Sandbag Climate Campaign

Sandbag Climate Campaign is a non-profit think tank advocating for effective climate mitigation policies.

Lobbying Activity

Sandbag warns electrification must not cannibalise power sector decarbonisation

9 Oct 2025
Message — Sandbag argues electrification must be matched by new renewable supply to avoid cannibalising power sector decarbonisation. They recommend reforming subsidy criteria, such as the Innovation Fund, to account for induced emissions. They also suggest power markets should better reflect spot prices to incentivise flexibility.123
Why — This approach prevents industry from claiming subsidies for projects that fail to reduce real-world emissions.45
Impact — Hydrogen producers and rigid industrial consumers lose access to subsidies for projects inducing emissions.67

Sandbag urges strict accounting of foreign carbon subsidies

25 Sept 2025
Message — Sandbag recommends that CBAM deductions include all forms of compensation, including subsidies to parent companies. They argue that payments must not be used for other corporate carbon neutrality claims.12
Why — This ensures a level playing field for EU producers while maintaining high climate standards.3
Impact — Foreign exporters and state-owned enterprises would lose benefits from indirect state subsidies and rebates.4

Sandbag Urges Closing CBAM Loopholes to Stop Resource Shuffling

25 Sept 2025
Message — The organization recommends closing loopholes for steel and aluminium by using systematic default values. They also advocate for calculating indirect emissions based on induced grid impacts.12
Why — Stronger rules would ensure the mechanism effectively prevents carbon leakage and supports climate mitigation.34
Impact — Trade partners lose the ability to use resource shuffling to artificially lower carbon fees.5

Sandbag urges product-based benchmarks to close steel carbon loopholes

25 Sept 2025
Message — The group proposes replacing process-based benchmarks with product-based ones for steel. This ensures equal treatment for imports and stops incentivizing polluting production over recycling.12
Why — This shift would align EU carbon policy with the organization's climate advocacy goals.3
Impact — Producers using iron ore and coal lose advantages over cleaner scrap-based recyclers.4

Sandbag urges EU to adopt higher domestic climate targets

15 Sept 2025
Message — Sandbag demands a 90-95% domestic emissions reduction target based on scientific advice. They reject international carbon credits and call for separate targets for reductions and carbon removal methods.12
Why — This ensures domestic policy integrity and prevents carbon price crashes in the ETS.3
Impact — International carbon credit markets and biomass companies lose significant business opportunities.4

Sandbag demands carbon cost reform before extending state aid

2 Sept 2025
Message — Sandbag recommends linking compensation only to the non-fossil share of electricity consumed. They argue support should be limited to times when fossil fuels determine electricity prices.12
Why — This would align state subsidies with climate goals while decreasing public expenditures.34
Impact — Fossil-reliant industrial firms would lose subsidies and current windfall profit opportunities.5

Sandbag urges default emission values to prevent CBAM circumvention

1 Aug 2025
Message — Sandbag recommends using systematic default values rather than tracing individual plant data. This aims to prevent exporters from selectively sending low-carbon products to Europe.123
Why — Adopting default values reduces administrative burdens and protects commercially sensitive data from disclosure.45
Impact — High-emitting exporters lose the ability to use 'resource shuffling' to avoid carbon fees.6

Sandbag demands fossil-free standards for green steel labels

8 Jul 2025
Message — Sandbag proposes steel labels that look beyond plant-level emissions to include wider environmental gains. They request that fossil-based production routes be excluded from the top performance classes eligible for public support.12
Why — This framework ensures public funding supports only the most innovative and truly sustainable technologies.3
Impact — Industries using fossil-based production methods would be barred from receiving the highest incentives.4

Sandbag urges EU to scrap free carbon permits for industry

8 Jul 2025
Message — Sandbag demands phasing out free emission allowances to eliminate administrative complexity. They also propose restricting aviation's access to industrial permits and excluding carbon removals.123
Why — Ending free allocation eliminates complex bureaucratic reporting and reduces significant administrative costs.45
Impact — Airlines and industrial polluters face higher costs as free subsidies are removed.67

