Plans for a new EU fund to help heavy industry cut carbon emissions have been criticised by the European Court of Auditors (ECA), which warns the proposal may be flawed in both design and impact.
The proposed Temporary Decarbonisation Fund, put forward by the European Commission in late 2025, aims to support sectors such as fertilisers, aluminium and steel. These industries are seen as at risk of relocating outside the EU due to strict climate rules.
However, in an opinion published on Tuesday, EU auditors questioned whether the fund would deliver real results, warning it may not lead to significant new green investment.
“It is not clear how much new investment the fund will generate,” said ECA auditor Keit Pentus-Rosimannus. She noted that many of these industries have already committed to cutting emissions in exchange for free allowances under the EU’s carbon market.
The Commission has proposed that 75% of revenues from the EU’s carbon border tax — the Carbon Border Adjustment Mechanism — should go into the EU’s long-term budget for 2028–2034. The remaining 25% would stay with member states.
EU officials estimate revenues of €632 million, compared with spending of €265 million. This has raised questions from auditors over whether EU countries should contribute as much as planned. They also warned that revenue forecasts are uncertain, due to fluctuating carbon prices and the new nature of the scheme.
The ECA also highlighted timing issues. EU countries would pay into the fund in 2028 and 2029, but companies would not receive support until 2029. This could leave hundreds of millions of euros unused for at least a year, with no clear plan for managing the money.
In the European Parliament, opinions are divided
MEP Danuše Nerudová, from the centre-right European People's Party, described the fund as a “sensible response” to prevent heavy industry from leaving Europe.
She stressed that carbon costs are only part of the challenge, pointing also to high energy prices and supply chain disruptions. However, she added that the EU should not “simply compensate for everything”.
Nerudová called for rapid decarbonisation, while warning that geopolitical tensions and rising energy costs are affecting Europe’s competitiveness. She also said EU resources are limited and highlighted the need to repay pandemic-related debt.
Meanwhile, MEP Ana Vasconcelos from the liberal Renew Europe group said public spending must meet high standards of transparency and accountability.
“If the fund is poorly managed, we risk not only missing climate targets but also failing European taxpayers,” she said, calling for better incentives before committing large amounts of money.
The final shape of the fund will depend on negotiations between EU countries and agreement on wider budget rules. For now, auditors are urging EU leaders to rethink the design to ensure it effectively supports Europe’s transition to a low-carbon economy.
