What changed

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

– having regard to the reasoned opinions submitted, within the framework of Protocol No 2 on the application of the principles of subsidiarity and proportionality, by the Czech Chamber of Deputies and the Czech Senate, asserting that the draft legislative act does not comply with the principle of subsidiarity,

– having regard to the opinion of the EuropeanCourt Economicof andAuditors Socialof Committee25 ofMarch [...],2026,

– having regard to the opinion of the CommitteeEuropean ofEconomic theand RegionsSocial Committee of [...],19 March 2026,

✦ Formal Adds a consultation of the Committee of the Regions.

– having regard to Rule 60 of its Rules of Procedure,

– after consulting the Committee of the Regions,

– having regard to Rules 60 and 58 of its Rules of Procedure,

– having regard to the opinion of the Committee on Industry, Research and Energy,

– having regard to the report of the Committee on the Environment, Climate and Food Safety (A100000/2026),(A10-0202/2026),

1. Adopts its position at first reading hereinafter set out;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

✦ Adds to Recital 1 the aim of achieving negative emissions after 2050 and of averting carbon leakage while keeping industrial sectors competitive.

Recital 1: (1) The Union is committed to achieving climate neutrality by 2050 at the latest and negative emissions thereafter, which includes the objectives of reducing net greenhouse gas emissions by at least 55% by 2030 and 90% by 2040, in line with the European Green Deal4 and the European Climate Law5 .Law5. The Clean Industrial Deal, as set out in the Commission Communication of 26 February 20256 ,20256, underscores the need to align industrial competitiveness with climate ambition, ensuring that the transition to a climate-neutral economy is both just and economically resilient.resilient, while also maintaining the competitiveness of industrial sectors and averting the risk of carbon leakage. / 5 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (OJ L 243, 9.7.2021, p. 1, ELI: http://data.europa.eu/eli/reg/2021/1119/oj).

✦ Replaces the description of asymmetry and relocation risk in Recital 2 with text on the reduced Union-wide emissions cap, free allocation, the Market Stability Reserve and funds alleviating EU ETS costs.

Recital 2: (2) The Union’s environmental objectives, as set out in Article 191 of the Treaty, include preserving and improving the quality of the environment and promoting measures at international level to address global environmental challenges. They are pursued among other things through carbon pricing instruments, such as the Union’s Emission Trading System (‘EU-ETS’) established by Directive 2003/87/EC7 . Where the Union’s international partners have policy approaches that are significantly below the level of the Union’s climate ambition, production in third countries is not subject to comparable carbon constraints. This asymmetry risks incentivising the relocation of production of carbon-intensive goods – a phenomenon known as carbon leakage – which would undermine the attainment of the emission-reduction objectives of Directive 2003/87/EC. Such relocation may ultimately lead to an overall increase in global greenhouse gas emissions, thereby compromising the environmental integrity and effectiveness of the Union climate policy. This asymmetryTo alsoaddress risksthat hamperingrisk, the levelUnion-wide playingemissions fieldcap has been reduced in a gradual way with some sectors still receiving up to 100% of the allowances for companiesfree. coveredMoreover, andallowance indirectlyprice impactedspikes byhave been prevented through the EU-ETSMarket inStability Reserve. Instruments, such as indirect cost compensation under the UnionEU butETS activeand onthe exportEU marketsInnovation whereand localModernisation producersFunds, mayhave notalso facecontributed ato similaralleviating carbonthe price.EU ETS impact on production costs and to stimulating invest…

✦ Replaces many recitals and articles: support now targets exports and downstream operators, adds conditionality, tax and labour requirements, changes application and disbursement rules, and adds reporting and review duties.

Recital 5: (5) To incentivise industrial decarbonisation action while also ensuring a level playing field both within the Union and abroad, it is appropriate to establish a Union funding instrument, the Temporary Decarbonisation Fund (the ‘Fund’), providing temporary financial support to operators in carbon intensive sectors that are subject to the remaining risk of carbon leakage, ensuring that decarbonisation efforts within the Union are preserved and that emissions reduction incentives remain effective. Such support should be strictly limited to what is necessary to mitigate that remaining risk of carbon leakage, be proportionate, and be conditional upon demonstrable progress in reducing greenhouse gas emissions.

Recital 3: (3) The Clean Industrial Deal emphasises the need for financial support, regulatory predictability, and innovation to enable energy-intensive industries to decarbonise without compromising their competitiveness, particularly in sectors exposed to the risk of carbon leakage, including those that produce strategic inputs essential for food security, such as fertilisers. The prevention of carbon leakage constitutes an environmental objective directly linked to the effectiveness of emission-reduction instruments on which Union climate policy relies. Targeted financial support, based on clear conditionality and eligibility criteria, can help ensure that emission reductions are achieved within the Union through decarbonisation of industrial activity, rather than the relocation to jurisdictions with lower environmental requirements giving rise to a risk of carbon leakage.

Recital 8: (8) The Fund should provide financial support in the years 2027, 2028 and 2029 to the final beneficiaries to address their exposure to the remaining risk of carbon leakage, determinable based on the two-year production reference period 2026–2027. Given the need to ensure continuity of decarbonisation efforts and address the remaining risks of carbon leakage and the fact that CBAM revenue will only become available in 2028, it is appropriate to allow support under this Regulation to cover actions before the entry into force of this Regulation, in accordance with Article 3(2) of Regulation 2024/2509. Such retroactive eligibility is strictly limited to actions that contribute to the environmental objectives of this Regulation.

Recital 3 a (new): (3a) Even though Regulation (EU) 2023/956 includes a mechanism to prevent carbon leakage, it does not contain a permanent solution for export-oriented products or for residual carbon leakage across the wider value chain. This justifies the establishment of a transitional Fund for operators and downstream operators to mitigate costs incurred and to support them in investing in decarbonisation throughout their processes.

Recital 9: (9) By limiting the initial support period to two years, the Fund should provide short-term support pending a comprehensive review of how best to address the issue of the remaining risk of carbon leakage from 2028 onwards, in the context of the scheduled review of the EU ETS.

Recital 3 b (new): (3b) While this Regulation provides targeted support to achieve decarbonisation, to address the remaining risk of carbon leakage and to preserve the competitiveness of the Union industry, small and medium-sized enterprises not currently engaged in export activities could face structural barriers to accessing international markets, other than carbon price differences. The Commission should assess the presence of those structural market access barriers and the need for additional support mechanisms aimed at facilitating market access and enhancing the competitiveness of such undertakings.

Recital 10: (10) Given the temporary nature of the Fund, its governance should be cost-efficient and minimise to the extent possible the administrative burden for both the final beneficiaries of the financial support and the Member States’ competent authorities.

Recital 3 c (new): (3c) In small and peripheral economies, and in Member States with a high share of trade in goods covered by Regulation (EU) 2023/956, operators and downstream operators face a particularly acute remaining risk of carbon leakage on export markets outside the Union, due to higher logistics costs and limited economies of scale.

