What changed between the draft committee report and the plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

9 unchanged paragraphs

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))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2025)0990),

– having regard to Article 294(2), Article 192(1) and Article 322(1), point (a), of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C100353/2025),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the budgetary assessment by the Committee on Budgets,

– 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,

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

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

Change 1

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

Added:– after consulting the Committee of the Regions,

Added:– 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,

Changed:– 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;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

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

Change 2

Changed: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).

Change 3

Changed: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…

Change 4

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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;

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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.

Added: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.

Removed: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:

Added: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.

Removed: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

Added: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.

Removed: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.

Added: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.