Commissioner Wopke Hoekstra has defended the proposed Temporary Decarbonisation Fund as a necessary measure to address the remaining carbon leakage risk for EU producers on third-country markets, even as the Carbon Border Adjustment Mechanism (CBAM) covers the internal market. In a written answer on 22 July 2026 to a parliamentary question from MEPs Mathilde Androuët and Marie-Luce Brasier-Clain (both PfE), Hoekstra acknowledged that the fund would provide temporary decarbonisation support to EU producers of certain CBAM goods, helping them compete against cheaper, more emission-intensive alternatives abroad. The answer comes as the European Court of Auditors, in Opinion 13/2026, flagged risks of retroactive payments under the fund, which would disburse money in 2028 and 2029 based on production in 2026 and 2027, limiting the awarding authority's influence over funded actions.
The MEPs had questioned whether the fund merely corrects the negative impact of the Commission's own ETS and CBAM architecture, and how retroactive payments can serve as a genuine reindustrialisation and decarbonisation strategy. Hoekstra did not directly address the first point, but stressed that the fund addresses a specific competitiveness gap not covered by CBAM. On retroactivity, he argued that swift agreement by co-legislators would allow operators to factor support into investment decisions earlier, enhancing planning certainty. On the third question about slowing the phase-out of free allowances for strategic sectors like fertilisers, Hoekstra pointed to the upcoming review of the EU Emissions Trading System (ETS), which will examine the effectiveness of free allocation in promoting cost-effective emission reductions, covering CBAM sectors including fertilisers.
The answer signals the Commission's willingness to maintain the current timeline for the fund's adoption, while leaving the door open to adjustments in the ETS review. The fund, if agreed, would mark a shift from free allowances to targeted decarbonisation support for energy-intensive industries, but its retroactive design has drawn scrutiny from auditors and some MEPs. The Commission has not proposed slowing the free allowance phase-out, but the ETS review, expected later this year, could lead to modifications for sectors deemed strategic for European industrial and agricultural sovereignty.