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Poland: Commission approves scheme to compensate companies for ETS-related costs

The European Commission has approved, under EU State aid rules, a Polish scheme to partially compensate energy-intensive companies for higher electricity prices resulting from indirect emission costs under the EU Emission Trading System (ETS).

“This 10 billion euros scheme paves the way for Poland to reduce the risk of carbon leakage for its energy-intensive industries. At the same time, the incentives for cost-effective decarbonisation of its economy will be maintained, in line with the Green Deal objectives, and undue competition distortions will be limited,” said Executive Vice-President and Commissioner for Competition, Margrethe Vestager.

The scheme notified by Poland, with a total estimated budget of 10 billion euros 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. This aims to reduce 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 maximum aid amount per beneficiary will be equal to 75 per cent of the indirect emission costs incurred. In some instances, the maximum aid amount can be higher to limit the remaining indirect emission costs incurred to 1.5 per cent of the company’s gross value added. The additional aid granted to limit the remaining indirect emission costs will not exceed one-third of the regular compensation based on the 75 per cent aid intensity. The aid amount is calculated based on electricity consumption efficiency benchmarks, which ensure that the beneficiaries are encouraged to save energy.

Impact on the European Green Deal

According to the press release, the EU’s executive body found that the Polish scheme is necessary and appropriate to support energy-intensive companies to cope with the higher electricity prices, and discourage those companies from relocating to countries outside the EU with less ambitious climate policies which would increase the global greenhouse gas emissions. The Commission also found that the scheme complies with the requirements on energy audits and management systems set out in the ETS State aid Guidelines. Therefore, it supports the EU’s climate and environmental objectives and the goals set in the European Green Deal. Concluding, the aid granted by the Commission is limited to the minimum necessary and will not have undue negative effects on competition and trade in the EU.

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