Sandbag is a UK based not-for-profit organisation campaigning for environmentally and economically effective climate policies, with a focus on the EU Emissions Trading System (ETS).
Our campaigns are supported by in-house research that monitors the environmental robustness of the ETS, the distribution of allowances, and how key sectors, installations and companies in the scheme are affected.
Through small changes in carbon markets, both in Europe and across the world, billions of tonnes of carbon dioxide can be prevented from entering the atmosphere; with our analysis and lobbying, we can make sure that’s what happens.
Join us in calling for tighter caps on emissions and/or take direct action to cancel carbon permits now.
Reports and briefings

The following reports and briefings have been produced thanks to the support of our core funders: The European Climate Foundation, the Goldsmith Foundation and the Esmee Fairbairn Foundation.

Bespoke analysis, reports and briefings on a range of topics can be commissioned - please contact us if you wish to discuss options.

June 2015
Briefing: Financing Deep Decarbonisation in Industry

To promote CCS and other methods of deep industrial decarbonisation, a combination of additional Member State and EU support will be needed, well beyond the proposed Modernisation and NER 400 funds. A supporting policy should be explored based on Contracts For Difference (CFD), similar to the UK's electricity CFDs, but pegged to the carbon price rather than the wholesale electricity price. This could fund any technology which permanently stored or abated CO2 emissions.

June 2015
Report: Putting the Emissions Trading Scheme in context

Should we ditch the EU Emissions Trading Scheme or drop all other overlapping climate policies? 

Neither, argues this new report, but we do need a better policy framework.

The EU’s Emissions Trading Scheme is 10 years old this year. This report places it in the context of other climate and energy policies and explores the impact of external events that have occurred over the last decade.

Webinar discussing the report at 11am BST

On July 15th we are expecting a significant ETS reform package to be published, that will spark considerable debate about its future role and how it relates to other EU ambitions and policies.  This report is intended to inform that debate.

June 2015
Briefing: Consultation response - The ESD & the 2030 package

Sandbag’s response to the European Commission Consultation on the preparation of a legislative proposal on the effort of Member States to reduce their greenhouse gas emissions to meet the European Union's greenhouse gas emission reduction commitment in a 2030 perspective. This consultation specifically focuses on the Effort Sharing Directive.

May 2015
Briefing: Call for Evidence on the 5th carbon budget

This represent's Sandbag's submission to the Climate Change Committee's Call for Evidence regarding the 5th Carbon Budget. In light of new developments in the EU ETS, Sandbag leads with the recommendation that the UK budgets should shift to full territorial emissions accounting. This should replace the current system which "nets off" traded sector emisisons against estimated UK allocations in the EU ETS. We also urge the Committee to revise its global "climate objective" to reflect a likely chance of avoiding 2 degrees that is more consistent with the UK's international pledges. 

May 2015
Briefing: Update: 2014 EU ETS Emissions analysis

With EUETS data now 99.9% complete, Sandbag has updated our analysis of emissions, including data on country and industry surplus.

May 2015
Briefing: Decoding the deal - Explaining the Council agreement on the Market Stability Reserve

The deal struck by the Council in Coreper agreed a January 2019 start to the market stability reserve and the placement of both unallocated allowances and backloaded allowances into the MSR.

In order to break the blocking minority on start date led by Poland, wealthier Member States had to agree to shield a volume of nearly 1.5 billion allowances that would benefit poorer ones. However, despite this substantial volume, the actual transfer of wealth between wealthier and poorer Member States could be as low as 14 million EUAs - although the actual figure may shoot up to 260 million EUAs depending on how the surplus actually develops.

In this briefing, Sandbag provides a step by step overview of what allowance clusters are shielded, how the redistribution effects operate, and how gains and losses are distributed across groups of Member States.
April 2015
Briefing: Lithuania and the ETS: Arguments for an enhanced MSR

In this briefing Sandbag argues that Lithuania could reap advantages from supporting an enhanced Market Stability Reserve. We first argue why Lithuania should reconsider its position on the MSR. Then we present strong evidence based on ETS data, revealing the various ways in which the MSR would influence the competitiveness of Lithuania’s industry in the EU economy. We finally provide more detailed information about how the proposed ETS reform would function if implemented.

April 2015
Briefing: The Czech Republic in the EU ETS

Sandbag argues that the Czech Republic could reap advantages from backing an enhanced Market Stability Reserve (MSR), with an early start, and the backload and unallocated allowances prevented from coming to market.

We first argue why Czech Republic should reconsider its position on the MSR. Then we present strong evidence based on ETS data, revealing the various ways in which Czech Republic’s industry is not only protected against any effects of the MSR, but can actually capitalise on these effects. We finally present more detailed information about how the proposed ETS reform would function in the concluding section of this briefing.

April 2015
Briefing: España en el RCDE

En el presente informe Sandbag expone las ventajas que España experimentaría al respaldar una MSR más ambiciosa. En primer lugar argumentamos por qué España debería reconsiderar su posición acerca de la MSR. Luego exponemos pruebas sólidas basadas en los datos del RCDE revelando las distintas formas en que la industria española no solo estará protegida contra cualquier efecto de la MSR, sino que además podrá capitalizar este efecto. Finalmente, exponemos información más detallada sobre cómo funcionaría la propuesta de reforma del RCDE en la sección final de este informe.

April 2015
Briefing: 2014 EU ETS Emissions analysis

Updated May 11th version available here.

This Powerpoint presentation delves deeper into the EUETS emissions data released today, looking at emissions by data and country, as well as some other details. This links closely with the two main stories we released today: -[For the first time, 4 out of 5 largest EU emitters are German lignite power stations]( "") -[Emissions in Europe’s carbon market reach 2020 target six years early]( "")

March 2015
Briefing: The German "Climate Contribution" vs the UK's "Carbon Price Floor"

Carbon price instruments for the Power Sector. Analysis comparing proposed German "Climate Contribution" to the UK's "Carbon Price Floor", and how they act to tackle coal. Download in German: Nationale CO2-Preise für den Stromsektor

March 2015
Briefing: Response to the Consultation on revision of the EU Emission Trading System (EU ETS) Directive

The European Commission is consulting on revision of the EU Emission Trading System (EU ETS) Directive. Sandbag's response is available here.