Recital 10 a (new): (10a) To allow for early compensation of the beneficiaries’ exposure to the remaining risk of carbon leakage, a call for applications in 2027 should be provided for. Beneficiaries should be able to choose to do a single application in 2028 for the production reference period 2026-2027 or to do two separate applications, a first one already in 2027 for the production reference period 2026 and another in 2028 for the production reference period 2027.

Recital 4: (4) Energy-intensive industries covered by Directive 2003/87/EC progressively internalise the cost of their greenhouse gas emissions. The reduced Union-wide emissions cap, combined with the gradual phase-out of free allocation provided for in that Directive, requires cost-intensive and rapid adaptations by the industries covered by Directive 2003/87/EC, thereby increasing the short-term risk of carbon leakage such as in sectors that have not yet achieved a transformation of their production processes or transition to low-carbon technologies. That remaining risk of carbon leakage is not fully prevented by Regulation (EU) 2023/956 of the European Parliament and of the Council8 and should therefore be addressed through additional, measures, that are verifiable supporting the transition and promoting the decarbonisation of industrial sectors. In sectors such as fertilisers, that remaining risk could also have a direct impact on agricultural production costs, which could have consequences on Union food security.

Recital 12: (12) The Fund should in particular contribute to the decarbonisation objective by providing support to operators of EU-ETS installations and downstream operators which produce goods exposed to the highest remaining risk of carbon leakage in the short term. Those goods should be selected taking into account both their emissions and carbon leakage exposure, using the approach followed to determine the carbon leakage list for the EU-ETS as a starting point and targeting the measure to those goods which remain most at risk of carbon leakage based on an objective indicator.

Recital 5: (5) To complement the already existing incentives for industrial decarbonisation, this Regulation establishes an additional Union funding instrument. The Temporary Decarbonisation Fund (the ‘Fund’) will provide temporary financial support to operators in carbon intensive sectors that are subject to the remaining risk of carbon leakage due to their production for export to third countries. The Fund will support further decarbonisation efforts and thereby contribute to the global competitiveness of European industry and the Union's strategic production. Such support should be strictly limited to what is necessary to mitigate that remaining risk of carbon leakage, be proportionate, and be conditional upon further demonstrable greenhouse gas emissions reductions. The Fund is an environmental measure and is compatible with the exemption provided for under Article XX of the GATT.

Recital 13 a (new): (13a) The risk exposure of some goods using products covered by Regulation (EU) 2023/956 should also be included in the Fund insofar as some of them could face, in the short term, a significant cost push due to the increased price of imports of intrants and precursors, in particular in the agri-food value chain, Therefore, the Fund should include operators of installation directly covered by the EU ETS and their downstream operators.

Recital 5 a (new): (5a) The Fund should aim to ensure that support is directed towards genuine decarbonisation transformation. Direct support under the Fund should be subject to clear conditionality with appropriate decarbonisation such as through climate-neutrality plans that prioritise genuine transformation and social criteria.

Recital 13 b (new): (13b) For the extension to agri-food products, the selection criteria used to determine the scope of covered products are the direct and indirect costs of the implementation of Regulation (EU) 2023/956 and Directive 2003/87/EC on those product costs, expressed as a proportion of the gross value added, and the sector’s trade intensity with third countries.

Recital 6: (6) Revenues generated from the sales of CBAM certificates pursuant to Regulation (EU) 2023/956 will be collected by Member States. As part of its proposal for a new Own Resources Decision9, the Commission has proposed for the next Multiannual Financial Framework 2028-2034 that 75% of the revenue from the sale of CBAM certificates should accrue to the EU budget as an own resource10. In order to ensure the necessary funding, the Fund should be financed from the remaining 25% of the revenues from the sale of certificates, which should constitute external assigned revenue for the purpose of covering the commitments to pay financial support to final beneficiaries of the Fund, and the Commission’s administrative costs to be incurred in managing the Fund. It is necessary to provide for a derogation from Article 21(5) of Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council11 to allocate to the Fund the appropriate share of the revenue generated from the sale of CBAM certificates pursuant to Regulation (EU) 2023/956 as external assigned revenue, while ensuring that the use of such revenue directly contributes to supporting industrial decarbonisation and thereby maintaining the competitiveness of exposed sectors, with a view to preventing the relocation of production and strengthening the Union’s strategic autonomy.

Recital 13 c (new): (13c) For downstream operators, fulfilling the same conditionality requirements as operators is not relevant. Therefore, national competent authorities should impose less onerous commitments on downstream operators than on operators. In the case of sellers of fertilisers also selling agricultural products, commitments could take the form of commercial proposals which support the reduced use of fertilisers.

Recital 7: (7) The Fund’s resources should only be used to cover the commitments to pay financial support to the final beneficiaries and the administrative costs of the Fund. Any unused revenue could be reallocated as additional contributions to international climate finance under Article 9 of the Paris Agreement.

Recital 14: (14) To ensure that the effect of the financial support to operators is to incentivise the reduction of greenhouse gas emissions, that support should be subject to objective, non-discriminatory and pre-established conditions. To reduce administrative burden, the conditions should build on the existing administrative framework established for free allocation under the EU-ETS. To align the conditions with the existing procedure of application for free allocation, financial support to operators should be contingent on the demonstration of the implementation of recommendations included in energy audits or equivalent measures or a legal commitment made for investments to achieve the targets and milestones referred to in a climate neutrality plan. To enable the most effective and cost-efficient emission reductions, beneficiaries should have the choice to invest their support in projects that most appropriately suit their individual situation.

Recital 7 a (new): (7a) The Union is committed to working with and supporting low and middle-income third countries for the reduction of their greenhouse gas emissions, including through the decarbonisation and transformation of their industries, and for their adaptation to climate change. The Commission needs to continue to engage with lower-middle income third countries to support their compliance with CBAM. In accordance with Article 30(6) and (8) of Regulation (EU) 2023/956, the Commission is to periodically assess, report on, and, where appropriate, propose new measures in relation to the CBAM impact on least developed countries and its contribution to the decarbonisation of the manufacturing industry in those countries, as well as to consider allocating unused revenues under the Fund as additional contributions to international climate finance under Article 9 of the Paris Agreement.

Article 1 – paragraph 2: 2. The Fund shall provide financial support in the period 2027-2029 to address the remaining risk of carbon leakage associated with carbon intensive goods produced by eligible operators of installations in the period 2026-2027.

Recital 8: (8) The Fund should provide financial support in the years 2027, 2028 and 2029 to the final beneficiaries to address their exposure to the remaining risk of carbon leakage, determinable based on the two-year export production reference period 2026–2027. Given the need to ensure continuity of decarbonisation efforts and address the remaining risks of carbon leakage and the fact that CBAM revenue will only become available in 2028, it is appropriate to allow support under this Regulation to cover actions before the entry into force of this Regulation, in accordance with Article 3(2) of Regulation 2024/2509. Such retroactive eligibility is strictly limited to actions that contribute to the environmental objectives of this Regulation and which are undertaken from 1 January 2026 onwards.

