
Response to Revision of the CO2 emission standards for cars and vans
10 Oct 2025
By de facto focusing only on pure electrification, the Regulation has forced the EU industry to compete in sectors where it does not enjoy a comparative advantage. This has led to inefficient decarbonisation and unintended deindustrialization in the EU auto sector. Broader compliance options, such as credits for low-carbon materials and fuels, would enhance effectiveness by aligning with market realities and enabling a more flexible transition. Current tailpipe-only focus limits compliance flexibility and places burdens on vehicle manufacturers. These rules overlook low-carbon alternatives and force an over-reliance on full electrification. This approach is misaligned with the lifecycle-based methodologies used in the ETS, RED, FuelEU Maritime, and ReFuelEU Aviation frameworks. To enhance coherence between the EU CO2 emission standards for cars and vans and other EU frameworks, a lifecycle-based approach should replace the tailpipe-only focus. This would align incentives for low-carbon fuels, electricity, and material production emissions, upholding technology neutrality and market efficiency while fostering cross-sector decarbonization and investment. Currently, incoherence arises because some legislations (RED, ETS, FuelEU, ReFuelEU) recognize the bio-component of fuels, whereas in the car CO2 standards this contribution is excluded. To encourage innovation and cost-effective decarbonisation, a voluntary crediting system should be introduced for REDcompliant fuels and low-carbon materials, using lifecycle assessment-based credits recorded in a Union-wide database. For SMEs, verification and reporting requirements should be simplified to reduce administrative costs. Lifecycle-based credits should also be introduced for manufacturers using green steel, low-carbon metals, plastics, and battery materials. This reduces compliance costs and supports job-heavy regions like Germany's steel areas. Measures should diversify supply chains, fuels, and innovation pathways while enhancing circularity and workforce readiness. Diversifying critical materials through the European Critical Raw Materials Act, expediting permitting processes, and fostering strategic partnerships can mitigate dependency on limited resources. Fuel diversification, encompassing RED-compliant fuels and hydrogen, supports legacy fleets and enhances energy security. Hydrogen, particularly in fuel cell vans, also plays a significant role in decarbonizing heavy-duty and long-range transport sectors. Plug-in hybrid electric vehicles and range extender electric vehicles should be viewed as a long-term solution where they can be supplied with renewable fuels. This allows diverse pathways to decarbonize road transport, fostering competition and innovation while addressing barriers like charging infrastructure gaps and range anxiety. Furthermore, an ICE vehicle using renewable fuels has a similar or even lower carbon footprint than a BEV. An ICE car fuelled exclusively by carbon neutral fuels is a carbon neutral vehicle and should be considered as such in the Regulation - the possibility developing a class of vehicles running exclusively on CNF, complementary to ZEVs, should be considered in this regard. Renewable and synthetic fuels, such as biofuel, biogas, RFNBOs, and RCFs, should play a role in EU CO2 emission standards for cars and vans. The mechanism should be designed as a lifecycle-based crediting system integrated into the Regulation, allowing OEMs to choose diverse decarbonization options (e.g., BEVs, PHEVs, or ICEs with renewables) through tradable credits that incentivize cost-effective GHG reductions. The EU should not keep the 2035 CO2 emission targets for cars and vans unchanged. Adjusting targets to include flexibility for low-carbon products and renewable fuels would better align with market realities, ensuring a more sustainable transition.
Read full responseResponse to Carbon price paid in a third country under the carbon border adjustment mechanism (CBAM)
25 Sept 2025
Previous work by ERCST on Crediting Carbon Prices under the CBAM (see link: https://ercst.org/crediting-carbon-prices-under-the-cbam/) has laid important groundwork in exploring how carbon pricing and crediting might interact under the Carbon Border Adjustment Mechanism. However, in light of recent developments, two key points merit further discussion: carbon credits and compensation mechanisms. ERCST further develops its thinking by focusing on these two specific issues in the attached file.