March 2015
Briefing: The Eternal Surplus of the Spineless Market

New analysis from Sandbag shows that even with a strong Market Stability Reserve (MSR), the Emissions Trading Scheme (ETS) surplus will stay at about two billion tonnes until 2020. This means the carbon price is unlikely to rise significantly.

Blog available here.

February 2015
Briefing: Voting recommendations for the MSR proposal in ENVI

As the Market Stability Reserve proposal is voted on by the Environment (ENVI) Committee today, we release our voting recommendations for fixing the EU Emissions Trading Scheme.

February 2015
Briefing: Romania in the ETS

Sandbag's briefing on Romania in the Emissions Trading Scheme, in the context of the Market Stability Reserve negotiations.

• The total surplus that has accumulated, and will continue accumulating, to the Romanian manufacturing sector is so large that Romanian industrial installations will overall not need to buy allowances before 2050.

• Article 10c of the ETS Directive: Romanian ranks second Union-wide from the point of view of how long electricity generators will be protected thanks to additional free allocation of allowances.

• By opposing a strong MSR, the Romanian government could miss out on an estimated €1.2 billion in increased auction revenues, caused by a stronger carbon price.

Versiunea în limba română a acestui raport se poate găsi aici.

February 2015
Report: Avoiding the Avalanche

In this report, Sandbag finds that the European Commission’s proposal to tackle the oversupply of 2 billion allowances in the EU carbon market, could take a decade to get supply below current levels.

It finds that that previous forecasts published by the Commission and the UK government, underestimated the extent to which unassigned carbon allowances will hit the market in 2020. Sandbag estimates, roughly 750 million unused allowances will be auctioned in 2020, adding to 900 million “backloaded” allowances that are already due to flood the market in 2019 and 2020. This will see an acute increase in the supply just before the Commission’s proposed market stability reserve is supposed to start reducing it.

January 2015
Briefing: NGO joint recommendations on the ITRE Market Stability Reserve proposal

Sandbag's voting recommendations for the ITRE Committee of 23rd January, in partnership with Climate Action Network Europe, Carbon Market Watch, Greenpeace EU, and WWF EU Policy Office. Read more at

December 2014
Briefing: The UK Capacity Market - Auction results

Is the Capacity Market slowing UK power decarbonisation? Read our analysis.

"With £293m being paid to old coal, the capacity market looks more like a subsidy scheme to keep heavy polluters online, rather than as a mechanism to encourage new investment - only 5% of auction revenues will go to new investment. It seems the capacity mechanism is actually slowing decarbonisation of the UK power sector." – Dave Jones, Sandbag

December 2014
Briefing: Request for Internal Review of Commission Carbon Leakage Decision

Following our briefing on the problems with the ETS Carbon Leakage list, with this request for an Internal Review (2014/746/EU), climate NGOs are continuing their challenge to the unreasonable €30 carbon price assumption for compensating EU industry (the current price is under €7).

With Greenpeace, WWF, Carbon Market Watch, and Sandbag

Read more here:

December 2014
Briefing: Amendments to the Market Stability Reserve proposal

Sandbag supports four key changes to improve the Commission's Market Stability Reserve proposal. They are needed to avoid a price crash and the possible collapse of the EU Emissions Trading Scheme.

• Cancel backloaded allowances

• Cancel unallocated free allowances

• Start the MSR in 2017

• Calibrate the annual adjustments

November 2014
Briefing: Response to the DECC Consultation on Implementing the EPS

This brief note responds to the Department of Energy & Climate Change consultation on Implementing the Emissions Performance Standard on electricity generation in the UK.

Sandbag continues to believe the EPS, though welcome, does not go far enough to signal the transition to low-carbon power in the UK.

The current EPS:

  • fails to include existing coal plant undertaking life extension (publicly paid for in the Capacity Market) through air pollution control equipment;

  • grandfathers the 450gCO2/kwh EPS level out to 2044, which is inconsistent with UK commitments in the Climate Change Act. Grandfathering of 10-15 years is more appropriate to lead UK electricity generation towards decarbonisation.

October 2014
Briefing: Is Europe's new climate target a walk in the park?

Sandbag responds to the European Environment Agency's 2014 Trends and Projections report, challenging the limited emissions reductions the Agency expects between 2013 and 2020 and warning that spare carbon allowances amassed in the EU ETS risk scuppering the 2030 climate target newly agreed by European heads of state at the October Council.

Press clipping:
October 2014
Briefing: Consultation Response on Next steps in CCS - Developing an approach for the next phase of Carbon Capture & Storage projects in the UK

The UK government is currently (October 2014) consulting on next steps for Carbon Capture & Storage in the UK, and Sandbag has responded. Though a regulatory framework has begun to mature, progress on commercial-level CCS has been disappointing, with the UK yet to break ground on a single project. Sandbag believes that CCS has also been neglected in the areas of industrial emissions, and that the already existing Carbon Capture & Utilisation (CCU) companies in the UK are being unhelpfully ignored.

October 2014
Report: Slaying the Dragon: Vanquish the surplus and rescue the ETS

In our 6th annual report, Slaying the Dragon, we highlight the effect of recent changes to the ETS rules. There have been big improvements from an environmental perspective – including harmonised cap setting, the introduction of carbon-efficiency benchmarks and the banning of certain classes of offsets.

Our report finds that changes introduced to date, though welcome, are not sufficient to address the ETS’s significant problems, the most obvious of which is the build up of a massive excess of allowances that is suppressing prices and dissuading companies from investing in clean technology.