Article 2 – paragraph 1 – point b a (new): (ba) ‘downstream operator’ means any person whose commercial activity is directly impacted by a carbon cost passed through an operator and that produces eligible goods;

Recital 9: (9) By limiting the initial support period to three years, the Fund should provide short-term support pending a comprehensive review of how best to address the issue of the remaining risk of carbon leakage from 2028 onwards, in the context of the scheduled review of the EU ETS. The transitory character of the Fund precludes any interpretation that it may constitute a precedent, a model or a reference point for the EU ETS review. Accordingly, the existence, operation or cessation of the Fund shall not create any expectation, legal or otherwise, regarding the EU ETS review. The design and implementation of the Fund should not pre-empt the outcome of the scheduled review of Directive 2003/87/EC and the consideration of a permanent export solution under that framework, and needs to remain consistent with the long-term architecture of the Union's carbon-pricing system.

Article 3 – paragraph 3: 3. Each Member State shall communicate to the Commission the exact annual amounts to contribute to the Fund for the year 2026 by 31 July 2027 and for the year 2027 by 31 July 2028. Member States shall transfer to the Fund a monetary amount that corresponds to the amount referred to in paragraph 2 of this Article respectively by 30 September 2027 for the revenues of the year 2026 and by 30 September 2028 for the revenues of the year 2027. The amounts contributed shall be assigned revenue to the Fund in accordance with Article 21(5) of Regulation (EU, Euratom) 2024/2509. By way of derogation from that provision, the amounts contributed shall constitute external assigned revenue.

Recital 10: (10) In view of the temporary nature of the fund, its governance should be cost-efficient and -effective and minimise administrative burdens, for both the final beneficiaries of the financial support and the Member States.

Article 6 – paragraph 2: 2. The operator of an installation or downstream operator producing goods not listed in the Annex, which have a low ratio of value to weight and are subject to a heightened remaining risk of carbon leakage at national level as defined in the delegated act adopted in accordance with paragraph 3, shall, upon decision of the Commission following a reasoned request of a Member State, be eligible to receive financial support in accordance with Article 9 and be subject to the conditions set out in Article 7.

Recital 10 a (new): (10a) To allow for early compensation of the beneficiaries’ exposure to the remaining risk of carbon leakage, a call for applications in 2027 should be provided for by the Commission. Beneficiaries should be able to choose to submit a single application in 2028 for the export production reference period 2026-2027 or to submit two separate applications, one in 2027 for the export production reference period 2026, and another in 2028 for the export production reference period 2027.

Article 6 – paragraph 2 a (new): 2a. The downstream operator producing eligible goods as listed in the Annex, which fall under the Combined Nomenclature (‘CN’) codes in Regulation (EEC) No 2658/87 shall be eligible to receive financial support in accordance with Article 9 and subject to the conditions set out in Article 7.

Recital 12: (12) The Fund should in particular contribute to the decarbonisation objective by providing conditional support to operators of EU-ETS installations which produce goods exposed to the highest remaining risk of carbon leakage in the short term and downstream operators which produce such goods. Those goods should be selected taking into account both their emissions and carbon leakage exposure, using the approach followed to determine the carbon leakage list for the EU-ETS as a starting point and targeting the measure to those goods which remain most at risk of carbon leakage based on an objective indicator.

Article 7 – paragraph 3 a (new): 3a. A downstream operator shall receive support from the Fund provided that it demonstrates to the satisfaction of the competent authority that it has undertaken verifiable actions leading to a reduced use of goods included in Annexes I and II to Regulation (EU) 2023/956 or that it fulfils the conditions set out in paragraph 2 of this Article.

Recital 13 a (new): (13a) The risk exposure of some goods using products, including agri-food products, covered by Regulation (EU) 2023/956, in particular fertilisers, should also be included in the Fund insofar as some of those products could, in the short term, experience a significant cost increase, as a result of higher prices of imports of intrants and precursors. The Commission should therefore include, if appropriate, specific indicators related to fertiliser-use efficiency and energy-use intensity. The Fund should also include operators of installations directly covered by the EU ETS and their downstream operators and should be able to provide targeted support, limited to the additional carbon related cost.

Article 8 – paragraph 1: 1. The operator of an installation or downstream operator producing goods that are eligible for financial support may submit an application for such support from the Fund:

Recital 13 b (new): (13b) The selection criteria used to determine the scope of covered agri-food products are based on the direct and indirect costs of the implementation of Regulation (EU) 2023/956 and Directive 2003/87/EC on those product costs, expressed as a proportion of the gross value added, and the sector’s trade intensity with third countries.

Article 8 – paragraph 1 – point i (new): (i) by submitting a single application by 31 March 2028 to cover the production reference period 2026-2027; or

Recital 13 c (new): (13c) Downstream operators and installations significantly and demonstrably affected by the combined impact of the phase-out of free allocation under Directive 2003/87/EC and the application of Regulation (EU) 2023/956 on the cost of CBAM-covered inputs, and where they are substantially exposed to international competition on export markets, should be able to receive targeted support under the Fund, with clear eligibility criteria and appropriate decarbonisation conditionalities. However, it is possible that downstream operators do not need to fulfil the same conditionality requirements as operators. Therefore, the Commission should impose less onerous commitments on downstream operators than on operators.

Article 8 – paragraph 1 – point ii (new): (ii) by submitting an application by 31 March 2027 that covers the production reference period 2026 and a supplementary application by 31 March 2028 that covers the production reference period 2027.

Recital 13 d (new): (13d) Operators of EU ETS installations producing cement clinkers and cement are subject to the phase-out of free allocation under Directive 2003/87/EC and face a remaining risk of carbon leakage on export markets that is not fully addressed by Regulation (EU) 2023/956. The inclusion of cement clinkers and cement products in the scope of the Fund is consistent with the scope of Annex I to Regulation (EU) 2023/956 and with the objective of maintaining the export competitiveness of Union cement producers, including those established in island and peripheral Member States where cement production represents a significant share of industrial output.

Article 8 – paragraph 1 – subparagraph 1 (new): All applications for support shall be submitted to the competent authority of the Member State where the operator of the installation is established.

Recital 13 e (new): (13e) The financial architecture of the Fund needs to remain dynamic and capable of adapting to market developments. Therefore, the Commission should assess the feasibility and possible impact of an EU ETS secondary market transaction fee in its interim report. If the assessment demonstrates that such a transaction fee will successfully reinforce market stability and strengthen the Fund’s resources, without hindering the daily compliance of EU ETS sectors, the Commission should consider introducing such a transaction fee by 31 December 2028.

