Commission approves amendments to German State aid scheme to compensate energy-intensive companies for indirect emission costs

The European Commission has approved, under EU State aid rules, amendments to a German scheme to partially compensate certain energy-intensive companies for higher electricity prices resulting from the impact of carbon prices on electricity costs (so-called ‘indirect emission costs’) under the EU Emission Trading Scheme (‘ETS’).

The scheme was originally approved by the Commission on 19 August 2022 (SA.100559). Under the scheme, the compensation is granted to eligible companies through a partial refund of the indirect emission costs incurred between 2021 and 2030. The compensation is granted for indirect emission costs incurred in the previous year, with the final payment to be made in 2031.

Germany notified the following modifications to the existing scheme: (i) the removal of two conditions requiring beneficiaries to bear an additional share of their indirect emission costs compared to the applicable State aid rules  and which limited the maximum aid amount, with that modification becoming applicable for compensation of costs incurred between 2023 and 2030; and (ii) a budget increase of around €5 billion reflecting these modifications and accounting for updated estimates, bringing the overall estimated budget of the scheme to around €32 billion.

The Commission assessed the amended scheme under EU State aid rules, and in particular the Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2021 (‘ETS State aid Guidelines’). The Commission found that the amended scheme continues to comply with the requirements set out in the ETS State aid Guidelines. In particular, it found that the amended scheme remains necessary and appropriate to support energy-intensive companies to cope with the higher electricity prices and to avoid that companies relocate to countries outside the EU with less ambitious climate policies, resulting in an increase in global greenhouse gas emissions. Finally, the Commission concluded that the aid granted continues to be limited to the minimum necessary and will not have undue negative effects on competition and trade in the EU.

On this basis, the Commission approved the amended scheme under EU State aid rules.

The non-confidential version of the decision will be made available under the number SA.113265 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.