ERCST has started a new project that will have as its starting point the fact that we have reached a point in the drive towards a low-carbon economy, where the power industry has undertaken great strides towards decarbonization and energy transition. Electrification is and will continue to play a very important part in the economic transition and is one of the many necessary conditions for the transition to succeed that have yet to achieve the level that is needed.

The next step is clearly a much more difficult nut to crack: industrial decarbonization. While incomplete in many cases and also imperfect, with much work yet to be done to achieve a viable solution, there is currently a framework in place that is creating the supply side of low-carbon products. Since we are in a market economy, the second part also needs to fall into place, that is, the demand side. Hence, the need to ensure the creation of the right framework will lead to demand for low-carbon products.

This ERCST initiative will therefore look at what needs to be put in place to create demand for low-carbon products, and the starting point is that product standards need to be investigated as an option, but not the only option.

The concept of product standards for industrial decarbonization – setting minimum carbon performance requirements for goods – has gained renewed attention in light of ongoing challenges in European and global climate policy. While the idea is not new, having been proposed in various international forums (including sectoral agreements under the Kyoto Protocol), recent developments make it timely to revisit this approach.

The European Union (EU) is entering a period of significant legislative review and policy reform, including:

• Revisions to the EU Climate Law to set the 2040 target and update the EU’s 2035 NDC
• Further review and adjustment of the EU Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism (CBAM)
• Integration of carbon dioxide removals in the EU ETS
• Development of markets for low-carbon products under initiatives such as the Clean Industrial Deal and Steel and Metals Action Plan

In order to introduce product standards, what is also needed is a deep examination of carbon accounting, especially as it relates to the product level.

The main objective of the initiative will be to assess how carbon accounting and carbon intensity product standards could be introduced within the EU policy framework, building on and interacting with existing instruments (e.g., EU ETS, CBAM) and other relevant legislation.

As always, ERCST will follow an iterative, consultative process that will include:

• Research Report: 20–30 pages with policy recommendations.
• Stakeholder Engagements: 6 events – in Brussels and Member States. The first meeting is anticipated in Brussels.

Date to be determined.