Article 8 – paragraph 2 – point a: (a) for all operators, a production data report complementing the verified activity level reports for the relevant production reference period covered by the call for application referred to in paragraph 1 of this Article submitted pursuant to Article 3 of Implementing Regulation (EU) 2019/1842, providing the necessary production data to verify the eligibility for financial support;

Recital 14: (14) Support should be subject to objective, non-discriminatory and pre-established conditions which need to be verified. To ensure that the effect of the financial support to operators is a demonstrable reduction of greenhouse gas emissions, support should be primarily provided to new decarbonisation investments. To reduce administrative burden, the conditions should build on the existing administrative framework established for free allocation under the EU-ETS. To align the conditions with the existing procedure of application for free allocation, financial support to operators should be contingent on the demonstration of the implementation of recommendations included in energy audits or equivalent measures and a legal commitment made for investments to achieve the 2030 targets and milestones referred to in a climate neutrality plan, or a transition plan for climate change mitigation as laid down in Commission Delegated Regulation (EU) 2023/27721a. Financial support should be used by the beneficiaries in particular to finance investments delivering the minimum decarbonisation or energy efficiency effects referred to in section 5 of the Clean Industrial Deal State Aid Framework (CISAF). Beneficiaries should retain the flexibility to select the decarbonisation measures that are most effective in their specific circumstances, provided they comply with the conditionality requirements of the Fund. / 1a Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing …

Article 8 – paragraph 2 – point a a (new): (aa) for all operators, the share of production sold in third countries broken down by country of destination;

Recital 14 a (new): (14a) To ensure the protection of Union’s interests and the strengthening of the Union’s economy, beneficiaries should not transfer the financed technology and the facility concerned outside of the Union’s territory, and some of the equipment used as part of the co-financed investments should be sourced from within the Union’s territory. This should not however preclude operators and downstream operators in Ireland from purchasing equipment, supplies, materials or components from suppliers established in Northern Ireland, in recognition of the all-island dimension of Ireland's economy.

Article 8 – paragraph 2 a (new): 2a. For downstream operators, an application submitted pursuant to paragraph 1 shall be accompanied by the following specific elements: / (i) production data for the production reference period covered by the call for application referred to in paragraph 1 to verify the eligibility for financial support; / (ii) the share of production sold in third countries broken down by country of destination; / (iii) documentary and verifiable evidence that demonstrates actions by the downstream operator leading to a reduced use of goods included in Annexes I and II to Regulation (EU) 2023/956 or the fulfilment of the conditions of Article 7(2) of this Regulation;

Recital 14 b (new): (14b) In order to safeguard social rights, beneficiaries of the Fund should respect relevant labour law and applicable collective agreements.

Article 8 – paragraph 2 b (new): 2b. Within 15 days of reception of the application under paragraph 1, the competent authority shall assess the completeness of the information provided by the applicant which is necessary to evaluate the eligibility of the operator and the downstream operator for support under the Fund. / If before the end of 15 days, the competent authority assesses that the information provided by the applicant is incomplete or insufficient to conclude the evaluation of its request, the applicant shall be requested to submit complementary information within a reasonable timeframe. The competent authority shall assess the completeness of the complementary information. / Following the acknowledgment of completeness referred to in the second subparagraph, the applicant shall not be asked to provide any new information unless duly justified.

Recital 15: (15) Following the submission of applications, the methodology for calculating the financial support by the Commission should be laid down. That calculation should take into account the annual average of the closing prices of EU-ETS allowances on the auction platform for the years 2026 and 2027 as those years are the reference years for which the support is awarded and better reflect the cost of addressing the remaining risk of carbon leakage. The calculation should also consider the level of the carbon price in the export market or the absence thereof, which has an impact on the carbon leakage risk. Following the calculations, the Commission should establish and make publicly available a list identifying all beneficiaries and their respective calculated financial support.

Article 8 – paragraph 5: 5. By 30 June 2027 and 30 June 2028, a competent authority shall provide to the Commission a list identifying all the applicants that applied by 31 March 2027 and 31 March 2028, respectively, that meet the conditions as determined in accordance with paragraph 4, their respective installations and the level of support calculated in accordance with Article 9.

Recital 16: (16) The Commission should, based on its calculations, publish a decision setting out the amount allocated to each Member State specifying the amounts payable to each final beneficiary in the Member State. That decision should constitute a legal commitment in relation to the final beneficiaries within the meaning of Regulation (EU, Euratom) 2024/2590 of the European Parliament and of the Council16 . The Commission should thereafter, in a timely manner, disburse to the national competent authorities the amount allocated to each Member State, corresponding to the financial support given to final beneficiaries in that Member State. The competent authorities should then timely disburse the support to their respective final beneficiaries.

Article 9 – paragraph 1: 1. The competent authorities shall assess and calculate the amount of financial support to be provided to eligible operators, for the production of each of the exported goods listed in the Annex, based on the amount of free allocation phased out. That amount of allowances shall be calculated in accordance with Article 16(8) of Delegated Regulation (EU) 2019/331 and take into account the Decision the Commission has adopted in accordance with Article 23(4) of that Regulation. To obtain the financial value of the support, the amount of free allowances shall be adjusted to the share of production (in volume) of goods listed in the Annex, and multiplied with the annual average of the closing prices of EU ETS allowances on the common auction platform for the reference period for which an application for support has been submitted in accordance with Article 8(1) of this Regulation and in accordance with the procedures laid down in Delegated Regulation (EU) 2023/2830.

Recital 17: (17) To ensure the prevention, detection and tackling of fraud, corruption, conflicts of interest and other irregularities affecting the Union’s financial interests and objectives of this Regulation, the Commission, the European Court of Auditors and the European Anti-Fraud Office (OLAF) should have the powers conferred on them by Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council17 and Regulation (EU, Euratom) 2024/2509 to carry out audits and investigations concerning the use of Union funds under this Regulation, including through risk-based controls and the use of digital tools for data-matching with EU ETS and CBAM registries. For the Member States participating in the enhanced cooperation in accordance with Council Regulation (EU) 2017/193918 , the European Public Prosecutor’s Office (EPPO) should investigate and prosecute offences against the Union’s financial interests. The Commission, supported by the relevant Member State authorities, should verify that the final beneficiaries have used the financial support to carry out the investments in compliance with the conditions set out in this Regulation and should take legal action to recover the funds in case of non-compliance.

Article 9 – paragraph 1 a (new): 1a. The competent authorities shall assess and calculate the amount of financial support to be provided to eligible downstream operators, for the production of each exported good listed in the Annex to this Regulation, based on the volume of goods listed in that Annex, multiplied by the CO2 content of the intrants or precursors used to produce those goods covered by Regulation (EU) 2023/956, and by the annual average of the closing prices of EU ETS allowances on the common auction platform for the reference period for which an application for support has been submitted, in accordance with Article 8(2a) of this Regulation and with the procedure laid down in Delegated Regulation (EU) 2023/2830.

Proposal for a regulation Recital 17 a (new)

Article 9 – paragraph 1 b (new): 1b. The competent authorities shall assess to the extent possible the competitiveness risk faced by the goods in the export destination due to the differences of carbon pricing schemes in the targeted market and the Union territory and factor it in the calculation of the amount of financial support to be granted.

Amendment: (17a) The provisions of this Regulation as well as its governance arrangements should be conducive to proper decision-making by the budgetary authority and to appropriate parliamentary oversight. In particular, any provisions regarding the use of external assigned revenue should be subject to particular reporting requirements.

