Temporary Fund to Help Factories Cut Carbon Emissions

EU Temporary Decarbonisation Fund – Key Points

• Purpose
  The EU wants to be climate‑neutral by 2050 and cut greenhouse‑gas (GHG) emissions by 90 % by 2040 (vs 1990).
  The EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) are already in place, but some energy‑intensive industries still face a risk of “carbon leakage” – moving production to countries with weaker carbon rules.
  The Fund gives temporary money to those industries so they can invest in cleaner production and keep EU emissions falling.

• Who can get help?
  Only operators that produce goods listed in the Annex (mainly aluminium, fertilisers, iron & steel, and many other high‑carbon products) and that are covered by the CBAM.
  They must show a concrete decarbonisation plan and meet conditions such as energy‑audit recommendations or a legal commitment to invest.

• How much money?
  The Fund is financed by Member States: each pays 25 % of the CBAM revenue it collects for 2026 and 2027.
  The EU keeps the remaining 75 % as an own resource.
  The total budget for the Fund is limited – about €1 million in 2026, €1.1 million in 2027, and €308 k in 2028 and €324 k in 2029 from Member‑state contributions.

• When is it available?
  The Fund will operate in 2028–2029, covering projects that started in 2026–2027.
  A single call for applications is open in 2028.
  The Fund is temporary; it will be reviewed after 2029 and is not meant to replace future EU climate policy.

• How is it managed?
  The European Commission runs the Fund directly, using existing ETS administrative structures.
  National competent authorities assess applications and calculate support amounts; the Commission reviews and finalises payments.
  Oversight comes from the Commission, OLAF (anti‑fraud), the Court of Auditors, and the EPPO where applicable.

• What does the money cover?
  Investments that reduce GHG emissions, such as new low‑carbon technologies, energy‑efficiency upgrades, or other decarbonisation measures.
  Support is paid only if the operator meets the set conditions.

• Monitoring and reporting
  The Commission collects data on applications, disbursements, and emission reductions.
  It reports to the European Parliament and Council and will publish an evaluation of the Fund’s performance.

• Legal basis
  The Fund is based on Article 192(1) TFEU (environment protection) and Article 322(1) TFEU (budget rules).
  It is proportionate, limited in scope, and coordinated at the EU level to avoid market distortions.

• Key dates
  • 31 March 2028 – operators submit applications.
  • 30 June 2028 – national authorities send lists to the Commission.
  • 31 December 2029 – final beneficiaries receive payments.
  • 31 December 2030 – the Commission reports on the Fund.

• Goods covered
  The Annex lists many specific CN codes for aluminium, fertilisers, iron & steel, pipes, tubes, and other industrial products.
  Only those goods that pose a high remaining risk of carbon leakage are eligible.

This Fund is a short‑term, targeted financial tool to help EU industry stay competitive while cutting emissions, ensuring that the EU’s climate goals are met without encouraging production to move abroad.