Response to Evaluation on the operation of the Innovation Fund - 2025

7 Jul 2025

1. Not all electricity use should not be treated as emissions-free Current rules allow projects to ignore the carbon footprint of electricity consumed, assuming zero-carbon power is always available. This overlooksinduced emissionsfrom marginal fossil generation during peak demand. The Fund should reflect the real climate impact of electricity use. 2. Grants should target high-risk technologies only Upfront grants are often awarded to projects that are costly or new, but not genuinely risky. This can displace private capital and shift all risks to the public. Grant funding should be reserved for technologies facing real deployment barriers due to technical uncertainty. 3. Scale-up support should go to sectors that need it Public funding should not support well-capitalised sectors or mature technologies. Instead, subsidies should be directed to deprived sectorsthose unable to invest in decarbonisation due to limited access to ETS allowances or innovation finance. E-fuel mandates at Union or Member State level should instead be at company level.
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Meeting with Pascal Arimont (Member of the European Parliament) and Norsk Hydro and Alcoa Nederland

4 Feb 2025 · CBAM and the aluminium sector

Sandbag demands tighter emission standards for low-carbon hydrogen

25 Oct 2024
Message — Sandbag requests removing methods that underestimate fossil fuel use. They also want more realistic methane leakage rates for gas-derived hydrogen.123
Why — Tighter rules prevent mislabeling fossil-heavy hydrogen, supporting the group's climate mitigation advocacy.4
Impact — Fossil-based hydrogen producers would face higher reported emissions, potentially disqualifying their products.5

Sandbag urges stricter transparency for permanent carbon capture products

16 Jul 2024
Message — Sandbag calls for a review process that allows for the removal of products from the approved list. They also recommend making all update requests and unsuccessful product evaluations publicly available to ensure accountability.12
Why — Stronger rules help ensure that the carbon capture market supports genuine, long-term climate mitigation.3
Impact — Organizations with conflicts of interest lose the ability to lobby the Commission privately.4

Sandbag urges EU to reward recycled steel production

18 Dec 2023
Message — Sandbag proposes shifting free emission allowances from intermediate production stages to final flat steel output. This adjustment aims to incentivize scrap metal recycling and establish a level playing field across steelmaking routes.12
Why — These changes would make circular steel production more economically competitive against traditional ore-based methods.34
Impact — Traditional integrated steel plants that rely heavily on virgin iron ore would lose their current financial advantage.5

Sandbag urges EU to close metal scrap reporting loophole

11 Jul 2023
Message — The current draft may open the door to carbon leakage. Sandbag recommends that the Commission properly account for the carbon embedded in metal scrap. It is crucial to assign emissions to all re-melted pre-consumer scrap.12
Why — Closing this loophole ensures that EU climate policies effectively reduce global industrial emissions.3
Impact — Foreign producers lose the financial advantage of avoiding carbon costs through resource shuffling.45

Meeting with Michael Bloss (Member of the European Parliament) and Transport and Environment (European Federation for Transport and Environment) and Climate Action Network Europe

24 Jan 2023 · Austausch zum ETS

Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and BUSINESSEUROPE and

20 Dec 2022 · ETS

Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and European Environmental Bureau and

14 Oct 2022 · ETS

Meeting with Michael Bloss (Member of the European Parliament) and European Environmental Bureau and Carbon Market Watch