Article 10 – paragraph 1 – point a: (a) review the calculation performed by the competent authorities pursuant to Article 9(1), (1a) and (1b);

Proposal for a regulation Recital 17 b (new)

Article 10 – paragraph 3: 3. Based on its assessment in accordance with paragraph 1, the Commission shall adopt an implementing decision by 31 December 2027 for the lists received by 30 June 2027 and by 31 December 2028 for the lists received by 30 June 2028 on the financial support to the operators upon availability of the resources of the Fund. That decision shall constitute a financing decision within the meaning of Article 110 of Regulation (EU, Euratom) 2024/2509. The notification of that decision to the competent authority concerned shall constitute an individual legal commitment within the meaning of Regulation (EU, Euratom) 2024/2509.

Amendment: (17b) The implications of this Regulation for the Union budget have been assessed+ pursuant to Article 310(4) of the Treaty on the Functioning of the European Union. Sufficient financial and human resources should be provided for its implementation, while considering the impact of the financing on other Union programmes or policies and ensuring its compatibility with the multiannual financial framework, the system of own resources and the corresponding interinstitutional agreement, as well as with the budgetary principles laid down in Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council[1]. / + Pro memoria: Budgetary assessment of the European Parliament’s Committee on Budgets of 23 June 2026 on the proposal for a Regulation of the European Parliament and of the Council establishing the Temporary Decarbonisation Fund (COM(2025)0990 – C100353/2025 – 2025/0418(COD)) / [1] Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (OJ L, 2024/2509, 26.9.2024, ELI: http://data.europa.eu/eli/reg/2024/2509/oj).

Article 11 – paragraph 2: 2. Within one month upon receipt of the funding from the Commission and at the latest on 31 March 2028 for the implementing decisions referred to in Article 10(3) adopted by 31 December 2027 and on 31 March 2029 for the implementing decisions referred to in Article 10(3) adopted by 31 December 2028, the competent authorities shall disburse the financial support awarded by the Commission under the decisions referred to in Article 10(3) to the final beneficiaries and shall inform the Commission immediately after the disbursements are made.

Article 1 – paragraph 2: 2. The Fund shall provide financial support in the period 2027-2029 to address the remaining risk of carbon leakage associated with carbon intensive goods produced and exported by eligible operators of installations and eligible downstream operators in the period 2026-2027.

Article 12 – paragraph 1: 1. Member States, as beneficiaries of funds under the Fund, and their national competent authorities shall take all the appropriate measures to protect the financial interests of the Union and to ensure that the use of the financial allocations complies with applicable Union and national law, in particular regarding the prevention, detection and tackling of fraud, corruption, conflicts of interests and all other irregularities affecting the financial interests of the Union. To that effect, Member States shall take any necessary measures to prevent wrongful payouts and for the recovery of amounts wrongly paid. Member States shall rely on their national budget management, control and recovery systems.

Article 2 – paragraph 1 – point b a (new): (ba) ‘downstream operator’ means any legal or natural person established in a Member State that uses goods listed in Annex I to Regulation (EU) 2023/956 as primary material inputs in its production processes to produce eligible goods;

Article 2 – paragraph 1 – point c: (c) ‘eligible good’ means any of the goods listed in the Annex, as well as any goods subject to a heightened remaining risk of carbon leakage identified pursuant to Article 6(2) and (3);

Article 3 – paragraph 3: 3. Each Member State shall communicate to the Commission the exact annual amounts to contribute to the Fund for the year 2026 by 31 July 2027 and for the year 2027 by 31 July 2028, respectively. Member States shall transfer to the Fund a monetary amount that corresponds to the amount referred to in paragraph 2 of this Article respectively by 30 September 2027 for the revenues of the year 2026 and by 30 September 2028 for the revenues of the year 2027. The amounts contributed shall be assigned revenue to the Fund in accordance with Article 21(5) of Regulation (EU, Euratom) 2024/2509. By way of derogation from that provision, the amounts contributed shall constitute external assigned revenue.

Article 3 – paragraph 4: 4. Revenues remaining after the full disbursement of funding to final beneficiaries and payment of administrative costs of the Fund shall not be automatically carried over to be used by the Fund. By way of derogation from Article 12(4), point (c), of Regulation (EU, Euratom) 2024/2509, the Commission may use those revenues for the purpose of the Union’s international climate finance commitments, in particular under Article 9 of the Paris Agreement;

Article 4 – paragraph 3: deleted.

(The text of this provision is partially taken by amendment 40.)

Article 4 a – paragraph 1 (new): 1. From … … [the date of entry into force of this Regulation], the Commission shall document, on an annual basis, detailed information about the collection and use of the assigned revenue referred to in Article 3(1) in the relevant working documents accompanying the draft budget of the Fund, as well as a detailed breakdown of funds disbursed under the Fund and applications per Member State, sector, goods and installations.

Article 4 a – paragraph 2 (new): 2. By 31 March 2028, the Commission shall carry out a comprehensive assessment and submit to the European Parliament and to the Council an interim report on the performance and effectiveness of the Fund in: / (a) preventing carbon leakage, including by assessing whether the current scope of eligible goods and sectors adequately reflects the sectors exposed to a risk of relocation of production outside the Union; / (b) supporting the level playing field of Union producers in third markets, and all goods covered by Directive 2003/87/EC and Regulation (EU) 2023/956, / (c) achieving verifiable emission reductions. / The interim report referred to in the first subparagraph shall evaluate in particular: / (a) the adequacy of the scope of this Regulation in terms of eligible goods or sectors on the basis of an updated assessment of the remaining risk of carbon leakage from those goods or sectors; / (b) the adequacy of the financial resources allocated to the Fund in light of its objectives and whether the available appropriations are commensurate with the demand for support by the sectors and installations concerned, on the basis of the applications received; / (c) consistency of the Fund with Union climate objectives, State aid rules, and the Union’s international obligations; / (d) the appropriateness of introducing a targeted transaction fee on the secondary EU ETS market, its effect on price stability and expected revenues for the Fund; / (e) an assessment of the effectiveness a…

Article 4 a– paragraph 3 (new): 3. On the basis of the reports referred to in paragraphs 1 and 2 of this Article, the Commission may, where appropriate, and at the latest by 31 December 2028, submit, together with the corresponding report, a legislative proposal accompanied by an impact assessment to, inter alia: / (a) extend the existence of the Fund after 31 December 2029, taking into account the provisions of the Directive 2003/87/EC for the period 2031-2040; / (b) adapt the scope of the Fund in terms of eligible goods or sectors; / (c) adapt the financial envelope of the Fund in order to ensure adequate support to eligible operators; / (d) introduce a transaction fee on the EU ETS secondary market, subject to the findings in the interim report, while exempting transactions executed solely for the purpose of compliance under Directive 2003/87/EC.

Article 4 a– paragraph 4 (new): 4. By 31 December 2030, the Commission shall present a report to the European Parliament and to the Council on the performance and the expenditure financed by the Fund. This report shall contain at least a detailed breakdown of funds disbursed by the Fund, applications and disbursement per Member State, sector, goods and installations, verifiable emission reductions achieved, and an evaluation of the Fund.

(The text of this amendment is very similar to former Article 4(3) of the Commission proposal, which is proposed to be deleted by amendment 36).

