Temporary Fund to Help Heavy‑Industry Companies Go Green

What the document is addressing
The European Union is aiming for climate‑neutrality by 2050 and a 90 % cut in greenhouse‑gas (GHG) emissions by 2040 (from 1990 levels). As the EU Emissions Trading System (EU‑ETS) phases out free allowance allocation between 2026 and 2034, some energy‑intensive industries risk moving production outside the EU – a phenomenon called carbon leakage. The proposal creates a Temporary Decarbonisation Fund to give short‑term financial help to those operators that are most exposed to this remaining leakage risk, so that they can invest in low‑carbon technologies and keep the EU’s climate policy effective.

How the problem is being solved

• A fund is set up for the years 2028‑2029.
• Member States contribute 25 % of the revenue they collect from the sale of Carbon Border Adjustment Mechanism (CBAM) certificates for the 2026 and 2027 production periods.
• The fund will pay support only to operators that:
• produce goods listed in the annex (e.g., aluminium, fertilisers, iron & steel, oil‑pipe steel, etc.) or, by request, other goods that show a high remaining leakage risk;
• carry out decarbonisation investments that meet clear, non‑discriminatory conditions (e.g., energy‑audit recommendations, legal commitments to climate‑neutrality plans, or other approved measures).
• A single call for applications is opened in 2028 for the 2026‑2027 production reference period.
• The Commission, in direct management, will review applications, calculate support amounts (based on free‑allocation levels and the average EU‑ETS allowance price for 2026‑2027), and disburse funds to national competent authorities, who then pay the final beneficiaries.
• The fund is governed by a Regulation, ensuring uniform rules across all Member States and preventing market distortions.
• Monitoring, reporting and audit powers are given to the Commission, OLAF, the Court of Auditors and, where applicable, the European Public Prosecutor’s Office.

What changes as a result of this document

• A new EU‑level financial instrument – the Temporary Decarbonisation Fund – is created.
• Member States will now allocate part of their CBAM revenue to this fund (25 % of CBAM sales for 2026‑2027).
• Eligible operators will receive temporary financial support for decarbonisation projects, conditioned on meeting the specified criteria.
• The fund will operate only for two years (2028‑2029) and will be closed after a review of the EU‑ETS revision.
• The Commission will adopt delegated and implementing acts to set detailed eligibility rules, calculation methods, and monitoring procedures.
• Any unused revenue will be returned to Member States in proportion to their contributions.
• The fund’s activities will be subject to the EU’s Financial Regulation, anti‑fraud rules, and audit procedures.

Other important information

• Legal basis: Article 192(1) TFEU (environment protection) and Article 322(1) TFEU (budget rules).
• Subsidiarity & proportionality: The measure is necessary at EU level to avoid uncoordinated national support that could distort the internal market.
• Scope of goods: The annex lists dozens of CN codes covering aluminium, fertilisers, iron & steel, oil‑pipe steel, etc.
• Budget impact: The fund is financed from CBAM revenues, not from the general EU budget. Member States will report contributions by 31 Dec 2027 (for 2026 revenue) and 31 Dec 2028 (for 2027 revenue).
• Governance: The Commission will manage the fund directly, with delegated acts for detailed rules and implementing acts for procedures.
• Monitoring & reporting: The Commission will publish a report to the European Parliament and Council by 31 Dec 2030, detailing disbursements, sectoral distribution, and compliance with decarbonisation conditions.
• Audit & fraud prevention: OLAF, the Court of Auditors, and the European Public Prosecutor’s Office (where applicable) will have powers to investigate misuse of funds.
• Temporary nature: The fund is limited to two years and is intended to bridge the gap until the EU‑ETS is revised in 2026‑2027. It is not meant to become a permanent instrument.

This proposal therefore creates a short‑term, EU‑wide financial safety net for the most vulnerable energy‑intensive industries, funded by CBAM revenues, to help them decarbonise and prevent carbon leakage while the EU’s long‑term climate policy framework is updated.