With a new team in Brussels there is great potential to get the ETS back on track. Vanquishing the surplus should be the first item on the to-do-list, but positively addressing competitiveness fears, by ensuring ETS rules stimulate green growth in Europe, must also be a part of that process.

October 2014
Briefing: 2020 surplus projection

For the first time, Sandbag – alongside its “Annual State of the ETS” – launches a complementary report, “Forecasting the EU ETS to 2020”. Sandbag projects a 4.5 billion tonne surplus by 2020 – this is more than double the current 2.1bt surplus. This is far in excess of the European Commission’s 2020 forecast of 2.6bt, and illustrates how severely the EU ETS is in need of reform. The major difference from Sandbag’s forecast to forecasts by other analysts is its bearish outlook for emissions growth – in particular, due to the assumption of electricity consumption falling 1%/year.

This document is open for peer review to 14-Nov-2014. Sandbag makes as transparent as possible all assumptions and methodology. If you wish to discuss any aspect of this document, please contact us at

October 2014
Briefing: UK Capacity Mechanism

First signs that payments to old coal will undermine climate goals:

Early evidence shows that DECC’s clumsy Capacity Market will actively subsidise 45-year old coal power stations to stay open that would otherwise have shut, and will consequently crowd out opportunities for new gas power stations to be built and discourage new demand-side response. Keeping additional coal open towards 2030 will put the UK’s legally-binding climate goals under threat. In addition, the auction’s perverse design could result in a windfall to the French nuclear company EDF of up to £2.6 billion.

Read our blog here.

September 2014
Briefing: Emergency Briefing objecting to the 2015-19 carbon leakage list

The European Commission's 2015-2019 carbon leakage list uses a projected ETS price of €30 per EUA. This is highly unrealistic, with the Commission's own research showing that €10 would be more reasonable, and the current ETS price of around €6. As such, the draft list includes far too many products which are not genuinely exposed to carbon leakage. This means too many free allowances will be handed out to industry, and Member States will miss out on €5 billion in auction revenues over the next few years. Parliament must demand the Commission uses a more realistic carbon price for calculation of carbon leakage.

Errata: The table in the version originally published did not include offsets in the cumulative balance of free allowances in 2013, making cumulative surpluses for each sector look lower than they actually are for that year. This has now been amended.

Press clipping:
September 2014
Briefing: Do current EU energy and climate policies tackle coal?

In July 2014, Sandbag released a comprehensive report called “Europe’s Failure to Tackle Coal” looking at how the European Air Quality Directive and the Emissions Trading Scheme are having a limited impact on coal generation. This briefing expands the picture to look at how the other elements of the EU’s climate and energy package: the Efficiency Directive and the Renewables Directive are impacting coal.

We present a scenario where, without major policy reform, coal remains substantially untouched by the current policy package.

August 2014
Briefing: The Emission Trading Scheme post-2020 carbon leakage provisions

Responding to the European Commission's request for stakeholder submissions on the post-2020 carbon leakage provisions, Sandbag made clear that the current rules (free allocation benchmarked against historical production for a fixed baseline year) is failing to address the risk of carbon leakage, and may in fact be encouraging 'offshoring' and reduced industrial production. We encouraged changes to the provisions, including using latest available production data, to prevent (and possibly reverse) any future carbon leakage.

July 2014
Briefing: Consultation Response: Carbon Capture and Storage in the EU

Carbon Capture and Storage (CCS), a variety of processes for extracting CO2 from large point sources and permanently storing it, has been recognised by the European Commission since the 2008 Impact Assessment as an essential part of Europe’s low carbon pathway. However, since then progress has been slow.

The European Commission is currently reviewing progress on CCS and Sandbag has responded.

July 2014
Report: Europe’s failure to tackle coal: Risks for the EU low-carbon transition

This new report covers coal emissions in the European power sector. Coal for power now represents 18% of total EU CO2 emissions, equivalent to all road transport.

The report explores the question of how long high coal use in the EU could continue and concludes that unless there are changes in the EU’s energy and climate policies it could remain stubbornly high into the next decade.

If EU politicians do not act urgently, Sandbag shows that current policy will not guarantee the end of unabated coal, calling in to question the credibility of Europe’s climate change and energy policy. And with no guarantee of continued renewables and energy efficiency growth after 2020, coal’s comeback could become permanent.

The executive summary is available for download here.

Our database of power stations is available for download here.

July 2014
Briefing: Policy Briefing on the Market Stability Reserve

This policy briefing responds to the Commission's proposal for a Market Stability Reserve. We explore why introducing a Market Stability Reserve could help to improve the cost-efficiency and resilience of the EU Emissions Trading Scheme; we explore how the Commission proposal could be improved to deliver these aims more effectively; and finally, we explain why a one-off environmental adjustment to the cap is also necessary if the ETS is to deliver Europe's stated climate goals in a fair and cost-effective manner.

July 2014
Briefing: An introduction to the EU Emissions Trading Scheme

With Carbon Market Watch, this short and simple brochure accompanies our event in Brussels introducing new MEPs to the basics of the EU Emissions Trading Scheme.

March 2014
Report: Sharing the Load: Poland’s coming of age on climate policy

As European leaders meet today to discuss Europe’s next energy and climate framework, Poland is again poised to delay or block efforts to agree a 2030 climate target. But new research conducted by Sandbag finds that Poland has consistently gained preferential access to greenhouse gas emissions rights under preceding climate targets, and this has allowed Poland to keep growing its emissions while profiting from the sale of spare carbon allowances. Read the blog here.

March 2014
Briefing: A 2030 Decarbonisation Obligation or Emissions Performance Standard: Breaking the deadlock on EU climate and energy targets

EU Member States are at loggerheads over the need for a 2030 renewable energy target.

