Barriers to Industrial Decarbonisation

This report by Sandbag summarises feedback from 15 stakeholders regarding the barriers to decarbonising industrial sectors within the EU's Emissions Trading System (ETS). It identifies systemic issues in carbon pricing, the design of product benchmarks, and regulatory norms that discourage breakthrough low-carbon investments in favour of incremental improvements.

• The current EU ETS carbon price is perceived as too low and unstable to incentivise the high capital investment required for breakthrough decarbonisation technologies. This has led to a climate where companies prioritise incremental improvements over radical abatement solutions because the cost of emitting is negligible compared to the cost of abatement.
• The design of ETS product benchmarks may inadvertently penalise early adopters of low-carbon technology. Because benchmarks are based on the top 10% of performers, some operators avoid reducing emissions at a single plant to prevent lowering the benchmark value, which would increase compliance costs for their other, less efficient assets.
• Specific benchmark definitions create competitive distortions by excluding low-carbon substitutes. For example, iron ore pellets—a lower-carbon alternative to sinter in steelmaking—have been treated under a different benchmark rather than the sinter benchmark, which actively discourages the substitution of more polluting materials.
• In the cement sector, the clinker-based benchmark fails to incentivise the reduction of clinker content in cement or concrete, which is a primary lever for emissions reduction. Reducing clinker production currently leads to a reduction in the free allocation of allowances.
• Technical norms and product standards are often overly prescriptive or outdated, leading to 'technological lock-in' and delaying the market entry of low-carbon innovations. This is particularly noted in the cement and concrete sectors, where standards may be based on a single technology rather than performance outcomes.
• There is a significant gap in infrastructure and funding for the commercialisation of new technologies. Stakeholders highlighted the need for government-led development of hydrogen distribution networks, CO2 transport and storage, and increased access to low-carbon electricity.
• The EU's current policy framework does not account for product lifecycle emissions or the value of manufacturing by-products. This creates an uneven playing field and fails to reward business models based on material circularity, such as the use of steelmaking slag to displace emissions in other sectors.

APA

Ember (2018). Barriers to Industrial Decarbonisation. https://ember-energy.org/app/uploads/2020/03/Sandbag_barriers-to-industrial-decarbonisation_-2018.pdf

Chicago

Ember. Barriers to Industrial Decarbonisation. 2018. https://ember-energy.org/app/uploads/2020/03/Sandbag_barriers-to-industrial-decarbonisation_-2018.pdf.

Wikipedia

{{cite report |author=Ember |title=Barriers to Industrial Decarbonisation |date=May 2018 |url=https://ember-energy.org/app/uploads/2020/03/Sandbag_barriers-to-industrial-decarbonisation_-2018.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ember2018barriers, author = {{Ember}}, title = {{Barriers to Industrial Decarbonisation}}, institution = {Ember}, year = {2018}, month = may, url = {https://ember-energy.org/app/uploads/2020/03/Sandbag_barriers-to-industrial-decarbonisation_-2018.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }