Sandbag

Our newsletter is here – packed with research and analysis on decarbonisation and #climatepolicy! 🌍   Here’s a glimpse of what’s inside 👇   🔹 #Carbonremovals and the EU ETS – What role should removals play in the EU's climate goals? Learn about our upcoming policy brief, gain insights from CONCITO and Clean Air Task Force's latest report and get actionable recommendations from the CO2ol Down Project, led by Carbon Market Watch, where Sandbag played an active role! 🔹 #CBAM's next steps – What happens after the transitional period ends? Discover the latest developments with our contribution to the Shanghai Dialogue hosted by Agora Energiewende, and ERCST - European Roundtable on Climate Change and Sustainable Transition's report on the inclusion of downstream goods in CBAM. 🔹 Industry decarbonisation and #EUETS - we’ve gathered must-reads on: Carbon markets and emissions analysis under the EU ETS, industrial flexibility, carbon capture technologies and their role in decarbonising heavy industry. 📩 Equip yourself with the knowledge to shape smarter climate policy – click here and read the full newsletter: https://lnkd.in/d3JkY_p2

The debate on carbon removals is hotting up! It's been a busy week exploring the role of carbon dioxide removal (#CDR) in #EU climate policy. Here's what we've been up to: ✅ Monday: We joined Clean Air Task Force (CAFT) and CONCITO for the launch of their report on permanent carbon removals and the #EUETS. The panel - featuring Mette Quinn, Emma Wiesner, Alejandra Muñoz Castañer, and Chris Sherwood - delivered an enlightening, wide-ranging debate on CDR. ✅ Tuesday: We saw the final presentation of the CO2ol Down project, in which we proudly participated. The project aimed to discuss and co-create a common vision of carbon removals in the EU, a crucial first step in the debate. Thanks to Carbon Market Watch for organising the event! ✅ Wednesday: We attended a great workshop organised by WWF European Policy Office, Bellona Europa, and Carbon Market Watch exploring much-needed alternative ideas on how CDR could be financed without ETS integration. Speaking of CDR, we're preparing to share Sandbag’s perspective with the launch of a dedicated webpage, and a policy brief on the future of CDR and the EU ETS. Stay tuned—we can’t wait to share it with you! #climateaction

🌍 What's next for the #CBAM? The Carbon Border Adjustment Mechanism (CBAM) will redefine how carbon-intensive goods enter the #EUmarket. Since October 2023, importers have had to report their greenhouse #emissions according to the CBAM methodology. As CBAM is phased in for importers, free emission allowances under the #EUETS will be phased out. Our report "A Scrap Game: Impacts of the EU Carbon Border Adjustment Mechanism", examines the implications of CBAM. Key insights include: 💠 Why the impact on EU trade partners will be small, and in some cases, positive. 💠The effects on EU manufacturers, consumers, and competitive dynamics in global markets. 💠How the existence of loopholes can benefit importers but also create a risk of legislative change. Click here to discover our findings 👉 https://lnkd.in/eCK7i3_C

🌍 For ‘low carbon’ hydrogen to effectively support Europe’s #ClimateNeutrality goals, robust safeguards are essential.  We recently provided feedback on the #EuropeanCommission draft regulation for establishing a methodology to determine greenhouse gas (#GHG) emission savings of low-carbon fuels.  The current draft has several issues that need addressing to ensure it will help achieve the EU's climate goals. ⚠️     Our recommendations: ➡️ Strengthen safeguards for #hydrogen production using electricity: The draft methodology allows electrolysers to use grid electricity when fossil power plants are active. The accounting methods must be revisited to ensure electrolysers operate only when the grid is genuinely ‘low carbon’. ➡️ Address methane leakage: The draft underestimates methane leakage associated with fossil-derived hydrogen. We advocate for updated leakage rates based on the latest research, which shows actual leakage could be 2.5 times higher than currently assumed by the draft. This would ensure #emissions are accurately accounted for.    Read our full response in the document below 👇  

As the #CBAM consultation on downstream products approaches, we need to discuss if more products should join the CBAM, and which ones! 📅 Join us on 23 October for a #webinar where Sandbag’s Adrien Assous will join a panel of experts to discuss the inclusion of additional products further down the #valuechain in the #EU CBAM.    👉 Learn more and register: https://t.ly/Q7JXL 