Proposal for a regulation Article 4 a– paragraph 5 (new)

Amendment: 5. By 30 June 2028, the Commission shall present a report to the European Parliament and to the Council on the expenditure financed by the Fund covering the applications received, the sectors and installations concerned, the level of demand for support, and an assessment of whether the available appropriations are sufficient to meet that demand.

Article 6 – paragraph 2: 2. The operator of an installation producing goods not listed in the Annex or downstream operator producing such goods, which have a low ratio of value to weight and are subject to a heightened remaining risk of carbon leakage at national level as defined in the delegated act adopted in accordance with paragraph 3, shall, upon decision of the Commission following a reasoned request of a Member State, be eligible to receive financial support in accordance with Article 9 and be subject to the conditions set out in Article 7.

Article 6 – paragraph 2 a (new): 2a. A downstream operator that produces eligible goods listed in the Annex to this Regulation, which fall under the Combined Nomenclature (CN) codes set out in Regulation (EEC) No 2658/87, shall be eligible to receive financial support pursuant to Article 9 of this Regulation and subject to the conditions set out in Article 7 of this Regulation, provided that it demonstrates the following: / (a) the downstream operator has incurred significant additional carbon-related costs passed through from operators under Directive 2003/87/EC or Regulation (EU) 2023/956 in respect of such goods; and / (b) a substantial proportion of the downstream operator’s output of those goods is exported to third-country markets or supplied to exporters of such goods.

Article 6 – paragraph 2 b (new): 2b. An operator and a downstream operator that produces eligible goods listed in the Annex, shall not be eligible to receive financial support pursuant to Article 9 when: / (a) the operator or downstream operator concerned, following verification by the relevant national competent authority, or respectively, the Commission, is in breach of relevant working and employment conditions and employer obligations resulting from Union or national labour laws, or applicable collective agreements according to national rules and practices; or / (b) the operator and downstream operator concerned, or the parent company, are not established in jurisdictions listed in the Union list of non-cooperative jurisdictions for tax purposes.

Article 6 – paragraph 3: 3. The Commission is empowered to adopt delegated acts in accordance with Article 14 to supplement this Regulation by establishing the indicators determining the heightened remaining risk of carbon leakage provided for in paragraph 2 and a list of goods determined on the basis of that indicator, including downstream goods not listed in Annex I to Regulation (EU) 2023/956, the conditions that the producers of such goods need to fulfil to receive financial support, in addition to the ones set out in Article 7.

Article 7 – paragraph 1 – introductory part: 1. Where an operator is subject to the obligation to conduct an energy audit as a stand-alone energy audit or within the framework of a certified Energy Management System or Environmental Management System, the operator shall receive financial support from the Fund provided that the operator demonstrates to the satisfaction of the Commission that one of the following conditions is fulfilled:

Article 7 – paragraph 1 – point c: (c) the cost of implementing the recommendations referred to in (a) is disproportionate and the operator demonstrates a legal commitment within the meaning of Article 3d of Implementing Regulation (EU) 2019/1842 for investments implementing other measures which will lead to verifiable greenhouse gas emission reductions equivalent to those recommended by the audit report or by the certified Energy Management System for the installation concerned.

Article 7 – paragraph 3: 3. Alternatively to paragraphs 1, and 2, an operator shall receive financial support from the Fund provided that the operator demonstrates to the satisfaction of the Commission, that it has made a legal commitment within the meaning of Article 3d of Implementing Regulation (EU) 2019/1842 made for investments to achieve the targets and milestones referred to in a climate neutrality plan and which is at least equivalent to the support amount applied for under this Regulation.

Article 7 – paragraph 3 a (new): 3a. A downstream operator shall receive financial support from the Fund provided that the downstream operator demonstrates to the satisfaction of the Commission that it has undertaken actions leading to a verifiable and significant reduction in the use of the goods listed in Annexes I and II, or investments that lead to a lower-carbon method in their relevant production processes to use those goods or investments in their relevant supply chains leading to the use by that operator of lower-carbon versions of those goods.

Article 7 – paragraph 3 b (new): 3b. Operators and downstream operators shall receive financial support from the Fund provided that they demonstrate to the satisfaction of the Commission that: / (a) they have a legal commitment to use or source, where available, half of their equipment, supplies and materials, or their components, from the Union’s territory, for investments supported by the Fund; / (b) they do not to use the financial support of the Fund for dividend payouts, in excess of expected returns, share buybacks or executive bonuses over the period of 2026-2027.

Article 7 – paragraph 3 c (new): 3c. The Commission shall, by means of implementing acts, determine standardised indicators and templates for operators and downstream operators to demonstrate compliance with the conditionality requirements set out in Article 7, including, inter alia, indicators relevant for downstream operators at the level of input reduction and use of lower carbon footprint material. This shall include simplified indicators and templates proportionate to small- and medium sized enterprises and shall take into account the specific case of Ireland and Northern Ireland.

Article 8 – paragraph 1: 1. The operator of an installation producing goods that are eligible for financial support or downstream operator producing such goods, may submit to the Commission: / (a) a single application by 31 March 2028 that covers the production reference period 2026-2027; or / (b) an application by 31 March 2027 that covers the production reference period 2026 and a supplementary application by 31 March 2028 that covers the production reference period 2027.

Article 8 – paragraph 2 – point a: (a) for all operators, a production and export data report complementing the verified activity level reports for the relevant production reference period covered by the application submitted pursuant to paragraph 1 of this Article submitted pursuant to Article 3 of Implementing Regulation (EU) 2019/1842, providing the necessary production data and data on the share of production sold in third countries, broken down by country of export, to verify the eligibility for financial support;

Article 8 – paragraph 2 – point a a (new): (aa) for all operators, if applicable, a tax transparency report and an ownership structure disclosure providing evidence that the operator and its parent company are not established in jurisdictions listed in the Union list of non-cooperative jurisdictions for tax purposes;

Article 8 – paragraph 2 – point a b (new): (ab) for all operators, documentation providing evidence that investments in Article 7(1), (2) and (3) are in accordance with Section 5 of the Clean Industrial Deal State Aid Framework (CISAF);

Article 8 – paragraph 2 – point b – point ii a (new): (iia) a technical decarbonisation plan and a certified project impact assessment demonstrating that the intended investments lead to verifiable emission reductions.

Article 8 – paragraph 2 a (new): 2a. For downstream operators, an application submitted pursuant to paragraph 1 shall be accompanied by the following specific elements: / (a) production data for the production reference period covered by the call for application referred to in paragraph 1 to verify the eligibility for financial support; / (b) the share of production sold in third countries broken down by country of export; / (c) if applicable, a tax transparency report and an ownership structure disclosure providing evidence that the operator and its parent company are not established in jurisdictions listed in the Union list of non-cooperative jurisdictions for tax purposes.

Article 8 – paragraph 2 b (new): 2b. SMEs, as defined in Directive 2013/34/EU of the European Parliament and of the Council, shall not be required to update their existing climate-neutrality plans, verified climate-neutrality report, energy audit, certified Energy Management System or certified Environmental Management System incompliance with CISAF, solely for the purpose of receiving support from this Fund.