Read full responseMeeting with Bruno Tobback (Member of the European Parliament)
15 Sept 2025 · Macro Economic Implications of the 2040 Target
Response to Industrial Decarbonisation Accelerator Act
16 Jun 2025
Please find attached ERCST's feedback to this public consultation
Read full responseMeeting with Gerassimos Thomas (Director-General Taxation and Customs Union)
8 May 2024 · Hybrid meeting - CBAM and carbon leakage discussion
Response to Amendment of the free allocation rules in response to the ETS revision/Fit For 55
18 Dec 2023
ERCST welcomes the opportunity to participate and contribute to the on-going consultation on the Free Allocation Regulation (FAR), following the revision of the EU ETS Directive. The FAR is a key instrument to support the decarbonisation of the EU economy. Providing the right incentives is key to achieve Net Zero and to guarantee the survival of EU industry in a competitive and worldwide environment. ERCST recognises the potential of this tool to protect against the risk of carbon leakage. Until a level playing field is achieved on carbon pricing at international level, free allocation could be targeted to those sectors with risk of dislocation (operations and investment) due to a higher stringency of the climate policy. FAR should seek an approach based on product rather than fallback benchmarks, when feasible. Circularity, recycling and/or unavailability of biomass, transparency, and pre-defined values are parameters that could be considered when defining benchmarks. Thus, promoting understanding, clear rules, harmonisation, and a level playing field. ERCST would like to provide feedback on the following issues: NACE/PRODCOM/CN classification. Conditionality of free allocation on energy audits. Calculation of HAL. Update of free allocation reference values for process emissions. Conditionality of free allocation on climate neutrality plans. New definition for the production of hydrogen. Please find ERCST's feedback attached.
Read full responseResponse to Carbon capture utilisation and storage deployment
28 Aug 2023
The European Roundtable on Climate Change and Sustainable Transition (ERCST) welcomes the opportunity to participate in the European Commissions public consultation for industrial carbon management carbon capture, utilisation and storage deployment. Please find attached the feedback from ERCST.
Read full response7 Aug 2023
ERCST welcomes the opportunity to participating in and contributing to the on-going consultation on the Innovation Fund, following the revision of the EU ETS Directive. The Innovation Fund (IF) is a key instrument to support the decarbonisation of EU economy. Providing the right incentives is key to deploying low carbon technologies required to achieve Net Zero. As a member of the Innovation Fund Expert Group, the ERCST recognises the potential of this tool to trigger economic change among participants, setting the frontrunners for the deployment of key technologies supporting climate ambition goals. Among the proposed Delegated Regulations positives: ERCST considers that re-defining small and large-scale projects sizes and introducing a new category for medium sized projects is a welcomed experiential gain increasing efficiency. Participation in a two-stage application procedure can provide a higher degree of flexibility. Upholding the integrity of the Single Market. Extension and access of projects to benefit from the Project Development Assistance (PDA). Among the proposed Delegated Regulations areas for improvement: ERCST questions the fitness of the competitive bidding mechanism in the context of the nascent hydrogen market. The capacity of the European Commission to determine (with Member States only) additional criteria for the ranking of proposals gives room to discretion, potentially hindering transparency. The technical assistance criteria for Member States with a low level of participation can be improved to further reflect reality. The Innovation Fund should disburse funds earlier in the projects development process for successful applicants. Incorporating additional factors to be taken into account during the assessment of the Innovation Fund's functioning would be important. You can find attached full explanation on ERCST's positioning.
Read full responseResponse to The reporting obligations during the transitional period of the carbon border adjustment mechanism.
11 Jul 2023
Please find attached comments of the European Roundtable for Climate Change and Sustainable Transition (ERCST)
Read full responseMeeting with Simona Constantin (Cabinet of Vice-President Věra Jourová)
6 Mar 2023 · Green transition, sustainable corporate governance
Meeting with Simona Constantin (Cabinet of Vice-President Věra Jourová)
1 Feb 2023 · Sustainable Corporate Governance
Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and European Environmental Bureau and
14 Oct 2022 · ETS
17 Jun 2022
ERCST welcomes the opportunity to provide our views on the proposed Delegated Act.
The European Commission is envisaging a hydrogen economy where regulation rather than markets is playing the key role in the development of the Hydrogen market. The amount of renewable electricity required to produce RFNBOs will depend on the level of ambition of targets and incentives set in the hydrogen regulatory framework. In other words, a hydrogen regulatory framework with focus on just one specific technology (renewables) may increase the scarcity of renewable electricity and see usage that is not necessarily the most economical and ecologically efficient.
Hydrogen deployment should aim to decrease emissions without unconditionally promoting one specific technology (renewables). A technologically neutral approach would support a faster ramp-up of the hydrogen market by providing the volumes required at affordable prices to the market demand side, especially to sectors where hydrogen has the highest emissions’ abatement potential. These sectors need hydrogen that is clean, affordable, reliable (24 hours a day, 7 days a week) in sufficient quantities, of requisite quality, rather than green, blue, or pink hydrogen.