5 Oct 2022 · ETS

Response to Regulation on REPowerEU chapters

20 Jul 2022

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 impossibility of meeting this objective while keeping conflicting incentives in force. The REPowerEU plan aims to mobilise €210bn in public funds, mostly taken from unspent existing budget lines such as the EU’s €800bn COVID-19 recovery fund. To these, only €20bn new funds are added, raised from the auctioning of EU ETS allowances held in its Market Stability Reserve (MSR). In a brief we published on 30 May, we flagged the disruptive effect which the use of MSR allowances would have on the supply/demand balance of the carbon market. As the effect depends on features of the ETS such as the scheme’s cap and the design of the MSR itself, we updated our analysis with the three main design options on the table, proposed by Commission, the Parliament and the Council. In all scenarios under the Commission and Council design options, the REPowerEU plan leads to 116-144 million additional supply of EUAs, all of which is ‘available in circulation’, whereas it slightly reduces the supply under the Parliament’s proposal. Money money everywhere, but not a euro to decarbonise Beyond the illusory effect of resorting to the MSR, the overall EC proposal lays bare a much larger shortcoming of the emissions trading scheme: despite creating assets worth a trillion euros, it does not make any funds available to decarbonise the industries it covers. This is because of the way the value of the emission allowances is split between entities and spent. Of a total value of €1.1tn over 2021-30 (assuming a carbon emission price of €100 per tonne), about half is allocated for free to emission-intensive industrial plants. Of the other half (mostly covering the power sector, but also airlines and shipping), up to €150bn can be spent by Member States to power-intensive industries as compensation for indirect carbon costs. This compensation applies to the use of grid electricity but not to the use of renewable electricity directly sourced with power purchase agreement. Another 69-83bn will be auctioned by the European Commission to fund the Innovation Fund (to be renamed ‘Climate Investment Fund’ according to the Parliament’s proposal). The remainder is split between the EU budget, Modernisation Fund, and Member States. It is striking that, although most of the value created by the scheme benefits industry, most of it is dedicated to supporting resource-intensive production processes, some goes to supporting innovation (with a distant decarbonisation potential) but nothing is dedicated to actual industrial decarbonisation measures able to quickly curb the use of fossil fuels. Free means expensive A reallocation of the carbon market’s value would be by far the most efficient way of reducing Europe’s dependance to fossil fuels. As we have found in previous reports, the free allocation of emission allowances is an obstacle to decarbonisation, innovation and the good functioning of the carbon market, so every possible means should be used to put an end to it and make it a very last recourse after trying all other options. The more value is allocated to emission-intensive plants, the more costly it is to make alternative products competitive. The various proposals for a gradual phase down of free allocation for CBAM-covered sectors lead to only slow and marginal corrections in the incentives to low-carbon processes. Applied just to those sectors, a faster phase out would free up another 135bn euros (see ‘faster CBAM’ scenario, which assumes full implementation in 2024). This would increase even further if free allocation was also abolished in some non-CBAM sectors such as hydrogen or plastics, where product requirements or consumption taxes could be applied instead. Besides the financial benefit, the largest gain from abolishing free allocation is its ability to break ...
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Meeting with Peter Liese (Member of the European Parliament, Rapporteur for opinion) and Climate Action Network Europe and Carbon Market Watch

8 Jul 2022 · REPowerEU

Meeting with Peter Liese (Member of the European Parliament, Rapporteur) and Climate Action Network Europe and

20 Jun 2022 · ETS

Sandbag targets double-counting flaws in EU hydrogen methodology

17 Jun 2022
Message — Sandbag proposes an amendment to exclude additional renewable electricity from grid intensity calculations. They argue the current method systematically under-estimates carbon intensity by establishing double-counting as a rule.12
Why — This would prevent the production of high-emission fuels that falsely claim a renewable origin.3
Impact — Producers using carbon-intensive grid electricity would lose the ability to claim high savings.4

Response to Carbon Border Adjustment Mechanism

18 Nov 2021

Sandbag supportive of a carbon border adjustment mechanism (CBAM), as an URGENT alternative to the free allocation of emission allowances under the EU’s Emissions Trading System.
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Response to Updating the EU Emissions Trading System

8 Nov 2021

Sandbag welcomes the opportunity to provide feedback on the update of the EU ETS under the FF55 package. Our analyses show that the proposed changes are not enough to guarantee that emissions will stay below the cap and that they could exceed it by 45% in 2030. This is because the current proposal does not address the core issues of the ETS, which are the ability for emissions to exceed its cap repeatedly by huge amounts, and the perverse incentives the free allocation mechanism creates for industrial sectors. We deplore that the Innovation Fund is much more focused on supporting innovation than environmental benefit, and that the incentives created by the whole system do not at all encourage circularity or the substitutions of high-carbon products with low-carbon ones.
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Meeting with Thierry Breton (Commissioner) and European Environmental Bureau and

