Why EU ETS-Linked Funding Matters for Anyone Buying or Selling Credits in the Voluntary Market
The Innovation Fund matters because it is a real bridge between the regulated market and the voluntary market. It is financed by revenues from EU ETS auctions and, between 2013 and the end of 2025, auctions generated more than €258 billion in revenue. This figure does not just mean “there is money.” It means the regulatory driver has scale and continuity, and therefore also influences how companies set climate budgets and priorities. Source: European Commission
Demand in the VCM changes because grants shift the center of gravity from “buying credits” to “financing CAPEX that cuts Scope 1.” If a company receives support for hard-to-abate technologies such as CCUS, hydrogen, or process heat, it reduces direct emissions that were previously difficult to tackle. At that point, the budget that used to go into generic offsets tends to move toward:
- carbon removal (for residual emissions, not for everything)
- insetting and supply-chain decarbonization
- credits with more robust MRV and stronger verification
A typical B2B use case in Italy is this (Italy is an EU ETS Member State, so these mechanisms apply directly to Italian industrial sites). A cement producer wins a call for electric calcination or CCUS. From that point it uses EU ETS and, where relevant, CBAM for compliance and for internal CO₂ pricing. Then it negotiates a removals offtake only for residual emissions, with a more defensible claim than “carbon neutral” based on heterogeneous credits.
The question that often comes from buyers is straightforward: “If I receive an ETS grant, can I still use credits?” Yes, but it requires discipline. In practice:
- always separate compliance (EUA) from voluntary claims
- avoid double counting and double claiming of environmental benefits
- be careful about how you describe additionality when there is public co-financing: transparency here is part of quality
Useful keywords to navigate: Innovation Fund, ETS-backed finance, decarbonization grants, EU climate finance, high-integrity VCM, carbon removals, MRV, insetting, Article 6 (as context, not as the focus).
Which Net-Zero Technologies Are Being Accelerated, and Where Demand Emerges for Carbon Removal and More Robust MRV
Innovation Fund calls accelerate “heavy” industrial technologies—those that truly move the Scope 1 emissions curve. The Commission announced total calls worth €5.2 billion to accelerate clean industrial deployment, with dedicated strands. Source: Atlantic Maritime Strategy, Commission news
In 2024, the Innovation Fund (IF24) had a budget of €2.4 billion and included topics on net-zero tech as well as battery cell manufacturing. This is also relevant for Italian component and automotive supply chains, because it shifts investment and traceability requirements along the value chain (Italy hosts major automotive and industrial component clusters integrated into EU manufacturing). Source: European Commission, IF24 call
Typical technology clusters seen orbiting around the Innovation Fund include:
- Net-Zero Technologies
- hydrogen auction
- industrial process heat decarbonisation (process heat)
The key point for credit strategy is this. Even with electrification and hydrogen, in sectors such as cement and chemicals there remain “process” emissions that are hard to eliminate. This opens space for carbon removal and for long-term contracts, often with stringent MRV clauses, on options such as:
- DACCS/BECCS (as categories of technological removal)
- biochar
- mineralization
MRV becomes tougher because grants raise the bar on monitoring and verification. In practice, anyone receiving public money must demonstrate results with ex-ante and ex-post KPIs, credible baselines, and primary plant data. This drives demand for:
- sensors and telemetry
- digital MRV
- LCA, mass balance, chain of custody
- audits and assurance
- an “evidence pack” ready for verifiers and disclosure
Italian B2B examples where this demand grows: the ceramics district (heat), chemicals (low-carbon H2), steel (DRI-EAF). It is not only demand for abatement technology that grows. Demand also rises for instrumentation, MRV software, and data platforms that make the reduction “verifiable.”
Impacts on Hard-to-Abate Sectors: Steel, Cement, Chemicals, Transport and Logistics (What to Expect in Italy)
Steel is changing because the industrial pathway is moving toward DRI + EAF, with hydrogen and/or gas and possible CCUS integrations. This affects procurement and energy contracts: pellets, scrap, and above all PPAs and access to low-carbon electricity become part of the CO₂ strategy, not just the energy strategy.
The typical CFO question here is: “What is decarbonization worth compared with buying EUA?” The operational answer comes through an effective carbon cost logic. You do not look only at the spot price. You look at net exposure, shock risk as free allocations decline, and the comparison between the MACC and the forward curve.
Cement remains an edge case because a share
Chemicals are moving toward process electrification, hydrogen, process heat, and circular feedstocks. The credit topic here is less “offsets” and more “data.” Funded projects require MRV of embedded carbon, useful both for CBAM and for customer requests along the supply chain.
Transport and logistics enter the discussion because ETS is already within the maritime perimeter and because ETS costs can be passed through into freight rates. This fuels practices such as carbon surcharge, green corridors, and book & claim schemes, with FuelEU Maritime as the regulatory context.
What to expect in Italy, in brief (Italy is deeply integrated into EU export supply chains and is exposed to both EU production rules and import requirements). More pressure on hard-to-abate export supply chains that sell into the EU and import inputs from outside the EU. Here it becomes normal to integrate CBAM data, MRV, and credit strategy, often with insetting in the supply chain. To the question “Do I need to change supplier specifications?” the answer is yes: verifiable emissions data, audit rights, and data-quality clauses.