A binding Decarbonisation Obligation or Emissions Performance Standard might be a way to achieve the same aims of reducing carbon emissions and supporting investor confidence in the renewable energy industry, whilst allowing the flexibility in technology some countries want in meeting their commitments to decarbonise the electricity-generating sector.

This briefing is currently in draft form, and we will be consulting on it, including with an event in the UK Parliament in March, and coming forward with a revised recommendation later in the year. Read the blog here.

February 2014
Briefing: Carbon budgets vs GHG targets

The carbon budgets set to help deliver Europe’s climate targets risk becoming an accounting fudge that allows these targets to be exceeded. There are now enough spare carbon allowances in the EU emissions trading scheme and the EU Effort Sharing Decision to allow Europe’s emissions to climb back to near 1990 levels by 2020. Europe must urgently adjust its carbon budgets to ensure its intended climate targets are actually met, be they in 2020, 2030 or beyond.

This briefing was launched at our joint Sandbag/Greenpeace event "Getting Back on Track" on January 29th 2014.

December 2013
Report: Aviation in the Emissions Trading Scheme: What happened in 2012 under Stop the Clock

In-depth analysis of what happened under the first year of the EU Emissions Trading Scheme incorporating aviation's carbon pollution. Under 'Stop the Clock', a reduced scope from the original proposals, all intra-EU flights had to account for their emissions from 2012 onwards. Was it a success? Who complied and who didn't? What should the EU do next? Read the blog here.

December 2013
Briefing: Europe’s 2020 confidence trick: Room to grow emissions under the current climate targets

The carbon budgets Europe set to meet its 2020 target would allow it to grow its emissions by over 2% a year between now and 2020 (reaching 19% above current levels). Europe must urgently revisit its 2020 target and the carbon budgets set to meet it if the original spirit of that goal is to be maintained. If these are not redressed, the 2030 target will be similarly undermined.

The main calculations underlying our analysis can be found here.

October 2013
Report: Benefitting from Carbon Markets? German Participation in CDM and JI during the first Kyoto Commitment Period

The flexible mechanisms of the Kyoto Protocol, namely the Clean Development Mechanism (CDM) and Joint Implementation (JI), have been very successful in generating emission reduction credits at large scale and low costs. In this paper we investigate to what extent German stakeholders have been involved in the flexible mechanisms and whether or not they have benefitted from the scheme. To answer this question, we look into German investments in the two mechanisms and how credits have been used to comply with obligations under the EU ETS. Furthermore, we investigate the role of German consultancies, auditors, financial market players and technology providers.

This report was written in collaboration with the Wuppertal Institute

September 2013
Briefing: Amendments to UK greenhouse gas emissions trading scheme and national emissions inventory regulations - Consultation Response

Proposed amendments to the UK’s greenhouse gas emissions trading scheme regulations (Consultation URN 13D/198), along with early-2013 legislation already passed but yet to be translated into new guidance by the Environment Agency, will endanger the integrity of the ETS scheme in the UK, primarily by making fines 'discretionary' and removing criminal penalties. In this response, Sandbag calls for the €100tCO2 mandatory penalties to be reinstated. Read more in the blog here: Polluters to avoid paying for carbon emissions in government’s ‘bonfire of regulation’

August 2013
Briefing: Reviewing the 4th carbon budget - Evidence submitted to the Climate Change Committee

In this submission to the Climate Change Committee we highlight that the current "climate objective" adopted by the CCC involves unusually low probabilities of keeping global temperature rise below two degrees (e.g. 37%), and also emphasise that the assumed UK emissions pathway encroaches heavily on the emissions space available to developing countries. We echo the CCC's earlier published remarks that the UK's current targets and budgets represent a minimum conceivable contribution to a global effort to combat climate change and argue that these should be strengthened further. Finally, we propose that the UK can best maintain the autonomy and environmental integrity of its domestic carbon budgets by unilaterally cancelling any excess carbon allowances awarded it under EU or international burden sharing agreements.

August 2013
Briefing: Review of the Balance of Environment and Climate Change Competences between the UK and the European Union - Evidence submitted to DEFRA

The UK government is examining the EU’s competence (power to act), in balance with the UK government. Sandbag's evidence regarding the environment and climate change sector is available here; the government's full report will be published in December 2013.

July 2013
Briefing: Progress on carbon budgets - evidence submitted to the UK Environmental Audit Committee

In this written evidence submitted to the EAC, Sandbag argues that the UK government has no basis to weaken the 4th carbon budget, and on the contrary should look to strengthen it. We highlight that EU ambition for the relevant period (2023-2027) has not yet been decided, and argue that UK ambition poses little danger of outstripping EU ambition in any case. We stress that the methodology used by the CCC to determine the UK trajectory embraces an unacceptably high risk of passing 2°C, and awards the UK an inequitably large proportion of the global carbon space. Finally we argue that where the UK carbon budgets are endangered by overly generous EU allocations, these can be protected simply by unilaterally cancelling EU allowances.

June 2013
Report: Drifting Toward Disaster: The EU ETS adrift in Europe's climate efforts

Drifting Toward Disaster is Sandbag's 5th Annual Environmental Outlook for the EU, reviewing how the scheme has performed across the whole of its second trading phase. The report finds that the Emissions Trading Scheme stands to deliver less than zero net emissions reductions over 2008-2020, and is cancelling out abatement from other policies in the climate package to count against its future climate pledges. It encourages policymakers to agree a backloading decision as a stepping stone to structural reforms which increase the ambition of Europe's 2020 targets and its forthcoming pledges in the international climate negotiations.

Read Damien's summary for Point Carbon here

June 2013
Report: The Sovereign Emissions Rights Framework

The Sovereign Emission Rights Framework is a special report prepared by Sandbag as part of its response to the European Commission stakeholder consultation on the 2015 international climate change agreement. In the runup to the 2015 Climate Conference, our new report challenges policymakers to commence in earnest a public debate about the way international mitigation efforts should be equitably shared between countries under a 2 degree target. To help restart that debate we present our own effort sharing model, and challenge the existing approaches by which Europe and other major emitters have currently defined their equitable emissions pathways.

