Brussels (The Brussels Morning Newspaper) – The EU Commission endorsed amendments to the Slovak State aid scheme to back energy-intensive companies.
How Does the Scheme Support Energy-Intensive Companies?
The European Commission has agreed, under EU State aid rules, modifications to a Slovak scheme to partially compensate energy-intensive firms for the electricity levy financing backing to renewable energy production. The scheme strives to mitigate the risk that, due to this levy, energy-intensive businesses may relocate their activities to areas outside the EU with less ambitious climate approaches. The original scheme was endorsed by the EU Commission in September 2019.
How Does the Scheme Align with EU Climate Objectives?
According to the EU Commission, the amendments align the scheme with the 2022 Policies on State Aid for Climate, Environmental Protection and Energy (‘CEEAG’) and expand its duration until 31 December 2030. The total funding following the amendments is about €300 million, while the annual allocation of €40 million remains unchanged.
Which Sectors Benefit from the Amended Slovak Aid Scheme?
The amended scheme will help companies involved in sectors listed in Annex 1 of the CEEAG. Those sectors depend heavily on electricity and are extremely exposed to international trade. Beneficiaries will obtain a levy decrease between 75% and 85%, depending on their risk exposure. The applicable reduction must not result in a levy below 0.5 EUR/MWh. Under the scheme, beneficiaries will have to execute recommendations outlined in the energy audit report or cover at least 30% of their electricity consumption with carbon-free sources.
Why Did the EU Commission Approve the Amended Scheme?
The European Commission evaluated the amended scheme under EU State aid rules, in certain, of the Treaty on the Functioning of the EU, which allows Member States to support economic activities under specific conditions, and the CEEAG. The EU Commission discovered that the scheme continues to encourage the development of economic activities depending heavily on electricity and is quite exposed to international competition.
In addition, the scheme remains essential and appropriate to contribute to attaining the European Green Deal objectives. Moreover, the scheme is proportional as the individual aid amounts do not surpass the maximum aid amount permitted under the CEEAG. The EU Commission concluded that the favourable effects of the scheme outweigh any potential negative effects on competition and trade in the EU. On this basis, the EU Commission endorsed the amended scheme under EU State aid rules.
