The Importance of Sustainable Carbon
Strong policies needed to promote the uptake of sustainable carbon for a
climate-neutral and circular chemical sector
By the Ministry of Economic Affairs & Climate Policy and the Ministry of Infrastructure & Water Management (NL)

Climate data indicates that fossil fuel sources are the largest driver of anthropogenic
climate change1. It is widely known that consumption of these sources needs to be curbed,
not only to fight climate change, but also to reduce pollution, to protect biodiversity and
to reduce unwanted fossil fuel dependencies. Without the defossilisation of the chemical
industry our climate and environmental goals cannot be met.
The EU has implemented a number of instruments to reduce our consumption of fossil
fuels, such as the Renewable Energy Directive (RED). Fossil fuel resources are also used
as a chemical feedstock, which adds up to 10.4% of all fossil carbon in the EU 2. This equals
115 Mt fossil carbon, which emits 422.05 Mt CO2 when incinerated. As carbon is a building
block of chemicals and materials, decarbonisation is not an option for the chemical
industry. The only solution is found in defossilisation by using sustainable carbon. There is
currently little to no incentive for the chemical industry to switch their feedstock to
sustainable carbon since the emission reduction takes place at the end-of-life stage and
therefore does not benefit the producer. EU policies are necessary to incentivise the
industry and to ensure a level playing field for the industry. Current policies however fall
short to include these types of emissions because of their focus on emissions reduction at
the source.
To curb climate change and to progress towards a circular economy, there is a need to
shift to sustainable carbon sources in order to create more sustainable and climate-friendly
production and consumption of chemicals and other carbon-containing materials. Recycled
materials, sustainable biomass, and CO2 are the only three alternative sustainable carbon
sources. In the Communication on Sustainable Carbon Cycles, the European Commission
has already highlighted the importance of the switch to these three alternative sources by
formulating the aspirational objective that at least 20% of the carbon used in chemical and
plastic products should be from sustainable non-fossil sources by 2030. The use of these
carbon sources should be promoted further through proper policies.

https://www.pbl.nl/sites/default/files/downloads/pbl-2020-trends-in-global-co2-and-total-greenhouse-gasemissions-2019-report_4068.pdf
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https://renewable-carbon.eu/publications/download-confirmationpage/?somdn_rrpage=somdn_rrpage&somdn_rrtdid=140782&somdn_rrdkey=MTQwNzgy&somdn_rrskey=MTY
4NDE1MTAzMg=&somdn_rrpkey=MTI3NzE4&somdn_rrukey=MA=&somdn_rrtype=cmVkaXJlY3Q
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Important pillars of the EU climate policy are the RED, the Energy Efficiency Directive
(EED), and the EU Emissions Trading Scheme (ETS). The RED sets the standards for the
share of renewable energy to be used in the energy mix, and the EED sets targets to
reduce energy consumption. The ETS sets a cap on the total amount of greenhouse
gases that can be emitted and puts a price on emission allowances, which incentivises
emission reductions and promotes investment in innovative, low-carbon technologies.
These three pillars are crucial in reaching climate neutrality in the EU. However, they do
not cover or incentivise to change the feedstock of the chemical sector. They only cover
direct and energy-related emissions. In order for the chemical industry to defossilise we
need policy instruments that focus on indirect emissions in the value chain. Stimulation is
needed to create a level playing field vis-à-vis the energy and fuels sectors, and to create
a momentum towards defossilisation of the chemical sector. Moreover, carbon is stored
for longer periods of time when applied in chemicals and materials, especially when the
chemicals and materials are recycled at the end of life.
As of yet, no instruments exist to stimulate the replacement of fossil carbon in chemicals
and materials. Current policy proposals3 promote the transition to a circular and climateneutral economy by prescribing, among other requirements, minimum levels of recycled
content in packaging and other products. These proposals focus on a select number of
products, and create a pull through the value chain. However, this is not enough. New
instruments focusing on the input (or feedstock) need to be introduced in order to
enhance the transitions to a circular and climate-neutral economy for a broader range of
products. These instruments should go beyond existing policy proposals, by including
biobased and CO2-based content (in addition to recycled content). Sustainable biomass
and CO2 are crucial resources for chemical feedstock in a circular and climate-neutral
chemical industry. Furthermore, additional options need to be introduced to support the
switch to sustainable carbon. The Climate, Energy and Environmental Aid Guidelines need
to be broadened for this purpose, and the General Block Exemption Regulation needs to
introduce a category for sustainable carbon.
Neither climate nor circular economy policy in the EU offers enough incentives to
promote the use of sustainable carbon as a feedstock for chemicals and materials in the
chemical sector. Meanwhile, shifting from fossil carbon to sustainable carbon in the
chemical sector is crucial for reaching climate neutrality, reducing pollution, protecting
biodiversity, and reducing our unwanted dependencies on fossil fuels. A mix of
instruments that promotes the use of sustainable carbon – through pricing, standardsetting and subsidising – is necessary to reach a climate-neutral and circular chemical
sector. By ensuring that these instruments are coherent, and as integrated as possible,
market distortions on the different use-forms of sustainable carbon are also minimised.
EU-wide instruments ensure higher effectiveness of such instruments, and preserve a
level playing field for the industry.
To stimulate the uptake of sustainable carbon in the chemical sector a range of
instruments and approaches could be considered, for example…
• … more focus of the European Commission on sustainable carbon;
• … an Industrial Sustainable Carbon Regulation which sets targets for a minimum
share of sustainable carbon used in the chemical sector;
• … a border adjustment mechanism for sustainable carbon;
• … more possibilities to subsidise the shift to sustainable carbon in chemicals and
materials in the General Block Exemption Regulation;
• … an IPCEI for sustainable carbon as a feedstock for the chemical sector.

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such as the Packaging and Packaging Waste Regulation and the Ecodesign for Sustainable Product Regulation