On Wednesday 28 April 2026, Bellona Europa hosted a high-level webinar titled “From compensation to decarbonisation: rethinking ICC and indirect emissions in CBAM in an ever-changing world.” The discussion brought together industry, civil society, and policy experts to revisit one of the most technically complex, and politically sensitive, questions in EU carbon pricing: how to align indirect cost compensation (ICC) with the inclusion of indirect emissions in the Carbon Border Adjustment Mechanism (CBAM). 

The webinar opened with a presentation by Francesco Lombardi Stocchetti (Policy Advisor, Sustainable Economy and Finance, Bellona Europa), setting out Bellona’s proposal to reform ICC so that it becomes compatible with a CBAM that includes indirect emissions. The subsequent debate featured reactions from Heidi Peltonen (Vice President Sustainability, Outokumpu) and Camille Maury (Senior Policy Officer, WWF EPO), offering perspectives from both industry and civil society. 

The discussion took off reflecting on the current turbulent geopolitical and energy backdrop. Rising global tensions and disruption to energy supply chains have once again exposed Europe’s vulnerability to fossil fuel dependency. While the crisis has intensified pressure to reduce energy costs for the European industrial sector, it has also reinforced the strategic case for accelerating renewable deployment as a cornerstone of European energy security and industrial resilience. With the EU Emission trading System (ETS) revision approaching in summer 2026 and the CBAM review scheduled for 2027, the timing of the debate proved particularly timely. 

At the core of Bellona’s proposal is a change in how indirect cost compensation (ICC) works. Instead of covering all carbon-related electricity costs, ICC would only compensate for the carbon cost that “spills over” onto clean (non-emitting) electricity. This would make it possible to include indirect emissions in the CBAM without leaving EU industries exposed, while still ensuring that fossil-based electricity fully reflects its carbon cost. In this way, ICC becomes a more targeted, temporary support tool, while CBAM takes on its role as the main mechanism to prevent carbon leakage. 

Bellona also proposed complementary reforms to strengthen the integrity and coherence of ICC: harmonising its application across Member States to avoid internal market distortions; reinforcing climate conditionality by requiring ICC to be directed towards decarbonisation and energy efficiency; improving transparency through EU-level reporting and monitoring; and maintaining ICC as a strictly temporary instrument, with a phase-out to be assessed after 2030 in line with grid decarbonisation progress. 

After the presentation, Ms. Peltonen, representing Europe’s leading stainless steel producers, with operations in Finland, Sweden, Germany, United States and Mexico, expressed interest in the proposal and strongly supported the inclusion of indirect emissions in CBAM. She reaffirmed Outokumpu’s support for carbon pricing measures that ensure imported products face equivalent carbon costs to EU production, in order to avoid carbon leakage and maintain climate ambition. However, she warned that excluding Scope 2 emissions remains a structural weakness in CBAM, particularly for electricity-intensive sectors such as steel and ferrochrome production, where competitiveness is closely linked to access to low-carbon electricity. 

The discussion also highlighted inconsistencies in the current ICC landscape across Member States. Some of the member states do not apply the ICC at all, some partially and some use it to the full extend. These divergences were seen as creating uneven competitive conditions within the internal market, even for companies operating across multiple jurisdictions, and were flagged as a challenge for overall policy coherence. In this context, support was expressed for approaches that better align ICC with real carbon cost exposure and the decarbonisation of electricity consumption. 

Ms. Maury welcomed Bellona’s paper as a timely and constructive contribution ahead of the ETS revision. She stressed that the proposal raises important questions about fairness and coherence in EU carbon pricing, particularly as some indirect emissions are already partially addressed in sectors such as fertilisers and cement, while others remain excluded. She also warned of a potential structural risk: if ICC is maintained while CBAM gradually expands to cover more ETS sectors, the system could evolve into a form of “double protection” against carbon leakage, weakening its environmental logic. For this reason, WWF reiterated that ICC should ultimately be phased out, as in practice it constitutes a form of implicit free allocation and is not aligned with a clear decarbonisation pathway. Ms. Maury further highlighted its analysis of ETS revenues between 2013 and 2021, estimating that nearly €100 billion has been channeled through free allocation mechanisms, including ICC, with notable distributional differences across Member States. WWF concluded by strongly supporting the inclusion of all indirect emissions (Scope 2) in CBAM, arguing that this would improve environmental effectiveness by strengthening incentives for cleaner production and renewable electricity sourcing. 

Despite differences in emphasis and approach, the webinar converged on several key points.  

1. There was broad recognition that CBAM should include indirect emissions across all sectors to ensure environmental integrity and policy coherence.  

2. Participants acknowledged that the current design and distribution of ICC is problematic and not functional. It creates disparities among Member States and it is not consistent with the EU climate objectives.   

3. While short-term transitional tools may still be needed to address energy price volatility and industrial exposure, they should not delay the development of long-term solutions that accelerate the phase-out of fossil fuel dependency and support the expansion of renewable energy systems. 

Bellona Europa will continue to develop its work on this topic and remains open to engaging with stakeholders across industry, policy, and civil society to further refine and advance the debate.