Effect on the CO2 Price and Compliance Choices: EU ETS, CBAM, and Investment Planning
The EUA price is already a budget number, not a detail. In 2025 the average EUA price was about €75/t and spot auctions saw levels around €69/t (July 2025). Source: Veyt, 2025 EU ETS year in review
CBAM is no longer “future.” The transitional phase started in October 2023. From 1 January 2026 the definitive phase begins and the price of CBAM certificates is linked to the EUA auction price, with a quarterly average in 2026 and a weekly average from 2027. Source: European Commission, CBAM
The CBAM phase-in 2026–2034 runs in parallel with the phase-out of free ETS allowances. Practical implication: net exposure to the carbon price increases for EU producers, and competitive differentials with imports change. Source: European Commission, CBAM
The “do I invest or buy allowances” decision is made with simple but rigorous tools:
- MACC vs EUA price (and the forward curve)
- carbon budgeting and an internal carbon price
- EUA hedging if you have material exposure
- capex planning with sensitivity to the CO₂ price and permitting timelines
Two recurring questions:
- “Does CBAM affect me if I produce in Italy?” Indirectly yes. It changes competition, prices of imported inputs, and data requirements along the supply chain.
- “Can I replace CBAM with credits?” No. CBAM and ETS are compliance. Credits are voluntary and must be kept separate in claims.
Editorial note on the 2026 angle. If the debate brings in stabilization tools such as a “price corridor” or extensions of the CBAM scope, for companies the consequence is only one: planning must become more risk-based, with scenarios and clear rules of engagement between investments, EUA, and commercial contracts.
How to Read an ETS-Backed Call: Criteria, KPIs, Additionality, and Greenwashing Risks in Corporate Claims
An ETS-backed call should be read starting from what can waste your time. Maturity and shovel-readiness matter as much as the technology. You typically find requirements on:
- TRL and industrial readiness
- the size of the GHG reduction
- replicability and scalability
- financial strength and bankability
- timeline to start operations
- contractual structure: grant agreement, milestones, possible mechanisms such as clawback, compatibility with state aid
Typical KPIs are “plant numbers,” not slogans:
- tCO₂e avoided/year
- €/tCO₂e abated
- product carbon intensity (examples: tCO₂/t clinker, tCO₂/t steel)
- plant availability
- share of renewable energy
- MRV requirements with audits
Additionality must be handled precisely because there are two different layers. “Credit additionality” and “grant additionality” are not the same. A co-financed project can make it harder to argue that any credit generated is additional in the same way it would be without public funds. For corporate claims it is often more prudent to use transparent wording such as “supported by EU funding” and describe the reduction, rather than turning it into an “offset.”
Greenwashing here comes from a common shortcut. Claiming “carbon neutral” with low-quality credits while receiving ETS grants for real reductions creates inconsistency and reputational risk. A more defensible claim hierarchy is:
- real reduction (plants, energy, processes)
- management of residual emissions
- high-quality removals with robust MRV
- clear disclosure on co-financing and limits
A real question, from the tokenization side: “Can I issue tokens/credits from a co-financed plant?” It depends on the methodology and, above all, on who holds the rights to the environmental benefits. You need traceability of rights, contractual governance, and disclosure to avoid double claiming. If mechanisms such as corresponding adjustments come into play, they must be managed as an integrity requirement, not as a technical detail.
Operational Checklist for Companies and Investors: Partnerships, Supply Chain, Offtake, and Integration with CSRD and SBTi
The “deal-ready” checklist starts with scope, not technology:
- define ETS/CBAM/VCM and what is compliance vs voluntary
- build a baseline and an MRV data model with primary data where possible
- build a CAPEX/OPEX plan with sensitivity to the EUA price and permitting timelines
- define the consortium structure: EPC, OEM, utility, CO₂ storage where needed
- align permits, grid connections, CO₂ logistics, and a realistic timeline
Partnerships matter because many solutions are infrastructure-heavy. Typical models: CCUS clusters, PPAs, industrial consortia, industrial symbiosis, shared infrastructure, CO₂ transport & storage, hydrogen value chain.
Offtakes are becoming the commercial tool that “closes the loop” between reduction and claims. In long-term contracts for carbon removal or low-carbon products, the clauses that truly matter are:
- volume and delivery schedule
- indexed pricing (often referencing the carbon price)
- MRV requirements and audit rights
- reversal/shortfall management
- options to replace the credit if non-compliant
The supply chain must be brought into data compliance before marketing compliance. Integrate CBAM embedded emissions requirements and supplier engagement with questionnaires, audits, EPDs, and LCA. This also anticipates bank and investor due diligence.
CSRD and SBTi should be treated as the “operating system” of the strategy, not as reporting. Align roadmap and disclosure on Scope 1-2-3 and transition plans. Avoid offsetting as a shortcut. Use credits, especially removals, for residual emissions, with a public policy and traceability.
Tokenization, if you use it, must have clear control points:
- linkage to registries and serialization
- claim management and retirement rules
- integration with MRV and assurance systems
- anti-double counting and proof of origin Keyword: carbon token, digital MRV, registry-linked tokens, proof of origin, anti-double counting.