The report is accompanied by an interactive Sovereign Emissions Rights Calculator.

Since publication these numbers have been reprised in light of the 5th IPCC report (see our blog)

April 2013
Briefing: The UK Carbon Floor Price (2013)

An update to Sandbag's 2012 briefing on the UK Carbon Floor Price in light of the 2013 budget and recent developments.

March 2013
Briefing: EC Consultation response on Structural Options to Reform the EU ETS

Sandbag's formal written submission to the European Commission stakeholder consultation on structural reforms to the EU Emissions Trading Scheme. Our submission argues for the cancellation of 2.2. billion allowances to restore the scarcity originally envisaged in the scheme and to help align the ETS with a 30% domestic EU climate target in 2020. It also recommends a suite of measures to ensure a scarcity of allowances, and adequate environmental ambition over the longer term.

February 2013
Briefing: Carbon Fatcat Companies in Greece

This briefing, published jointly with WWF Greece, highlights the surpluses accruing to all Greek manufacturing sectors, and focussing on the ten most oversupplied companies operating in the ETS in Greece. For two companies profiled, Lafarge and Titan Cement are shown to be protected against ETS costs by free allowances all the way out until 2020. The report is also available in Greek

February 2013
Report: Klimagoldesel 2013 - Carbon Fatcat Companies in Germany

This new report, published jointly by Sandbag and Friends of the Earth Germany (BUND), finds that German manufacturer's have accrued spare carbon allowances equivalent to the annual emissions of Austria, while just ten companies have potentially profited by as much as €1.2 billion from the scheme.

Released in advance of key EU votes to withhold ETS allowances from auctions, this report updates research conducted in our first Klimagoldesel [Climate cash-cow] report from November 2011.

The report is also available in German at:

January 2013
Briefing: EU ETS at a crossroads: recalibrating an oversupplied market to spur investments and innovation

The European Parliament will soon vote on the European Commission’s proposal to amend the EU’s Emissions Trading Scheme(EU ETS) Directive. In order to correct the massive imbalance between supply and demand in the carbon market, the European Commission has proposed to delay the auctioning of 900 million (mln) allowances, a process called “back-­‐loading”. The Parliament and EU governments have been asked to clarify the mandate of the Commission with regards to delaying the timing of emission allowance auctions.

December 2012
Briefing: Compensating Energy Intensive Industries for ETS costs - Evidence submitted to the EAC

Sandbag's written evidence submitted to the UK Environmental Audit Committee on the Energy Intensive Users Compensation Scheme. Our submission called for the government to factor in any overcompensation for direct ETS compliance costs (i.e. superfluous free allowances) before awarding any new compensations for indirect costs incurred. We also warned against several other potential overcompensation issues present in the EU State Aid Guidelines. This evidence appears in the official EAC report alongside a transcript of our oral evidence to the hearing.

Press clipping:
December 2012
Briefing: BIS consultuation submission on compensating Energy Intensive Users

Sandbag's official submission to the Department of Business Innovation and Skills on compensating Energy Intensive Users for the indirect costs of the EU ETS and UK Carbon Floor Price.

December 2012
Briefing: Event Note: Help or Hindrance? Offsetting in the EU ETS

Summary of the discussion at the Brussels launch of Sandbag's Help or Hindrance? Offsetting in the EU ETS report

November 2012
Report: Help or Hindrance? Offsetting in the EU ETS

This report follows on from work analysing offset usage that Sandbag started in 2009. Its primary purpose is to highlight what is happening on the ground. Linking the installations in the EU ETS with the projects they bought offset from has brought the use of carbon credits to life, as well as dramatically increasing the transparency of the system. The development of our web-based interactive maps (see: will further add to the transparency of how European companies utilise offsets as a means to meet compliance obligations.

November 2012
Report: Belgian Carbon Fatcats

A collaboration between Sandbag and WWF Belgium, this briefing identifies the ten companies which have obtained the largest surpluses of ETS allowances from the Belgian government. Against industry's claims that the ETS drives operations overseas, the briefing finds clear evidence that monetizing spare allowances helped companies to survive the recession.

October 2012
Briefing: Response to the public consultation on the EU ETS backloading proposal

Response to the public consultation on the EU ETS backloading proposal

June 2012
Briefing: Czech Fat Cats

This joint briefing with the Centre for Transport and Energy (CDE) investigates the current level of allowance oversupply in the Czech Republic, and specifically at the top ten companies who have amassed the largest amount of allowances.

June 2012
Report: Losing the lead? Europe's flagging carbon market

Losing the lead is Sandbag’s 4th annual report on the Environmental Outlook for the EU ETS – following on from ETS S.O.S. (2009), Cap or Trap? (2010) and Buckle Up! (2011). This report again uses latest emissions data to examine how the ETS is performing on the ground and makes recommendations for urgent reforms. In particular, it highlights that existing proposals to reform the scheme inadequately account for the change in demand for allowances since the caps were last set (2.2Gt), and the effects of industrial overallocation on the cap (0.9Gt). This report also updates our list of Carbon Fatcat companies accruing the largest surpluses of free allowances within the scheme.

May 2012
Briefing: Event Note: What's happening on emissions trading in China?

Summary of the discussion at the joint launch event of Sandbag and the SEI's Chinese emissions trading reports.

April 2012
Report: Turning the Tanker: China's changing economic imperatives and its tentative look to emissions trading

This report is not a comprehensive overview of Chinese environmental policy; it intends to act as a starting point for those wishing to better understand why and how China is slowly changing to adopt progressive policy instruments to tackle growing environmental concerns. Sandbag is particularly interested in the proposal to develop pilot emissions trading schemes as a precursor to establishing a national emissions trading scheme (ETS). It would be absurd to suggest that China is facing anything but an environmental catastrophe if it fails to act soon. It would be equally ridiculous not to look at China in context, a vast country experiencing rapid growth coupled with an increasing dependency on natural resources. We purposefully liken China's task of low carbon development to turning a tanker; a process that requires both time and patience. China has - as this report sets out to show - started to adjust the rudder, but it will take time for this behemoth to come about.

