EU ETS reform opens funding path for biofertilizers and wins Polish heating support
The European Commission’s proposed ETS reform would direct at least 50% of auction revenue to priority investments including industrial decarbonization, renewable energy and circular products. Poland’s district-heating industry welcomed the direction, while agricultural businesses could benefit from funding for bio-based fertilizers and biogas infrastructure.
Commission redirects ETS revenue
The European Commission has proposed changes to the EU Emissions Trading System that could channel substantially more carbon-market revenue into industrial decarbonization and create new financing opportunities for bio-based fertilizers. The package also received a positive initial assessment from Poland’s district-heating industry, although the sector says several of its demands remain unaddressed.
According to Farmer.pl, only about 5% of ETS revenue has so far gone directly toward decarbonizing sectors such as steel, chemicals and fertilizers, while industrial sectors generate about 47% of emissions covered by the EU ETS. Under the proposal, member states would have to allocate at least 50% of ETS auction revenue to defined priorities, including industrial decarbonization, renewable energy, the circular economy and markets for low-emission and bio-based products.
Biofertilizers gain a possible funding route
The reform does not identify digestate by name or grant it dedicated support. Farmer.pl reports that the broader financing framework could nevertheless cover properly processed digestate when it qualifies as an organic, bio-based or circular fertilizer. Digestate is the residue left after the anaerobic digestion of biomass, manure or organic waste in a biogas plant. It contains nutrients including nitrogen, phosphorus and potassium and can therefore be used as a fertilizer.
Eligibility would not be automatic. Commercial use would depend on the feedstock, product parameters, nutrient and contaminant levels, and compliance with sanitary and fertilizer rules. Farmers are identified as potential beneficiaries of wider adoption, but the proposal does not establish an automatic subsidy for purchases. The practical impact will depend on national programs, application rules and decisions by institutions in each member state.
Heating companies seek a more predictable carbon price
The proposal would also expand the investments eligible for support from the Modernisation Fund. At least 95% of its revenue would be directed to specified purposes, according to Farmer.pl. For Poland, a lower-income member state with substantial transition needs, this could indirectly support biogas plants, increase the supply of digestate and finance facilities that process bio-based fertilizers. The draft alone does not guarantee support for any particular installation or product.
Polish District Heating Chamber president Jacek Szymczak told Nettg.pl that the industry viewed the reform’s direction positively. The chamber supports a slower withdrawal of allowances, a longer period of free allocation, continued operation of the Modernisation Fund and links between free allowances and decarbonization investment plans. It also welcomed changes allowing the market stability reserve to release an additional pool of allowances, including when prices rise sharply. The chamber believes these measures could limit abrupt price movements, but still wants longer access to free allowances for companies presenting climate-neutrality plans and the removal of financial institutions from allowance trading. Financial institutions have been permitted to buy allowances since 2018, a practice the chamber argues contributes to higher prices.