Article 8 – paragraph 2 c (new): 2c. Within 15 days of reception of the application referred to in paragraph 1, the Commission shall assess the completeness of the information provided by the applicant which is necessary to evaluate the eligibility of the operator and the downstream operator for support under the Fund. If before the end of 15 days, the Commission assesses that the information provided by the applicant is incomplete or insufficient to conclude the evaluation of its request, the applicant shall be requested to submit complementary information within 15 days. Following an acknowledgment of completeness, the applicant shall not be asked to provide any new information unless duly justified.

Article 8 – paragraph 3 a (new): 3a. When establishing the details under Article 8(3) of this Regulation, the Commission shall align them and the requirements of Article 7 of this Regulation with the existing Union acquis, and notably with the requirements and methodologies for monitoring, reporting and verification of emissions laid down in Directive 2003/87/EC.

Article 8 – paragraph 3 b (new): 3b. Following the conclusion of the decisions referred to in Article 10(3), the Commission shall make the relevant documentation, evidence and plans submitted to the Commission, by operators and downstream operators, pursuant to this Article, publicly available. This shall be done in accordance with the applicable Union law on the protection of personal data, as well as commercially sensitive information and trade secrets, in particular pursuant to Regulation (EU) 2018/1725 of the European Parliament and of the Council1a and Directive (EU) 2016/943 of the European Parliament and of the Council1b, respectively. / 1a Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39, ELI: http://data.europa.eu/eli/reg/2018/1725/oj). / 1b Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, p. 1, ELI: http://data.europa.eu/eli/dir/2016/943/oj).

Article 8 – paragraph 4: 4. The Commission shall assess - with the support of relevant competent authorities - the documentation provided in accordance with paragraph 2. Based on that assessment, the Commission shall decide whether the conditions set out in Articles 6 and 7 have been met. It shall recover funds if the conditions were not met and bring legal proceedings where necessary in that regard.

Article 8 – paragraph 5: 5. By 30 June 2027 and 30 June 2028, the Commission shall establish a list identifying all the applicants that applied for support by 31 March 2027 and 31 March 2028, respectively, that meet the conditions as determined in accordance with paragraph 4, their respective installations and the level of support calculated in accordance with Article 9.

Article 9 – paragraph 1: 1. The Commission shall assess and calculate the amount of financial support to be provided to eligible operators, for the production of each of the exported goods listed in the Annex, based on the amount of free allocation phased out, in a transparent manner. That amount of allowances shall be calculated in accordance with Article 16(8) of Delegated Regulation (EU) 2019/331 and take into account the Decision the Commission has adopted in accordance with Article 23(4) of that Regulation. To obtain the financial value of the support, the amount of free allowances shall be adjusted to the share of production (in volume) of goods listed in the Annex that has been exported to third-country markets, and multiplied with the annual average of the closing prices of EU ETS allowances on the common auction platform for the reference period for which an application for support has been submitted in accordance with Article 8(1) of this Regulation and in accordance with the procedures laid down in Delegated Regulation (EU) 2023/2830.

Article 9 – paragraph 1 a (new): 1a. The Commission shall assess and calculate the amount of financial support to be provided to eligible downstream operators for the production of each exported good listed in the Annex, based on: / (a) the volume of those goods exported; / (b) the CO2 content of the CBAM-covered inputs or precursors used to produce those goods; and / (c) the annual average price of CBAM certificates for the reference period, as calculated pursuant to Article 22 of Regulation (EU) 2023/956 and the implementing acts adopted pursuant to paragraph 1b of this Article, taking into account the adjustment necessary to reflect the extent to which EU ETS allowances are allocated free of charge in accordance with Article 31 of Regulation (EU) 2023/956.

Article 9 – paragraph 1 b (new): 1b. The Commission shall, by means of implementing acts, specify the methodology for determining the CO2 content of inputs, the annual average price of CBAM certificates calculated as the weekly average prices of CBAM certificates published pursuant to Article 22 of Regulation (EU) 2023/956, and the parameters used for that calculation.

Article 9 – paragraph 1 c (new): 1c. Pursuant to paragraphs 1, 1a and 1b, when calculating the level of financial support, the Commission shall take into account, to the extent possible, the competitiveness risk faced by the goods in the country destination due to differences in carbon-pricing schemes and equivalent regulatory constraints on industrial emissions between that destination and the Union, notably by establishing a methodology based on public and objective indicators.

Article 10 – paragraph 1 – introductory part: 1. Upon establishing the list referred to in Article 8(5), the Commission shall perform the following actions:

Article 10 – paragraph 1 – point a: (a) review the calculation performed pursuant to Article 9(1), (1a), (1b) and (1c)

Article 10 – paragraph 1 – point b: (b) assess the inclusion of each operator, installation and downstream operator in the list;

Article 10 – paragraph 3: 3. Based on its assessment in accordance with paragraph 1, the Commission shall adopt an implementing decision by 31 December 2027 for the lists received by 30 June 2027 and by 31 December 2028 for the lists received by 30 June 2028 on the financial support to the operators, including downstream operators, upon availability of the resources of the Fund. That decision shall constitute a financing decision within the meaning of Article 110 of Regulation (EU, Euratom) 2024/2509. The notification of that decision to the competent authority concerned shall constitute an individual legal commitment within the meaning of Regulation (EU, Euratom) 2024/2509.

Article 10 – paragraph 4: 4. The decision referred to in paragraph 3 shall be publicly available and set out the total amount to be transferred to the respective Member State, the list of the final beneficiaries of financial support and the amount for each recipient, and information on how the beneficiaries meet the conditions set out in Article 7.

Article 11 – paragraph 1: 1. Within one month following the adoption of the decision referred to in Article 10(3), the Commission shall disburse the total amount set out in that decision to the relevant competent authorities. By derogation from Article 196(3) of Regulation (EU, Euratom) 2024/2509, the Commission may also pay support with respect to investments and productions even if already completed.

Article 11 – paragraph 2: 2. Within one month upon receipt of the funding from the Commission and at the latest on 31 March 2028 for the implementing decisions referred to in Article 10(3) adopted by 31 December 2027 and on 31 March 2029 for the implementing decisions referred to in Article 10(3) adopted by 31 December 2028, the relevant competent authorities shall disburse the financial support awarded by the Commission under the decisions referred to in Article 10(3) to the final beneficiaries and shall inform the Commission immediately after the disbursements are made.

Article 12 – paragraph 1: 1. Member States, as beneficiaries of funds under the Fund, and relevant competent authorities shall take all the appropriate measures to protect the financial interests of the Union and to ensure that the use of the financial allocations complies with applicable Union and national law, in particular regarding the prevention, detection and tackling of fraud, corruption, conflicts of interests and all other irregularities affecting the financial interests of the Union. To that effect, Member States shall take any necessary measures to prevent wrongful payouts and for the recovery of amounts wrongly paid. Member States shall rely on their national budget management, control and recovery systems.