April 2012
Report: 碳交易在中国



April 2012
Briefing: Options for Reforming the EU ETS

This briefing is prepared to coincide with the meeting of Energy and Environment Ministers in Horsens Denmark. It reviews some of the main options for ETS reform, exploring measures both to fix the supply of allowances in the short term and also to establish an investment framework that prevents carbon lock-in over the long term.

We conclude that a substantial set aside is urgently needed, which not only accounts for new surpluses under the Energy Efficiency Directive but also corrects for existing surpluses caused by industrial oversupply. We argue that these allowances should later be cancelled through a re-opening of the Directive in order to reap an environmental benefit and not merely an improved investment signal. We recommend establishing a new linear reduction factor for the scheme which aligns with Europe’s 2050 climate goals, effective from 2020 at the latest. Finally, we discuss features which might be introduced to the scheme if the Directive is reopened to protect from unexpected demand fluctuations on an ongoing basis.

March 2012
Briefing: The UK Carbon Floor Price

This short briefing explains what a carbon floor price is and why the UK Government believes it is needed. It also highlights some concerns and briefly explores alternative options.

February 2012
Briefing: Aviation emissions and the EU ETS

This briefing explores the cost in 2012 of the EU ETS to the UK's top 20 emitting airlines compared to the cost of the removal of fuel subsidies, such as introducing a tax on kerosene.

February 2012
Briefing: The ETS and the Energy Efficiency Directive

This briefing was prepared specifically for the MEPs in the Inustry, Technology and Research Committee ahead of their meeting on February 28th and outlines Sandbag's recommendations for how reforms to the ETS should be approached through the draft Energy Efficieny Directive legislation.

February 2012
Briefing: California's set-aside model

This briefing explores how set aside legislation is being introduced from the outset into California’s cap-and-trade legislation. The Californian scheme contains two strategic reserves of permits: the larger one is an Allowance Price Containment Reserve, which helps prevent both high and low prices in the market. The second is a Voluntary Renewable Energy Reserve which protects the decarbonising efforts of ethical energy consumers. We present these as legislative options that the EU policymakers may wish to follow here in Europe.

November 2011
Report: Der Klimagoldesel: Wer sind die Gewinner des EU Emissionshandels?

In den vergangenen Jahren haben wir bereits in verschiedenen Berichten dargestellt, ob und wie sich das europäische Emissionshandelssystem (EU ETS) bewährt hat. Unter Nutzung öffentlich zugänglicher sowie von uns selbst ermittelter Daten haben wir nun untersucht, wie dieses System auf Unternehmensebene funktioniert. Dabei hat sich herausgestellt, dass einige Unternehmen aufgrund kostenloser Zuteilung von Emissionszertifikaten erhebliche Überschüsse an eben diesen Zertifikaten angehäuft haben. Der vorliegende Bericht nimmt diejenigen Sektoren und Unternehmen in Deutschland ins Visier, welche die größten Überschüsse gehortet haben – denn Deutschland ist das EU-Land mit dem größten vom EU ETS erfassten Emissionsvolumen und hält somit eine Schlüsselposition in der Frage, ob und wie dieses Handelssystem reformiert werden wird.

Please note: since the publication of Klimagoldesel, we have received new information on installation ownership and waste gas transfers that has revised some of our figures for the top ten companies. The English report now contains an addendum updating our figures. A German translation will be available shortly.

September 2011
Briefing: Submission to the House of Commons Energy and Climate Change Committee Inquiry into the EU ETS

Sandbag submitted this memorandum as written evidence towards the latest ECC Select Committee inquiry. The ECC Committee describes the inquiry as follows:

The EU ETS is the principal policy instrument for climate change mitigation in the EU. This inquiry will investigate whether the system can deliver the EU’s climate change mitigation goals in the absence of a legally-binding international emissions reduction commitment.

July 2011
Report: Buckle Up! Tighten the cap and avoid the carbon crash

Three years into Europe's Emissions Trading System second trading period - how is it performing? This report provides a comprehensive assessment of the environmental outlook of the ETS, covering permit allocations, oversupply, companies use of offsets and projected effectiveness of the cap through to 2020.

It finds that the huge overallocation to industry in Phase 2 has left a double legacy undermining the effectiveness of the scheme to 2020 and beyond: a carryover of permits banked into Phase 3 and an inflated baseline which affects the starting position of the declining carbon cap beginning in 2013. The result: a likely oversupply that grows to an eye-watering 1.9 billion tonnes through to 2020, equivalent of a year's worth of carbon permits in the scheme.

Sandbag recommends a number of measure to save the ETS from redundancy: that the European Commission propose set-aside of 1.7 billion permits before 2013, as well as opening up the Directive by 2015 to adjust the cap.

June 2011
Report: Carbon Fat Cats 2011

Thanks to overly optimistic forecasts of growth and fierce lobbying by heavy industry the EU Emissions Trading Scheme (ETS) has failed to incentivise cost effective reductions in emissions and instead enabled some companies to profit from the scheme. This report looks at those companies who have made the most substantial gains: our Carbon Fat Cats.

The fact that the ETS has provided substantial windfalls to some participants and a money making opportunity for many others has not prevented industry from attacking it whenever it can and from successfully lobbying to keep it in its current state: oversupplied with allowances and exerting only the weakest pressure on participants to invest in a low carbon future.

Interactive map available at

May 2011
Briefing: Industrial Gas Big Spenders: HFC and N20 adipic credit usage in 2010

On the 16th May 2011 the European Commission released the final emissions trading data for 2010, giving the most up-to-date picture yet of how the system is functioning. Included in this data is the total use of international offset credits, from both Clean Development Mechanism (CDM) and Joint Implementation (JI) projects.

May 2011
Briefing: Fresh concerns over the transparency of the EU emissions trading scheme (ETS)

NGOs welcome the European Commission’s moves to increase the security of the EU ETS. Bolstering security measures to ensure an effective trading system is of paramount importance.

Increased security measures, however, should not come at the detriment of transparency and accountability.

December 2010
Report: Carbo diem: Seizing Italy’s opportunities in the EU ETS

To date Italy has perceived its obligations under both the Kyoto Protocol and the EU Emissions Trading System purely as a punitive cost to be shouldered rather than an opportunity for development. Not only has this made Italy nervous of European efforts to increase climate ambition, it has become a self-fulfilling prophecy: to meet its Kyoto targets Italy stands to spend billions of Euros on emission reductions overseas that would have been better spent improving Italy’s energy infrastructure and security. Without a change in strategy Italy stands to haemorrhage additional billions meeting its European climate commitments through to 2020.

An Italian translation of the report is also available.

December 2010
Briefing: Submission of comments on the California Air Resources Board proposal’s for introducing a Cap and Trade Program

Sandbag comment piece on the California Air Resources Board proposal’s for introducing a Cap and Trade Program

October 2010
Report: E R Who?: Joint Implementation and the EU Emissions Trading System

This report follows on from Sandbag’s ‘International Offsets and the EU 2009’ report released in July 2010. That report focused specifically on the use of CDM credits generated in uncapped countries, which make up the overwhelming majority of offsets used for compliance in the EU ETS to date. Nevertheless it was noticed that in 2009 there was a sharp increase in the number of JI credits from capped countries being surrendered for compliance. With much of the focus on the CDM it is easy to overlook the use of JI.

September 2010
Report: Cap or trap - How the EU ETS risks locking-in carbon emissions

This report critically evaluates the perfomance and prospects of the EU ETS as it currently stands. It explores how Phase 2 caps have been weakend by recession, and how slack from Phase 2 - in the form of unused offset credits - is likely to defer abatement within the EU for much of Phase 3. In addition we explore how large, undeserved surpluses have accrued to specific sectors and companies within the EU ETS.

Our companies analysis can also be viewed as the Carbon Fatcats 2009 pullout displayed below.

The report includes a note of correction from October 2010.

September 2010
Report: Carbon Fat Cats 2009 - Company Analysis of the EU ETS

This report revisits the companies holding the largest surpluses in 2008 to see how they have fared since the recession. New analyses explores potential intra-European competitiveness distortions introduced by these surpluses, and investigates how Phase III caps might affect these companies.

This is a pullout from our Cap or Trap report displayed above.

September 2010
Briefing: Hydro CERs and the EU ETS

The UNFCCC separates CDM and joint implementation (JI) project credits into 15 sectoral scope types. These sectoral scopes broadly differentiate the different project types, however, they do not always provide the most useful definitions, for example renewable and non-renewable project are included under the same sectoral type. For this reason Sandbag has further broken down the UN definitions into more detailed project types. This makes it clear what type of emissions reductions credits are entering the EU ETS and also makes the data more accessible for the lay person.

July 2010
Report: International Offsets and the EU 2009

Offsetting is clearly being used very successfully by many of the participants in the EU trading system. It is serving to reduce prices of compliance and delivering substantial volumes of finance (circa €860 m per annum) to countries outside of Europe. We wish to use the information we present here to illustrate how the scheme is working. It is clear that contrary to the claims made by industry it would not be 'impossible'1 for the EU to take on more ambitious climate targets since there is a readily available source of abatement accessible both within the EU and internationally via the offsetting market. In fact permits are so abundant that if the EU wishes to see a thriving market in abatement it should implement tighter caps on emissions and phase out industrial gas projects.

June 2010
Briefing: Carbon Floor Price

The Government announced today a consultation on the design of a 'floor price' for the carbon market. This short briefing explains what a carbon floor price is and why the Government believes it is needed. It also highlights the issues that need to be born in mind when designing and evaluating a policy intervention of this kind. IT will be important to consider not just the detail of the policy itself but also how it fits into a broader strategy the Government must deploy to create the right conditions to decarbonise the British economy and grow the sustainable energy sector.

April 2010
Briefing: A closer look at voluntary carbon action

Cutting carbon now occupies a prominent place in discussions about ethical living and corporate responsibility. In this document we explore how the popular metaphor of “carbon footprints” can lead us astray by emphasising personal action at the expense of public action and by importing politically contentious ideas about how global carbon resources should be apportioned. We also explore how a failure to account for the implications of the EU Emissions Trading Scheme (ETS) has led commentators to make misleading recommendations about the value of renewable tariffs or reduced electricity consumption in combating climate change. As electricity emissions are controlled under the ETS, these measures do not reduce the overall amount of CO2 entering the atmosphere unless a corresponding quantity of ETS carbon permits are bought and destroyed.

April 2010
Briefing: To offset or not to offset

In this document we re-examine the role offsetting can play in tackling climate change, and investigate how these compare with alternative carbon products in the consumer market today.

April 2010
Briefing: Rescuing the EU ETS from redundancy

After running for 5 years, the EU Emissions Trading Scheme (ETS) has failed to constrain the annual supply of carbon across capped sectors for any year except 2008. In Phase I the carbon price collapsed due to the glut of carbon permits. Then, barely into Phase II, the recession savaged Europe’s economy dragging emissions down 6% in 2008 and sending them plummeting a further 11.6% in 2009, leaving the market long once again by some 233 million tonnes.ii The likely slow convalescence from this economic shock will further enfeeble Phase II caps which were already anaemic. Furthermore, likely carryovers of at least 1.5 billion permits from Phase II could allow emissions to grow with no further need for domestic abatement until as 2017 or later.

