Aid Schemes Approved

As per the Statement on Energy by President von der Leyen issued on September 7th, 2022:

The fourth point is addressing the energy utility companies that must be supported to be able to cope with the volatility of the markets. Here, it is a problem of securing futures markets. And for that, liquidity is needed. These companies are currently being requested to provide unexpected large amounts of funds now, which threatens their capacity not only to trade, but also the stability of the futures markets. It is a liquidity problem. Therefore, we will help to facilitate the liquidity support by Member States for energy companies. We will update our temporary framework and enable thus state guarantees to be delivered rapidly”.

Commission approved the €1.1 billion Danish scheme to support carbon capture and storage initiatives

On January 12, 2022, the Commission approved the €1.1 billion Danish scheme to support the roll-out of carbon capture and storage (“CCS”) technologies to reduce CO2 emissions and boost decarbonisation of industrial processes.

CCS consists of a set of technologies that make it possible to capture the carbon dioxide (CO2) emitted from industrial plants, including process-inherent emissions, or to capture it directly from ambient air, to transport it to a storage site and inject it in suitable underground geological formations for the purpose of permanent storage.

The aid will be awarded through a competitive tendering procedure (to be concluded in 2023) open to companies active in any industrial sectors. Under a 20-year contract, the beneficiary will capture and store an annual minimum of 0.4 million tonnes of CO2 as from 2026. The maximum amount of aid will be equal to €54.9 million per year.

The Commission found that the Danish scheme is in line with the conditions set out in Article 107(3)(c) and in the 2022 Guidelines on State aid for climate, environmental protection and energy, which allow Member States to support measures reducing greenhouse gas emissions. In particular, the Commission found that the scheme is necessary and appropriate to cut CO2 emissions, has incentive effects towards future investment in CCS, and bears limited negative effects on competition.

The Commission decision on the Danish scheme is the last of a series of state aid decisions in Europe to promote CCS technologies. Previous measures consisted both of specific support to carbon capture projects (e.g., Commission’s decisions in cases SA.53525 and SA.61295 for the Netherlands, as well as EFTA Surveillance Authority’s decision in case 093/20/COL approving the €2.1 billion aid to Norwegian full-scale carbon capture and storage) and support to industrial facilities linked with decarbonisation countermeasures such as CCS (e.g., Commission’s decisions SA.102385 for Slovakia and SA.103821 for Czech Republic).

The largest aid approved so far by the Commission: The €49 billion German scheme to support the economy in the context of Russia’s war against Ukraine

On December 21, 2022 the Commission approved the €49 billion German scheme to support its national economy, under the State aid Temporary Crisis Framework (‘TCF’). Potential beneficiaries are companies being final consumers of electricity, natural gas, and heat produced using natural gas and electricity.

The support will be channelled via energy suppliers through monthly instalments in the form of reductions of the electricity, natural gas and heat bills of eligible beneficiaries. Energy suppliers will be then reimbursed by the German state. The total State aid amount granted to each company will be verified at the end of the eligibility period with a clawback mechanism.

The Commission found that the German scheme is in line with the conditions set out in Article 107(3)(b) TFEU and in the TCF. In particular: (i) the individual aid amount which can be granted to companies (including the aid amount for companies particularly affected by the crisis and beneficiaries qualifying as energy-intensive business) does not exceed the different applicable aid ceilings under the TCF Temporary Crisis Framework; (ii) the aid will be granted before December 31, 2023.

More specifically, the individual aid amount will not exceed 50% of the eligible costs for the maximum aid ceiling of €4 million; and for companies particularly affected by the crisis, the individual aid amount will not exceed 40% of the eligible costs for the maximum aid ceiling of €100 million. For beneficiaries qualifying as energy-intensive businesses, the overall aid per beneficiary will not exceed 65% of the eligible costs, or 80% for particularly affected sectors in Annex 1 or the maximum aid ceiling of €50 or €150 million respectively.

The € 6.3 billion euro German recapitalisation measure of SEFE

On December 20, 2022, the Commission approved the 6.3 billion euro State aid granted by Germany to recapitalise the energy company SEFE Securing Energy for Europe GmbH (“SEFE”, the former Gazprom Germania), under Article 107(3)(b) TFEU, in coherence with the principles of the 2022 Temporary Crisis Framework and the principles of the 2014 Rescue and Restructuring Guidelines. The Commission recognised the necessity, appropriateness and size of the intervention in relation to the exceptional situation caused by the war in Ukraine that jeopardizes the viability of the company. This capital injection comes right after the German State took the full ownership of SEFE on November 2022, resulting to 225.6 million euro German aid to SEFE. Considering the considerable size of the aid, the Commission imposed several conditions, among which Germany’s commitments to provide a long-term viability plan, an exit plan, a divestment plan of its business in Switzerland, Romania, Czech Republic, Hungary, Slovakia, Bulgaria and Mexico, and a governance and acquisition ban. 

CLEARY ALERT MEMOState Aid Decisions Under the Temporary Crisis Framework (TCF)

December 2022: