On Thursday 9 April, Pascal Canfin (Renew Europe, French), the European Parliament’s rapporteur on the new decarbonisation fund designed to compensate exporting companies subject to the Carbon Border Adjustment Mechanism (CBAM), presented the three main focuses of his draft report to the press.
In December, the Commission proposed setting up a temporary fund for two years, endowed with €632 million, to be implemented from 2028 (see EUROPE 13775/10).
The fund is aimed at energy-intensive industries in the EU that are exposed to a high risk of carbon leakage.
In his report, which is due to be put to the vote in mid-July, the French politician defends a fund that is broader, quicker and simpler to use and, finally, more predictable. He has “always supported the principle of such an instrument: while the CBAM helps combat climate dumping at the entry point of the European market, it does not, as it stands, protect companies that produce in Europe, pay for carbon, and then export their output to countries that have no carbon price”.
Some “of our companies in the steel, fertiliser, and aluminium sectors compete in these export markets and could therefore face a competitive disadvantage. The new Decarbonisation Fund must offset this disadvantage”, he explained, among other things, on LinkedIn.
Firstly, the rapporteur proposes that “all actors affected by the carbon price and the loss of free allowances be covered by this fund, not only the heavy industry companies covered by the ETS system”.
This will “in particular bring into scope the cereal farmers who have faced significant increases in their nitrogen fertiliser input costs in recent months, with the aim of compensating for this additional cost”.
On the question of deadlines, the rapporteur believes that the Commission is proposing “a system that is too slow, with first payments not arriving before 2029”. He wants to create a new application period for companies so that payments can be made as early as 2028.
The response times of the national authorities and the Commission will also have to be shortened, and administrations will be obliged to inform companies within two weeks as to whether or not their applications are complete.
The phasing out of free allowances and the implementation of the Carbon Border Adjustment Mechanism (CBAM) began on 1 January 2026, which means that operators are already incurring additional carbon costs, explains the MEP. Paying compensation only several years later risks compromising economic efficiency, particularly for SMEs.
He thus developed a two-call structure. “Beneficiaries should be able to choose whether to submit a single application in 2028 for the 2026-2027 production reference period or to submit two separate applications, the first in 2027 for the 2026 production reference period and the second in 2028 for the 2027 production reference period”.
In terms of predictability, each company receiving financial support from this fund would have climate obligations, whether in terms of energy efficiency, investment, or restraint. “Since this fund is fed by CBAM revenues, it heralds a new, more predictable approach: the use of carbon market revenues (in this case, those from the CBAM) should be directed as a priority towards decarbonisation”, whereas until now less than 5% of the ETS revenues managed by the Member States have been earmarked for decarbonisation projects.
Link to the report: https://aeur.eu/f/lid (Original version in French by Solenn Paulic with Lionel Changeur)