March 2010
Report: Carbon Fat Cats - Company Analysis of the EU ETS

This report presents company level analysis of the EU Emissions Trading Scheme for 2008 and looking ahead till 2012 when the current phase of trading ends.

The EU ETS was set up ‘to promote reductions of greenhouse gas emissions in a ‘cost-effective and economically efficient manner’ as a centrepiece of European efforts to tackle climate change. However, our company level analysis has uncovered a number of trends which have serious implications for the short and long term future of the ETS.

March 2010
Report: International offsets and the EU

The following report is based on a consolidated database of information about the use of offsetting in the EU EmissionsTrading System in 2008.This data links for the first time the users of international offsets (Certified Emissions Reductions or CERs) for compliance with EU caps, to the projects they have bought credits from.

January 2010
Report: Copenhagen: EU Not Done Yet

The end of 2009 saw the long awaited Copenhagen negotiations ending in disappointment with no legally binding emissions reduction targets to succeed those in the Kyoto protocol and only a minimal political accord being agreed. the EU's policy of using its conditional target to secure additional commitments from other countries has not delivered. however, January 2010 does offer the EU one last chance to inject much needed bite to the Copenhagen process, and to reclaim its role and reputation as a leader on climate change. at the end of the month, the Copenhagen accord will be finalised with all countries required to put forward their proposed emissions reductions for the period up to 2020.

December 2009
Briefing: Lessons learned from the ETS

The EU Emissions Trading system is the most extensive example of cap and trade regulation of greenhouse gases in existence to date. It be- gan in 2005 with a two year preparatory phase and is now in its first formal phase (beginning in 2008 and ending in 2012). The rules governing the scheme post 2012 have been agreed but are conditional on UN climate agreements.

The EU System offers rich evidence on what works and what doesn’t work in the design of an effective cap and trade policy. This briefing highlights the key lessons from the EU’s experi- ence for policymakers and civil society in coun- tries currently considering implementing their own emissions trading systems, and for the development of a global carbon market.

December 2009
Briefing: The Case of ArcelorMittal

This briefing examines how the world’s biggest steel company, ArcelorMittal, is set to become the largest1 beneficiary of the EU Emissions Trading Scheme. By 2012 the company is set to have 80 million permits to pollute which it does not need and which it was given for free. If sold, these will make over £1 billion in windfall profits by 2012, paid for in part, by UK power consumers.

December 2009
Briefing: 10 Reasons to engage with emissions trading

The key goal for all those concerned about climate change is too see global emissions peak and decline in the near future. Though there are many theories about how best this can be achieved an ounce of action is worth a tonne of theory and, with emissions trading schemes already up and running in Europe, action on the ground is already occurring as a result. Trading systems introduced so far still need to develop. They must be monitored and scrutinised by civil society to ensure they are achieving the task for which they have been invented. But they are potentially powerful tools for change. Below we set out some of the reasons why we are committed to engaging with the emissions trading or ‘cap and trade’ policy and to lobbying for improvements. `

November 2009
Briefing: One Giant Leap Overview and Legal Text

This document describes the objectives and goals of the One Giant Leap campaign.

Press clipping:
October 2009
Briefing: EU Ambition in Copenhagen: hot air means we can aim higher

This briefing explores three aspects of the EU's current climate change targets: - the degree of spare permits or 'hot air' that will be available for use in the next commitment period - we focus on permits issued to companies covered by the current phase of the EU Emissions Trading Scheme; - the appropriateness of the target setting formula the EU developed for itself in advance of the Copenhagen negotiations; - the effect of comparing Annex 1 country targets against different baseline years.

July 2009
Report: EU ETS S.O.S: Why the flagship emissions trading policy needs rescuing

The EU Emissions Trading System (ETS) is a central plank of the EU's policy framework towards tackling climate change. Covering 50% of Europe's emissions it creates approximately 2 billion tradeable permits a year. The scheme has the capacity to be a very powerful tool in cutting carbon emissions in the EU but it is currently a blunt tool, not delivering to its full potential. This report identifies two major flaws with the Emissions Trading Scheme as it stands and discusses the impact of these in relation to EU ambition on tackling climate change.

March 2009
Briefing: Submission to Australian Carbon Offset consultation
March 2009
Briefing: Submission to the House of Commons Environmental Audit Committee Inquiry into Carbon Markets
March 2009
Briefing: Proposal to introduce tax incentives for voluntary cancellation of permits

The UK is now liable to meet legally enforceable carbon budgets.

To account for the fact that ~50% of emissions of CO2 are covered by the EU ETS Government has chosen to count traded effort towards the meeting of these budget (as opposed to counting actual emissions). This is supported by the argument that emissions reductions are valid contributions to countering global climate change irrespective of where they occur and that trading helps to minimise cost by uncovering least cost abatement.

It is the initial allocation of permits that therefore contributes towards the budget. That is to say purchased permits/credits can be used to counteract or 'offset' any emission occurring above the initial allocation. Similarly any under emission resulting in sold or banked permits cannot be counted towards the budget (since they result in emissions occurring somewhere else).

October 2008
Briefing: Bend the curve in global emissions using a power sector carbon budget (updated Jan 2009)

A key criteria for a global climate change deal in Copenhagen in 2009 is that it should be sufficient, meaning that it must address the need for global emissions to peak and decline quickly. Time is a critical factor in the science of climate change. Delaying action increases risk.

And yet reaching a global deal has proved to be a complex and time consuming issue. Global emissions are currently increasing at approximately 2.5% per annum – last year adding an additional 27 billion tonnes of carbon dioxide to the atmosphere 20% of which will still be present in the atmosphere around 1,000 years later.

The sooner the growth curve in emissions peaks and declines the better, both in scientific terms and in terms of communicating that progress is possible and the problem resolvable.

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