European Parliament lawmakers have called for a proposed Temporary Decarbonisation Fund to begin earlier and cover more companies using CBAM-covered materials, as European industries face changing carbon costs and competitive pressures.
MEPs adopted Parliament’s negotiating position with 433 votes in favour, 97 against and 146 abstentions. They want the proposed funding period to run from 2027 to 2029, rather than starting in 2028, and support extending eligibility to a broader group of downstream businesses using inputs covered by the EU Carbon Border Adjustment Mechanism.
Proposed fund remains separate from CBAM
The Temporary Decarbonisation Fund would operate separately from the mechanism that imposes carbon-related costs on covered imports. Its proposed role is to address competitive pressures affecting European producers and manufacturers as carbon costs evolve.
The issue also concerns companies selling into markets where equivalent carbon costs may not apply. For downstream manufacturers, the pressure can arise through higher prices for carbon-intensive inputs even where the company itself does not operate a carbon-intensive furnace.
A European Parliamentary Research Service briefing says the European Commission’s initial design envisages financing the fund with 25% of member states’ CBAM certificate revenues. Questions concerning the timing of applications, eligible production and payment schedules remain part of the institutional negotiations.
Eligibility and funding terms are not yet final
The parliamentary vote does not establish funding rights for individual companies. Support for the proposed fund does not mean that a particular steel project has qualified, that a grant has been awarded or that exporters can deduct an equivalent amount from their carbon expenditure.
For downstream manufacturers, the proposed expansion addresses a different cost channel from that affecting primary steel producers. Rising prices for CBAM-covered inputs can affect the competitiveness of fabricators even when their own operations do not generate the same level of carbon-intensive production emissions.
Starting assistance in 2027 instead of 2028 could bring financial support closer to the period when higher costs emerge and before replacement technologies are fully deployed. The practical effect would depend on eligibility conditions, application processing and the scale of funding available for investment and production decisions.
The September parliamentary vote establishes Parliament’s negotiating position, but the proposed fund has not yet become confirmed project financing available to companies.