The proposed Delegated Act stablishes that if the electricity feeding the electrolyzer cannot be accounted as 100% renewable according to the provisions of the first delegated act, there is still the possibility that at least some share of the hydrogen produced can be accounted either as renewable or low carbon hydrogen.
However, we reiterate that this delegated act is not enough to cover all the different hydrogen production processes other than from renewables, excluding biomass. The definition for low-carbon hydrogen is incomplete and the necessary clarification should have been published at the same time as the methodology for RFNBOs and recycled carbon fuels. If methodologies for both renewable hydrogen and low-carbon hydrogen had been published together, this would have provided greater clarity for investments and reduced regulatory risk.
Need for clarification:
Further clarification should be provided as to:
• How to understand this proposal in the absence of the Delegated Act stablishing the GHG emissions methodology for low-carbon hydrogen? Particularly, given that the methodology for RFNBOs includes some provisions to assess the GHG emissions of electrolytic hydrogen produced through nuclear electricity. The methodologies should be coherent with each other, however it is very difficult to assess this coherence because the Delegated Act for low-carbon hydrogen has not yet been published.
o Paragraph 6 of the Annex mentions that where the number of full load hours the electrolyzer is producing is equal or lower than the number of hours in which the marginal price of electricity was set by RES or nuclear RFNBOs and recycled carbon fuels, electricity shall be attributed zero GHG emissions.
• How this delegated act interacts with the delegated act on additionality?
o The delegated act on additionality establishes that electricity from the grid can be counted as fully renewable if the electrolyzer is located in a bidding zone where the average proportion of RES electricity exceeded 90% in the previous calendar year. The delegated act on methodology states that in line with art 27 (3) of the RED, the share of RES electricity as measured two years before the production of the RFNBO could be used to determine the number of hours where the electrolyzer connected to the grid could produce an RFNBO.
• How can it be assured this additional flexibility will not lead to double counting?
Read full responseResponse to Revision of EU rules on Gas
12 Apr 2022
The proposed hydrogen and decarbonized gas package outlines a vision to decrease emissions in the gas sector. The fundamental view should be that technology neutral market driven approaches are the first choice, with other policies and measures to be considered only if there are compelling reasons. Given the level of state intervention in the economy through the EGD and the Fit for 55 package, any additional intervention should need to be carefully weighted and considered. There is still room for improvement in the package as some questions regarding its implementation, price affordability and impact on businesses and society remain unanswered. Decarbonised hydrogen is a promising approach to decarbonization but not without uncertainties. Fundamental issues need to be still defined and they will determine the success of hydrogen.
1. Financing of hydrogen networks and cross-subsidisation
The hydrogen economy will require extraordinary public and private investments; however, resources are limited. Initially hydrogen will develop in clusters and, therefore, the development of an extensive hydrogen dedicated transportation infrastructure, although important, is not an immediate priority. Networks will not develop without a functioning hydrogen market. Therefore, the priority should be on supporting the development of the market with a greater focus on both hydrogen production and demand.
The proposed Regulation establishes that if a network operator provides regulated services for gas and hydrogen it will have to do it through separated RABs, meaning network operators will not be able to spread costs across a larger network users, offering more attractive tariffs. However, according to Art. 4 of the proposed Regulation, a member state may allow financial transfers between regulated asset bases. Besides that, the Commission acknowledges in the recitals of the Regulation that “a limited form of cross-subsidisation would contribute to an investment climate supportive to the EU’s decarbonization objectives during the initial phase of network development”.
As the role of hydrogen will differ between European countries, cross-subsidies should not be allowed between different Member States. A national approach to cross-subsidies subject to conditions of proportionality, transparency and limited in time should be seen as acceptable.
2. Blending
The proposed Regulation introduces a 5% allowed cap (without setting a blending obligation) for hydrogen blends at cross-border points, which TSOs must accept. The discussion on blending has many angles: political, economic, environmental, technical or administrative, which are very difficult to reconcile. Member States and various players in the hydrogen value chain have diverging views on this issue.
One example is the tension between the fact that blending of gas and hydrogen provides an economic incentive towards decarbonization but it also hampers the direct use of hydrogen in industrial applications which require a very high purity. The 5% blending cap is a balanced compromise between those needs.
3. Governance
The adoption of an integrated approach to governance benefitting from potential synergies of gas, electricity, and hydrogen networks is an approach that needs to be seen in a positive light. The draft Regulation puts forward the creation of a European Network of Network Operators for Hydrogen (ENNOH) which, among others, will be tasked with the development of network codes, the adoption of ten-year network development plans and coordination with ENTSOG and ENTSO-E. ERCST believes that the establishment of an independent governance framework for hydrogen will help to develop the market, meeting hydrogen users’ needs.
In attachment, we provide comments on additional elements of the package and a more comprehensive answer to the issues raised above.
Read full responseResponse to Revision of EU rules on Gas
12 Apr 2022
The fundamental view should be that technology neutral market driven approaches are the first choice, with other policies and measures to be considered only if there are compelling reasons. Given the level of state intervention in the economy through the EGD and the Fit for 55 package, any additional intervention should need to be carefully weighted and considered. There is still room for improvement in the package as some questions regarding its implementation, price affordability and impact on businesses and society remain unanswered. Decarbonised hydrogen is a promising approach to decarbonization but not without uncertainties. Fundamental issues need to be still defined and they will determine the success of hydrogen.
One of these issues is the end uses of hydrogen and this will impact the estimates about the future demand for hydrogen . For illustration purposes one example is whether hydrogen is to be used beyond the hard to abate sectors, including heating, which is supported only by some Member States. Some see a broader use for hydrogen, some see a more targeted approach. Given such fundamental gaps, it is probably wise to avoid rushing into overregulation at this stage.
In the proposed hydrogen and gas package, the European Commission has coped with uncertainty by designing a flexible regulatory framework with a less regulated set-up for the period before 2030. This is a positive approach as we should not overregulate markets, and this will translate into several more concrete positions. We believe in a market driven approach to decarbonization, and market needs more than one solution on the table.
1. Hydrogen definitions and certification
Despite a technology neutral approach to low-carbon hydrogen, the definition itself is not complete. In particular, the proposed Directive refers to the 70% emission reductions threshold without specifying neither the scope of emissions covered nor the fossil fuel’s comparator the threshold is referring to. The draft Directive indicates that this matter and the measurement methodology will be clarified in a delegated act which will be published by the end of 2024.
The industrial investment cycle for some sectors seen as users of decarbonized hydrogen is on average 15 years and the decarbonization targets put forward by the Commission require immediate investment decisions. A clear and stable regulatory framework is essential to guide those decisions. Therefore, a swift clarification of a definition of low-carbon hydrogen is urgently needed, preferably in the articles of the Directive, considering delays in the publication of other delegated acts within the framework of the RED II.
A certification system for low-carbon hydrogen based on the principles laid down in the Renewable Energy Directive covering both domestic and imported production should be seen in a positive light. This system should specify the precise amount of lifecycle GHG emissions per ton of hydrogen making sure market players can relly on a trustworthy and reliable accounting method. Lack thereof may hamper the development of the market. Therefore, it important that the measurement methodology for lifecycle GHG emissions is developed quickly.
2. Unbundling
As the hydrogen market is in an initial stage of development with limited number of players, its growth requires economic incentives offered by economies of scale and scope. Therefore, we see merit in allowing certain degree of flexibility in approaching unbundling until 2030.
3. Incentives
During the transition the EU should favour an EU ETS driven, technology neutral approach to incentives, where all decarbonized hydrogen production pathways get the same level of support.
In attachment, we provide comments on additional elements of the package and a more comprehensive answer to the issues raised above.
Read full responseMeeting with Jens Gieseke (Member of the European Parliament) and AEGIS Europe
6 Apr 2022 · Austausch zur EU-Umweltpolitik
Meeting with Jens Geier (Member of the European Parliament, Rapporteur) and EUROGAS and Gas Infrastructure Europe
17 Mar 2022 · Exchange on the gas market directive
Response to Carbon Border Adjustment Mechanism
28 Oct 2021
The CBAM as proposed is pragmatic – a sensible approach given the political and economic challenges facing the EU. It shows the art of the possible and is a tool to get the EU to a high universal carbon price. The two critical issues that will be central in the ensuing political debate are the pace at which free allocation is removed without having had an opportunity to test the CBAM under real world conditions, and the lack of any provisions for exports.
At the same time, that sensibility stands in contrast to the urgency of decarbonizing the EU’s materials-producing sectors, the ambition of the EU’s climate target, and the mitigation needs. It will be important that the process of finalizing the legislation not exacerbate that contrast.
For the CBAM to be truly effective over the longer term as a tool to enable the pace and scale of European climate policy ambition set out with the European Green Deal, it will have to offer a convincing solution to issues that have been deferred or left unaddressed in the current proposal:
Partly out of concern of violating WTO disciplines, the proposal provides no protection for European exports. Initially free allocation will still shield these against leakage, but its elimination, gradual as it is, will likely give rise to increasingly serious economic and political challenges.
By initially excluding indirect emissions, the proposal avoids addressing the challenge of tackling indirect carbon costs, which differ from indirect emissions. For some sectors, indirect emissions related to electricity use represent the largest climate impact: a solution is therefore needed. There is widespread expectation that the inclusion of indirect emissions is likely to be strongly considered for inclusion after the CBAM review.
The lack of provisions for recognizing non-price-based foreign climate policies was predictably met with criticism abroad, especially by diplomatic and trade partners whose political economy simply will not allow passing a national carbon price in the foreseeable future. Excluding ambitious climate policy efforts because they do not take the form of an explicit price risks alienating allies and seems to be misaligned with the bottom-up approach that is the hallmark of the Paris Agreement. Focusing only on carbon prices may be more feasible but is unlikely to work in the long-term. If this instrument is to be operational in the long-term, finding a way to include non-pricing costs is probably inevitable, despite the obvious complexities and legal and political risks that might entail.
“How to spend it” is a very real issue in the CBAM debate. Given the legitimate concerns about impacts on producers in low-income countries, the EU should give serious consideration to directing a significant portion of revenues from the CBAM back to affected developing country producers or governments.
In our view, the proposal can be improved in tangible ways. But some of the most critical challenges will probably have to be addressed in parallel policies outside the CBAM – policies that support the objective of decarbonizing the EU’s industrial sectors and maintaining their place as leaders in the global green markets of the future, but also ensure that the end result is still a prosperous and industrial Europe – and with the current proposal, that is not a given.
The file attached to this submission includes 3 publications by the European Roundtable on Climate Change and Sustainable Transition (ERCST), that provide an assessment of the July 2021 CBAM proposal:
1) ‘ERCST Guide to the EU CBAM - Brief for Policy Makers’ (Sep. 2021), a 3-pager with takeaways from ERCST’s evaluation of the CBAM proposal (https://ercst.org/eu-cbam-brief-for-policy-makers/)
2) ‘ERCST Guide to the EU CBAM’ (Sep. 2021), a ~60-page publication providing a detailed evaluation of the July 2021 proposed CBAM design (https://ercst.org/ercst-guide-to-the-eu-cbam/)
3) ‘ERCST survey on the EU CBAM proposal’ (forthcoming)
Read full responseMeeting with Pascal Canfin (Member of the European Parliament)
15 Jan 2021 · Fit for 55
Response to Updating the EU Emissions Trading System
26 Nov 2020
The European Roundtable on Climate Change and Sustainable Transition (ERCST) welcomes the opportunity to provide feedback on the European Commission’s Inception Impact Assessment for the Revision of the EU Emissions Trading System (EU ETS).
Next to increasing the EU ETS 2030 target and Linear Reduction Factor in line with the overall 2030 and 2050 targets, ERCST has put forward 6 issues that should be assessed in the Impact Assessment and addressed through the review:
1. Write a story for the decarbonisation of industry, incl. carbon leakage protection;
2. Address policy overlap and supply-demand imbalance, incl. through the MSR review;
3. Assess how to price carbon in other sectors and assess the articulation between ETS, ETD, CBAM and other instruments;
4. Assess the use of flexibility mechanisms such as domestic and international offsets;
5. Assess division and use of auctioning revenues; and
6. Ensure long-term visibility and predictability for market participants.
There are two overarching remarks ERCST wants to make before assessing the IIA in detail, keeping the 6 issues outlined above in mind.
- Firstly, the fact that the IIA outlines in detail which elements of the EU ETS are up for review and which policy options are on the table provides some clarity as to what to expect for stakeholders. However, a sense of the overall direction and objectives of this review is missing.
- Secondly, while we understand that time is short and the Commission is bound by the timeline set out in the European Green Deal, this short timeframe allows for little debate among stakeholders and limits the ability of the Commission to internalise any feedback received.The fact that the public consultation was already launched during the feedback period for the IIA is testament to this issue.
The attached document further assesses the IA in detail, keeping the 6 issues outlined above in mind.
Read full response