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HomeFinanceEuropean Commission approves €300 million Polish just transition state aid

European Commission approves €300 million Polish just transition state aid

The European Commission announced on Monday (5 February) that it has approved, under EU state aid rules, a 300 million-euro Polish scheme aiming to support workers affected by the closure of coal- and lignite-fired power plants and lignite mines.

Poland notified the EU Commission of its plan to introduce a 300 million-euro scheme to provide financial support to those workers who are expected to lose their jobs due to the closure of coal- and lignite-fired power plants and lignite mines.

Under the measure, the support will take the form of a one-year severance payment for employees, which they can choose in place of the severance payment foreseen in the applicable collective labour agreements. Poland also notified, for legal certainty, a paid leave of up to four years for employees close to pension age until their retirement.

The scheme is set to run for a period of 10 years until February 2034. Poland may request a prolongation after that period.

The European Commission assessed the scheme under EU state aid rules which enables EU countries to support the development of certain economic activities subject to certain conditions and the 2022 Guidelines on state aid for climate, environmental protection and energy (“CEEAG”).

Support to workers does not constitute state aid, the European Commission said in a press release. The EU’s executive body found that the paid leave does not provide an advantage to the undertakings that close such an activity and thus does not constitute state aid.

Regarding the severance payment, the EU Commission found that it provides an advantage to the undertakings in which these workers are employed. When an activity closes and an employee opts for the severance payment under the measure, the undertaking is relieved from severance payment obligations stemming from the applicable collective labour agreements.

In particular, the Commission found that the measure is “necessary and appropriate” to mitigate the social impact of the closure of lignite mining and coal- and lignite-based electricity generation in Poland.

Additionally, according to the European Commission, the aid has an incentive effect as it facilitates the societal acceptance of closing these activities and also provides an incentive to the undertakings for early closure.

Lastly, the EU Commission said that the scheme is proportionate, as it is limited to the coverage of certain social costs that the beneficiary activities incur upon closure of the activities.

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