Today, alongside 23 other organisations, we called on the #EuropeanCommission to stay committed to developing a technology-neutral and performance-based approach to cement standardisation in Europe.   👉 Our message is clear: A performance-based approach is the only way forward to secure the European #cement industry’s long-term future and #competitiveness.  🔗 Read our open letter:  https://lnkd.in/eHZ9k7YD

How does the #CBAM scrap loophole threaten the backbone of EU #climatepolicy? 🌍 Sandbag’s Adrien Assous was on FORESIGHT Climate & Energy’s The Jolt podcast to explain what the scrap loophole is and its potential impact on the EU’s climate commitments. 🎙️ The podcast’s host, Sam Morgan, describes the CBAM as a powerful #EU climate trade policy. It puts a carbon cost on imports while the EU gradually stops handing out free emission permits to its own plants, making sure that both EU and non-EU producers face similar costs on carbon emissions. Currently, it is in a transitional phase – focused on collecting and reporting data - The CBAM is set to be fully deployed in 2026. However, a significant loophole has been identified: imported steel and aluminium scrap is exempt from CBAM charges. In the podcast, Adrien explains the potential consequences: “This #scraploophole poses an existential threat to the CBAM. If these products go through unchecked, it undermines the fundamental role of the CBAM, which is to phase out free allocation within the #EUETS. It then threatens the EUETS itself, which is the backbone of EU climate policy.” Want to learn more? Listen to the full episode here: 🔗 https://lnkd.in/dRbi6gZn

How can the EU fix the #CBAM scrap loophole? 💡 This is the question Adrien Assous from Sandbag answered at the EU-China Climate Expert Dialogue, hosted by adelphi and Germanwatch e.V. The event gathered experts from both China and the #EU to discuss the role of #carbonpricing in industrial decarbonisation. Adrien’s intervention focused on the CBAM scrap loophole, a topic on which Sandbag has conducted extensive research over the past years. During the presentation, he explained how a new approach to the CBAM’s emission reporting methodology, could effectively close the scrap loophole:    ➡️ In the current design, default values can only be used for 20% of embedded emissions and, from 2026, they will apply punitive markups to country-specific values.   ➡️ Instead, default values could be imposed on 100% of embedded emissions. They could be based on average values without markups. This rule could be applied only to countries that sign up for it, while others would continue with non-default values. Such an approach would benefit: ➡️ The climate: by properly addressing carbon leakage. ➡️ Exporters and importers: by simplifying CBAM declarations, removing the need for independent verification, reducing data manipulation, transaction costs, and the uncertainty of CBAM regulatory back and forth. ➡️ The EU: by removing resource shuffling incentives, and reducing uncertainty of CBAM impact on the price of goods sold in the EU. CBAM will be key in driving global decarbonisation efforts. Click here to learn more about our recent research 👉 https://sandbag.be/cbam/

Mario Draghi’s report on #EUCompetitiveness exposes critical vulnerabilities of the CBAM. ️⚠️ One of them is the scrap loophole —where the “zero-emissions assumption” for recycled materials could incentivise deliberate scrap generation to avoid paying the fees. This is a concern we have raised consistently over the years, and recently in our report: "A Scrap Game: Impacts of the EU Carbon Border Adjustment Mechanism" 👉 The problem isn’t limited to process scrap (the one generated at the production stage), but post-consumer scrap as well: for example, premium aluminium products can be made from up to 100% collected scrap. 👉 At the very least, the #EU should close this loophole. But it could go a step further. In our 2020 response to the Commission’s public consultation on the CBAM, we proposed systematically calculating #CBAM fees based on default emission intensity values rather than the actual carbon content of imported goods. It would easily solve this, as well as other circumvention issues. It would also address another major risk raised by M. Draghi (inconsistent and unequal implementation of the CBAM) and simplify the scheme dramatically. 👉 Using default values would not necessarily be detrimental to our trade partners. It depends on the very values, which don’t have to be punitive. Our proposal was to set them equal to average EU emission intensity, to put everyone at par. To ensure #WTO compliance, this system could be subject to an opt-in from our trade partners, most of whom would have an interest to subscribe to. Click here to learn more: https://lnkd.in/eCK7i3_C #DraghiReport

SHAPING INDIA's CARBON MARKET: tomorrow (13 August) at 2.30pm CET. #India needs to get its #carbon market right! India's nascent carbon market could be excellent news for the climate, but it really needs to avoid all the mistake we made in Europe. Sandbag will share its long experience of the #EUETS in an event organised by India's Centre for Science and Environment, New Delhi. Register here: https://lnkd.in/eTkqXqyn