On Tuesday 14 April, the European Court of Auditors cast doubt on the structure and impact of the future ‘Temporary Decarbonisation Fund’, as envisaged by the European Commission at the end of 2025 (see EUROPE 13775/10).
With €632 million from the sale of certificates through the Carbon Border Adjustment Mechanism (CBAM), this instrument will support the decarbonisation efforts of European companies in carbon-intensive sectors (steel, aluminium, fertilisers) whose production is at risk of being relocated outside the European Union.
“There is a kind of mismatch between objectives and what it funds directly”, Keit Pentus-Rosimannus, the member responsible for the Court of Auditors’ opinion, told some journalists.
In her view, it is “valid” to say that the fund will “indirectly” support investment in decarbonisation in the sectors concerned. However, she added, the conditions that companies will have to meet to access EU financial support are “similar” to those required to access free allowances under the EU’s emissions trading system (ETS), namely to follow the recommendations set out in their energy audits.
The EU auditors also point to the difficulty of determining the volume of new investment in decarbonisation that the temporary fund will be able to generate.
“The proposal should be clear about the fact that support will be paid only retroactively”, stressed Ms Pentus-Rosimannus.
While the Commission estimates the fund’s expenditure and revenue at €632 million and €265 million respectively, the auditors warn that these amounts are “highly uncertain”, as the prices of the ETS and CBAM certificates are difficult to predict. In addition, CBAM certificates are a new type of receipt that is not based on any historical data.
As the first aid payments will be made in 2029, the Court suggests that Member States pay their contribution in one instalment in 2029 rather than in two instalments over 2028 and 2029.
Furthermore, the Court of Auditors is of the opinion that the three suggested derogations from the Financial Regulation are not all justified or clear. In particular, it does not subscribe to one of them, which will authorise the Commission to return excess contributions to the Member States. According to the auditors, other budgetary options exist, such as using the funds via another European programme with similar objectives.
Finally, the Court points out a positive point in the legislative proposal on the table: the management of the fund will be based on existing administrative structures linked to the management of the allocation of free allowances under the ETS.
To see the European Court of Auditors’ report: https://aeur.eu/f/ljx (Original version in French by Mathieu Bion)