EU to support energy-intensive sectors with temporary decarbonization fund propos
The proposal presented by the Commission on December 17, 2025, covers producers in the aluminum, fertilizer, iron, and steel sectors, as well as other energy-intensive sectors at risk of carbon leakage.
The gradual phasing out of free allocations for CBAM-compliant products under the EU Emissions Trading System (ETS) by 2034 places exporting EU producers at a competitive disadvantage in international markets. In this context, the Temporary Decarbonization Fund (TDF) will act as a temporary bridge solution and provide short-term support for specific products during the 2026-2027 production period.
The proposed fund will be financed by 25% of the revenues generated by member states from CBAM certificates, and the total resources of the fund are estimated at approximately EUR 633 million. The fund will be directed exclusively toward producers of designated energy-intensive products, with applications to be accepted in 2028 and payments to be made in 2029.
For the fund to be applicable, operators must have implemented energy audit reports or committed to investments in equivalent emission reduction measures. Applications will be evaluated by national competent authorities, and the amount of support will be calculated based on the losses incurred due to the removal of free allocations.
The EU Commission will implement the TDF through a direct management model, and national competent authorities (NCA) will review applications and process payments. Details of the support provided under the fund will be reported to the EU legislative bodies by the end of 2030.
Sector representatives and experts have concerns regarding the temporary and limited scope of the fund. Eurofer criticized the narrow range of products covered by the fund and its short duration, while the European Aluminium Association demanded specific solutions for exports. Environmental organizations, on the other hand, warned that the fund could undermine the integrity of carbon pricing.
The EU Commission stated that the TDF aims to reduce the risk of carbon leakage in energy-intensive sectors during the ETS and CBAM compliance process and to provide support to producers during the transition period.
Italy’s crude steel production increased by 2.6% in february
According to data released by the Italian Steel Producers’ Federation (Federacciai), the country’s crude steel production increased by 2.6% y-o-y in February, reaching 1.9 million tons. Following the 1.6% increase recorded in January, the recovery in production was seen to be gaining momentum.
When the first two months of the year are evaluated together, Italy’s total crude steel production rose to 3.6 million tons, a 2.1% y-o-y increase. This confirmed that the recovery trend observed in the Italian steel sector in 2025 has carried over into 2026.
In the hot-rolled product group, the divergence between long and flat products continued. Production of long products for the construction sector increased by 5.0% y-o-y in February to 1.1 million tons, while it rose by 8.6% y-o-y to 2.1 million tons in the first two months of the year. In contrast, flat product production for the automotive, machinery, and white goods sectors decreased by 7.4% y-o-y in February, remaining at 737,000 tons. In the first two months, flat product production fell by 4.4% y-o-y to 1.5 million tons.
Tata Steel UK’s support for circular economy initiative
The initiative launched nationwide brings together organizations from different sectors to encourage practices such as reuse, remanufacturing, and high-quality recycling.
Tata Steel UK, which is among the founding signatories, will collaborate with sector stakeholders to integrate circular thinking into its business processes and contribute to the large-scale implementation of solutions in this field. This step by the company is considered an important part of its strategy to transition to a more sustainable and resource-efficient model in steel production.
Electric arc furnace transformation stands out
Tata Steel UK CEO Rajesh Nair stated that the company is entering a new era in steel production, noting that recycling will be placed at the center of operations with the transition to electric arc furnace (EAF) technology. Nair emphasized that thanks to this transformation, high-quality, UK-made steel will be produced using more sustainable methods.
With the company’s transition to an EAF-based production model, it is planned to use UK-sourced scrap steel as the primary raw material. This approach aims to contribute to the more efficient use of resources by increasing circularity in the steel value chain.
Acting in partnership with the supply chain
Rajesh Nair drew attention to the importance of close collaborations to be established with the supply chain, stating that in this process, waste will be reduced, resources will be used more wisely, and the resilience of the UK manufacturing sector will be strengthened.
The initiative in question will initially be supported by a task force consisting of organizations from different sectors. Through this structure, it is aimed to expand circular economy practices, implement practical solutions, and share the experiences gained.
The fact that steel can be recycled, reused, and repurposed repeatedly without loss of quality places the sector at the heart of the circular economy, while Tata Steel UK’s participation in this initiative stands out as an important step reinforcing the company’s sustainable production approach.