The European Commission has approved, under EU State aid rules, a Romanian scheme to partially compensate energy-intensive companies for higher electricity prices resulting from indirect emission costs under the EU Emission Trading System (ETS).
“This 1.5 billion euros scheme supports Romania in its ambition to reduce the risk of carbon leakage for its energy-intensive industries,” said Executive Vice-President Margrethe Vestager, in charge of competition policy. “At the same time, the incentives for a cost-effective decarbonisation of its economy will be maintained, in line with the Green Deal objectives and undue competition distortions will be limited.”
The scheme will cover part of the higher electricity prices arising from the impact of carbon prices on electricity generation costs (so-called indirect emission costs) incurred between 2021 and 2030. The support measure is aimed at reducing the risk of carbon leakage, where companies relocate their production to countries outside the EU with less ambitious climate policies, resulting in increased greenhouse gas emissions globally.
The compensation will be granted to eligible companies through a partial refund of the indirect emission costs incurred in the previous year, with the final payment to be made in 2031. The maximum aid amount will be equal to 75 per cent of the indirect emission costs incurred. The aid amount is calculated based on electricity consumption efficiency benchmarks, which ensure that the beneficiaries are encouraged to save energy.
In order to qualify for compensation, beneficiaries have to either implement certain energy audit recommendations, cover at least 30 per cent of their electricity consumption with carbon-free sources (through on-site or near-site renewable energy generation facilities, carbon-free power purchase agreements or guarantees of origin), or invest at least 50 per cent of the aid amount in projects leading to substantial reductions of their installations’ greenhouse gas emissions. Beneficiaries will have to comply with one of those obligations within three years from the granting of the aid.