10 Jun 2021 · Roundtable of the Clean Hydrogen Alliance: 3rd meeting of the co-chairs

Meeting with Thierry Breton (Commissioner) and

19 May 2021 · Clean Hydrogen Alliance; Hydrogen Strategy

Response to Commission Decision determining the benchmarks values for free allocation in the period 2021-2025

4 Jan 2021

The EU ETS benchmarks often support high-carbon incumbent installations at the expense of lower-carbon competitors, as they often treat differently (or even exclude) the latter, thereby disincentivising low-carbon alternative technologies and products. For example, in the case of steel, steel production from lower-carbon electric arc furnaces receives fewer allowances than the carbon-intensive blast furnace production method. The benchmarks for free allocation should be based on the actual product and not create silos between production methods. The proposed benchmark trajectories for the reduction of free allowances under the EU ETS do not align with a net-zero trajectory for the cap. This creates a misleading emissions trajectory for industries which avail of free allowances, causing them to delay short-term actions to reduce emissions. This will leave businesses facing a cliff-edge scenario, required to make rapid changes from 2030 onwards. We therefore call for benchmarks to be aligned with a 2050 carbon neutral target. The annual reduction rates for the benchmark values are often far behind the industrial reality. This means that installations with greater carbon efficiency will continue to receive large amounts of free allowances for little additional decarbonisation effort. While this can have a decarbonisation incentive effect, there is still considerable room for a higher upper limit to the benchmark reduction rate. This is particularly true for the heat benchmark, which, relying on the 1.6% annual reduction rate, proposes a benchmark of 47.3tCO2/TJ, while the actual intensity of the 10% most efficient plants is 2.8tCO2/TJ. The EU ETS benchmarks have consequences exceeding the scope of free allocation within the scheme. One critical example concerns the eligibility and level of support for projects under the Innovation Fund, which are based on the EU ETS benchmarks. According to this rule, some projects that are far from low-carbon may get selected and supported by the Fund. We would finally like to raise the concern that the data used to determine product benchmarks, for example aggregated production data, is not publicly available. Given the role of the benchmarks in determining free allocation, which essentially represents a public subsidy for polluting industries, the data on which these benchmarks are based should be made available to public scrutiny. Please find further details of our feedback, with supporting figures, in the attached document.
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Response to Updating Member State emissions reduction targets (Effort Sharing Regulation) in line with the 2030 climate target plan

26 Nov 2020

The Effort Sharing Regulation (ESR) must be updated to bring national emission reduction targets in line with the 2050 climate neutrality target and the 2030 target of at least 55% emission reductions compared to 1990 levels. The Inception Impact Assessment proposes some rather dramatic changes to one of the EU’s flagship climate policies. Sandbag finds that Option 2 is the only feasible option that will (better) guarantee effective climate action is taken at the required speed and in line with the EU’s new climate targets. The proposal to remove the road transport and buildings sectors from the ESR and include them in an expanded EU ETS gives rise to the following criticisms: - The CO2 abatement costs of the road transport and building sectors are not the same as those in industrial sectors, which risks creating discrepancies in the carbon price required to incentivise decarbonisation in different sectors. This in turn risks destabilising the EU ETS or exacerbating existing problems around surplus allowances. - Demand in the transport and buildings sectors are less responsive to carbon pricing, particularly in the short term. - The largest impact of subjecting road transport and heating to the EUA price would fall on low-income households, especially in the short term to 2030. Consumers with less capacity to reduce discretionary spending and to replace their cars or home heating system will face lock-in to high-carbon technologies. - To cover the buildings sector under the EU ETS, the Commission proposes addressing upstream suppliers of fuels. However, industry actors who pay the EU ETS price downstream often use the same fuels used for the heating of buildings. Industries would demand a measure to prevent double-payment of the EU ETS which could be administratively very complex. - The EU ETS is only just starting to achieve the desired results after many years of fine-tuning the mechanisms (and there are still improvements to be made). Adding two large sectors to the EU ETS could have a large destabilising effect on the EU ETS that would negate the progress to date. On top of these problems, there is the fact that road transport and buildings cannot be decarbonised by a carbon price alone. There are non-price barriers to their decarbonisation which mean that regulatory measures such as product requirements are still crucial, regardless of whether these sectors are included in the EU ETS or not (or in an alternative separate ETS). Therefore, the road transport and buildings sectors must stay under the ESR, making Option 2 the only viable policy choice. Furthermore, under the current ESR, Member States can use surplus ETS allowances to make up for gaps in achieving their ESR targets. To ensure that Member States commit to their required climate ambition, this should not be continued under the revised ESR (and indeed the EU ETS must be revised in a way that surplus allowances are eliminated, rendering this option impossible anyway).
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Response to Updating the EU Emissions Trading System

26 Nov 2020

Sandbag is pleased to provide our initial inputs on this timely and much needed revision of the EU ETS. Please find our comments in the attached file.
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Response to Sustainable Products Initiative

12 Nov 2020

The Sustainable Products Initiative (SPI) offers the possibility to introduce effective, enforceable and holistic sustainability requirements for products in the EU. It is relevant for a wide variety of products, but particularly for emissions-intensive commodity products. Emissions-intensive products face a large challenge of decarbonising by 2050, a transition that can only be achieved through a comprehensive uptake of circularity measures. To realise this circularity potential, for emissions-intensive and other products, the SPI should: - Ensure the rapid deployment of materials efficiency levers through the introduction of mandatory, product-specific sustainability requirements. - Address existing barriers to circularity such as poor collection infrastructure, contamination of recyclate and information gaps. - Expand the scope of the Ecodesign Directive to include all the key sectors listed under the CEAP, and to cover circularity and carbon content as well as the energy efficiency of products. - Enshrine overarching sustainability principles in a horizontal framework (e.g. extended producer responsibility, circular economy hierarchy for waste reduction and reuse). - Establish work plans for priority product areas which set product-specific sustainability requirements. - Develop a digital product passport to contain information on product fabrication, composition and possibilities for reuse, dismantling and recycling. - Integrate existing regulation which partially covers sustainability requirements (e.g. the Construction Products Regulation) to ensure that all key products receive equivalent treatment. - Consider complementary measures such as taxes and charges to discourage the use of non-circular products. Please find further details, as well as a case study focusing on the construction and automotive sectors, in the attached document.
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Response to Revision of the EU Emission Trading System Directive concerning aviation

28 Aug 2020

Sandbag welcomes the opportunity to give feedback on the Inception Impact Assessment on updating the EU ETS rules for aviation. In the context of the European Green Deal and the enhanced ambition for 2030, changes to the EU ETS for aviation should not result in a step backwards in terms of tackling CO2 emissions, but a step forward. The aviation sector should also contribute to the goal of a climate-neutral EU economy through an improved, focused EU ETS that drives emission reductions. In this way, when considering the interaction of the EU ETS with CORSIA, the Commission should exclude policy options which would reduce the level of climate ambition required from the aviation sector. It should also rapidly phase out free allowances, as there is little risk of carbon leakage and the sector already suffers from a lack of accountability for climate action compared to other sectors. The EU ETS on its own is not a sufficient tool to counter carbon emissions from the aviation sector and other policy instruments will also be required to decarbonise aviation. The ETS still needs broad reforms and should not be seen as a panacea. Nevertheless, the EU ETS is a much more potent tool than CORSIA for reducing aviation emissions, and it should not be reduced or abandoned as the EU seeks to participate in global initiatives through the ICAO. Instead, the EU ETS rules for aviation should be improved through the phase-out of free allowances and the extension of the scheme’s coverage. Please find our full comments and assessment of the various policy options in the attached document.
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Response to Review of the Construction Products Regulation

