The European Court of Auditors has assessed the Commission’s proposal for a Temporary Decarbonisation Fund, finding that projected revenues of €632 million substantially exceed estimated expenditure of €265 million, and questioning whether one of three requested derogations from the Financial Regulation is justified.
The Temporary Decarbonisation Fund, proposed by the Commission on 17 December 2025, was designed to provide transitional support to companies in six carbon-intensive sectors, iron and steel, cement, aluminium, fertilisers, hydrogen, and electricity; as they lose access to free EU ETS allowances between 2026 and 2034. The Fund would operate in 2028 and 2029, based on 2026 and 2027 production data, and would be financed by requiring Member States to transfer 25% of the revenues they collect from the sale of CBAM certificates in those two years. The remaining 75% of certificate revenues stays with Member States at the moment, but from 2028 onwards, a separate proposal would direct it to the EU budget as an own resource.
The ECA’s principal financial concern is the mismatch between revenue and expenditure projections. The Commission estimates total revenues at €632 million but total disbursements at only €265 million, generating a gap of €367 million, or about 58% of projected revenues with no clear account of what happens to the surplus. The ECA notes that both figures are subject to substantial uncertainty, particularly regarding ETS allowance prices and the volume of imports triggering CBAM certificate requirements. It questions whether a 25% Member State contribution rate is calibrated to actual need, and notes that the proposal does not address how the Commission will manage collected revenues between the first transfer (2028) and disbursement (2029).
On the three Financial Regulation derogations requested by the Commission, the ECA takes differentiated positions. ECA considers the first derogation, concerning unused appropriations, unnecessary, as solutions exist within the current Financial Regulation framework. For the second, covering the ex-ante evaluation requirement, the ECA considers the derogation justified given the Fund’s transitional nature but notes the ex-ante evaluation was not published alongside the proposal, contrary to standard practice. The situation is quite similar for the third derogation, related to administration of the Fund, as ECA finds it sufficiently justified but flagging imprecise drafting.