Article 12 – paragraph 2 – point a: (a) that Member States take appropriate measures to prevent, detect and tackle fraud, corruption, conflicts of interests, non-compliance and all other irregularities affecting the financial interest of the Union within the meaning of Article 61 of Regulation (EU, Euratom) 2024/2509 and to take legal action to recover funds that have been unduly spent or misappropriated; The Commission, with support of the Member State relevant competent authorities, shall verify that the final beneficiaries have used the financial support to carry out the investments and that they have complied with the conditions referred to in Article 7;

Article 12 – paragraph 2 – point e: (e) to expressly authorise that the Commission has the right to reduce the financial support under the Fund proportionately and recover any amount due to the Union budget, in cases of fraud, corruption, conflict of interests, non-compliance or any other irregularity affecting the financial interests of the Union.

EXPLANATORY STATEMENT

With these adjustments, the Rapporteur considers that the Temporary Decarbonisation Fund can deliver genuine added value within the EU’s climate and industrial policy framework. By improving its scope, speed, and predictability, the Fund can strengthen the effectiveness of the CBAM, support the decarbonisation of European industry, and contribute to enhancing the sovereignty, resilience, and strategic autonomy of the European economy.

✦ Adds a budgetary assessment by the Committee on Budgets covering the Fund's financing, oversight, administrative costs and remaining revenues.

BUDGETARY ASSESSMENT OF THE COMMITTEE ON BUDGETS

for the Committee on the Environment, Climate and Food Safety

on the proposal for a regulation of the European Parliament and of the Council establishing the Temporary Decarbonisation Fund

(COM(2025)0990 – C100353/2025 – 2025/0418(COD))

Rapporteur for budgetary assessment: Danuše Nerudová

The Committee on Budgets has carried out a budgetary assessment of the proposal under Rule 58 of the Rules of Procedure and has reached the following conclusions:

The Committee on Budgets,

A. whereas the proposed Temporary Decarbonisation Fund (TDF) complements the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) by providing financial support to operators in energy intensive sectors facing a remaining carbon leakage risk;

B. whereas the proposed measure is targeted, limited in volume and temporary until a more structural solution to the carbon leakage problem is devised by the upcoming revision of the ETS;

C. whereas the Member States are to transfer 25 % of their CBAM revenues to the Commission in 2028 and 2029; whereas these contributions are to be treated as external assigned revenue to fund the new budget line for the TDF;

D. whereas Parliament has repeatedly called for the CBAM to serve as the basis for a new EU own resource; whereas the latest Commission proposal for a new system of own resources includes the introduction of a new own resource based on the CBAM; whereas the Council has still not adopted the CBAM as an own resource five years after the Commission first proposed this in 2020;

E. whereas the Commission is to present a report on the implementation of the TDF to Parliament and the Council by 31 December 2030;

F. whereas on numerous occasions, Parliament has highlighted the challenges associated with the treatment of external assigned revenue in terms of budgetary transparency and procedural accountability;

1. Considers that the rationale and the operating principles of the TDF illustrate how the EU budget can be used to pursue the Union’s climate objectives, while improving the competitive position of the EU industrial sectors that are sensitive to the carbon leakage dilemma; underlines that any support mechanism must safeguard the competitiveness of EU industry and preserve a level playing field on the global market; deeply regrets, in this context, the fact that the Just Transition Fund is not included in the Commission’s proposal for the 2028-2034 multiannual financial framework (MFF), as it previously played a key role in supporting vulnerable regions and households, particularly those where energy-intensive industries are often located, in the transition towards decarbonisation; underlines the importance of ensuring that support for the transition remains targeted, efficient and consistent with the principles of sound financial management;

2. Welcomes the fact that public revenue, which is generated through the implementation of EU legislation and the enforcement of EU regulations such as the CBAM Regulation, is used to finance expenditure at EU level, albeit outside the EU own resources system;

3. Welcomes the proposed share of 25 % of CBAM proceeds to be made available by the Member States, as it is compatible with the Commission’s proposal to use 75 % of proceeds from the CBAM as own resources for the general budget, and with Parliament’s established position on own resources;

4. Suggests that a similar accompanying initiative be launched under the relevant external development instruments to further accelerate the decarbonisation of carbon-intensive industries in least developed countries, in compliance with the EU’s international commitments, in particular the Paris Agreement, and to ensure better policy coherence, in this regard;

5. Confirms that expenditure financed by external assigned revenue is not counted against MFF ceilings and that therefore, by default, the proposal is compatible with the current and 2028-2034 MFFs;

6. Recalls that one quarter of the CBAM revenue collected by Member States in this very early phase of implementation will yield only around EUR 300 million to EUR 350 million per year; recalls that this revenue is also intended to cover a modest amount of administrative support costs, which means that only around EUR 600 million will be available for calls for applications under the TDF in 2028 and 2029; estimates that these amounts might be marginally higher if the extension of the scope of the CBAM Regulation to certain downstream products will have taken effect by then;

7. Considers that any revenues remaining after full disbursement should be reused to support the decarbonisation of energy-intensive industries; calls on the Commission, in that regard, to submit, by 31 March 2030, a legislative proposal providing for the use of such revenues to grant additional support to operators in the sectors covered by this regulation, in accordance with the objectives set out in Article 1 thereof;

8. Calls on the Commission to present, by December 2028, an implementing report covering the applications received, the sectors and installations concerned, the level of demand for support, and an assessment of whether the available appropriations are sufficient to meet that demand; calls on the Commission, on the basis of that report, to assess whether a prolongation of the programming period is necessary; further calls on the Commission, in that context, to assess whether the monitoring, verification and reporting obligations provided for in the regulation are being implemented in a manner that takes account of the size, resources and administrative capacity of undertakings, in particular small and medium-sized enterprises, thereby avoiding unnecessary administrative burdens;

9. Recalls that the earmarking of revenue for particular spending purposes is to be avoided as a matter of principle; acknowledges, however, that the temporary nature and specific purpose of the TDF justifies an exception to the principle of universality of revenue; recalls that, in order to avoid the risks of a ‘shadow fund’ and the proliferation of the ‘budgetary galaxy’, assigned revenue must be subject to additional scrutiny and transparency provisions; insists, therefore, that the Commission report comprehensively and from the outset on the implementation of the fund; requests, more specifically, a detailed description and periodic documentation within the framework of the annual budgetary procedure, and in particular in the working document (Part V) accompanying the draft budget, dedicated to assigned revenue;

10. Asserts that new budget lines must be introduced and approved by the budgetary authority, both on the revenue and expenditure sides of the budget and for operational and administrative expenditure;

11. Takes note of the estimated administrative costs of approximately EUR 1 million per year, and the fact that these are to be covered by redeployment in 2026 and 2027, and by external assigned revenue once available until 2031;

12. Emphasises that the new fund, even though it is temporary and financed by external assigned revenue, is subject to legal provisions protecting the financial interests of the Union, such as the rule of law conditionality; insists that the protective measures to prevent fraud and irregularities set out in Article 12 of the proposal must not be weakened in the course of interinstitutional negotiations.