19 Aug 2020

Sandbag welcomes the opportunity to comment on the Roadmap for the revision of the CPR and emphasises the role which the revised regulation should play in the achievement of the goals of the European Green Deal. The scope of the CPR must therefore be expanded to include the setting of environmental standards for construction projects. Such an expansion, while ambitious, is necessary to direct the construction industry on the path to climate neutrality by 2050. Environmental standards set at EU level will establish clear signals and incentives for the development of low-carbon, sustainable construction products which can be efficiently repaired, replaced or recycled. Environmental standards should include considerations of climate impact and circularity. A carbon efficiency first approach should be taken towards construction products, aiming to reduce embodied carbon emissions along the life cycle of these products. Circular economy principles should also be enshrined under the revised CPR to maximise the potential for reuse, repair, recycling and safe disposal of construction products. Please see the attached document for recommendations as to the content of these environmental standards and our assessment of the revision options contained within the Roadmap.
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Response to 2030 Climate Target Plan

15 Apr 2020

2020 marks a halfway point for the EU as it will be 30 years since the first IPCC report, and 30 years to when the EU aims to be net-zero economy, fully decarbonised, more specifically by 2050. We are half-way in time, but with 2018 GHG emissions at 24-5% below 1990 levels – we are only around a quarter of the way there in effort. The EU is backloading action on climate change. At the same time, the EU has met its overall reduction target for 2020 already back in 2014, 6 years earlier, indicating that the target was far from an ambitious one or even one that harnessed the European economy's potential. This further shows that the targets the EU have been setting politically are disconnected from the rate at which emissions reductions are actually feasible, the rates at which technology costs drop once given an initial push and is in fact cutting us short of reaching more emissions reductions faster. There is a cost effectiveness element that a relevant target ensures, more specifically by adding a certain degree of pressure on the reduction trajectories, it ensures that the reductions happen where they are cheapest and encourages deployment across the space of the Union. In the absence of stringency from the targets, some economic benefit is lost, as is the the fact that postponing emission reductions feasible today for later only increases the bill for the last decades and the reductions end up happening where there are either extra funds for them or where there is additional regulation requiring it, increasing the overall long-term cost of decarbonisation. The current target for 2030 is not compatible with the Paris Agreement, nor is it in tune with what is already in our legislation. A year ago Sandbag launched a report that brought good news: the EU in 2019 already had the policies in place it needs to halve its emissions by 2030 at least, compared to 1990. We modeled all the policies already in place like those of the Clean Energy Package, the mobility packages and announced coal phaseouts and our results show this would deliver a cut of at least 50% in GHG emissions. This is more than the Commission’s Longterm Strategy modelling of 2018 indicated (a mere 45%), in a large part because our report also modeled coal phaseouts that had been agreed since 2018. This means discussion on Europe’s climate ambition in 2030 changes from “at least 40%”, to become “at least 50%”. This was before the NECPs, which now take us beyond this level, assuming implementation. With the EU's new Industrial Strategy and Circular Economy Action Plan, in which the need to have deep reductions in the next decade already is clearly highlighted as a key priority, we can assume the EU will reach at least -55% by 2030. The EU target needs to reflect at minimum this level of ambition, as to ensure stringency of the target which leads to implementation at a lowest cost. A EU target of -60% by 2030 would be advisable from the perspective of reaching the Paris Agreement levels and of inspiring others to follow. This would require a redrawing of the two EU carbon budgets, which would in any case be required given the departure of the UK from the EU. Last but not least, targets for the future need to assume innovation and build it in through a higher level of the overall target. See attached our analysis for more details on how a relevant target for the EU for 2030 can be achieved, a target above -55% on 1990, which is the minimum level for the target to be labelled as ambitious. While the EU has only 10% of the world's emissions, its carbon footprint is much larger and it has the responsibility to lead on this front at the global level and inspire third parties to follow suit. The measures which aim to make EU trade more sustainable, such as by introducing border carbon adjustments to avoid distorsions between the EU market and other markets with higher carbon intensity will be necessary.
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