Sittings · Document

DRAFT REPORT (COM(2025)0990 – C100353/2025 – 2025/0418(COD)) 2026-04-07

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

Committee on the Environment, Climate and Food Safety · Rapporteur: Pascal Canfin

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The rapporteur's draft report sets out Parliament's first-reading position on the proposed regulation establishing the Temporary Decarbonisation Fund, which supports carbon-intensive sectors facing the remaining risk of carbon leakage. It widens the Fund to downstream operators and some agri-food products, adds a 2027 application window alongside the 2028 one, and extends support to the years 2027 to 2029. It ties support to climate conditions, bases the calculation on exported goods and free allocation phased out, and shortens the deadlines for national authorities and the Commission. It asks the Commission to refer the matter to Parliament again if it substantially amends its proposal.

Committee position. The rapporteur proposes to strengthen the Fund by widening it to downstream operators and agri-food products, adding an optional 2027 application round, shortening procedural deadlines, and tying support to climate conditions, so it is larger in scope, faster and more predictable.

Key points

  1. The Fund would provide financial support in 2027, 2028 and 2029 to address the remaining risk of carbon leakage for carbon-intensive goods produced in 2026-2027.
  2. A new category of 'downstream operator' is created: any person whose commercial activity is directly impacted by a carbon cost passed through an operator and that produces eligible goods.
  3. Downstream operators producing eligible goods under Combined Nomenclature codes, and those producing goods not listed in the Annex with a low value-to-weight ratio and heightened national carbon leakage risk, become eligible.
  4. The Fund is extended to agri-food products, selected on direct and indirect carbon costs as a proportion of gross value added and trade intensity with third countries.
  5. Downstream operators face less onerous commitments than operators; sellers of fertilisers also selling agricultural products could offer commercial proposals supporting reduced fertiliser use.
  6. A downstream operator receives support if it shows verifiable actions leading to reduced use of goods in Annexes I and II to Regulation (EU) 2023/956, or meets the conditions in Article 7(2).
  7. Applicants may submit a single application by 31 March 2028 for 2026-2027, or an application by 31 March 2027 for 2026 plus a supplementary one by 31 March 2028 for 2027.
  8. Applications must include production data, the share of production sold in third countries by destination, and, for downstream operators, evidence of reduced use of CBAM goods or fulfilment of Article 7(2).
  9. Competent authorities assess completeness within 15 days; after acknowledgment, applicants are not asked for new information unless duly justified.
  10. Support is calculated on exported goods, based on free allocation phased out and the share of production, using the average EU ETS auction closing price for the reference period.
  11. For downstream operators, support is based on the volume of exported goods, the CO2 content of CBAM-covered intrants or precursors, and the average EU ETS auction price; competitiveness risk in export destinations is factored in.
  12. Member States must communicate annual contribution amounts for 2026 by 31 July 2027 and for 2027 by 31 July 2028, and transfer them by 30 September 2027 and 30 September 2028.

Who is affected

  • Operators of EU ETS installations producing carbon-intensive goods: eligible for support for exported goods.
  • Downstream operators, including SMEs in steel value chains and agri-food actors: newly eligible, with tailored conditions.
  • Farmers and fertiliser sellers: support tied to reduced fertiliser use and commercial proposals.
  • Member States and their competent authorities: must contribute funds, assess applications and disburse support.

Figures and deadlines

  • Support period 2027-2029, for production in 2026-2027.
  • Application deadlines: 31 March 2027 and 31 March 2028.
  • Member State contribution communication deadlines: 31 July 2027 and 31 July 2028.
  • Member State transfer deadlines: 30 September 2027 and 30 September 2028.
  • Competent authority completeness assessment: within 15 days of receiving the application.
  • Commission implementing decisions: by 31 December 2027 and 31 December 2028.
  • Disbursement deadlines: 31 March 2028 and 31 March 2029.
  • Trade intensity criterion for product scope: 25% instead of 30%.

Legal basis: Article 294(2), Article 192(1) and Article 322(1), point (a), of the Treaty on the Functioning of the European Union.

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