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    EU clears Dutch, Finnish and German state aid for energy-intensive industry

Summary

Germany's scheme alone is valued at €27.5bn ($27.5bn).

by: NGW

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EU clears Dutch, Finnish and German state aid for energy-intensive industry

The European Commission (EC) has approved under EU state aid rules schemes proposed by authorities in Denmark, Finland and Germany to shield energy-intensive industries from high electricity costs due to carbon taxation under the bloc's emissions trading system, it said on August 19.

Berlin's scheme, valued at €27.5bn ($27.5bn), "will allow Germany to reduce the impact of indirect emission costs on its energy-intensive industries and hence the risk that these companies relocate their production to countries outside the EU with less ambitious climate policies," the EC said. It covers compensation for indirect carbon costs relating to power generation between 2021 and 2030.

The aid will generally cover up to 75% of the emission costs. But in some cases it can be higher, to limit remaining indirect emission costs to 1.5% of a company's gross value added.

To qualify for compensation, companies must have in place plans to increase energy efficiency, or cover 30% of their power consumption with renewable sources, and as of 2023, they must invest at least 50% of the aid as of 2023 in economically feasible measures set out in their energy efficiency plans, or in decarbonising their production.

The Dutch and Finnish schemes are similar and valued at €835mn and €687mn respectively, but the compensation will only be granted to cover carbon costs between 2021 and 2025. The maximum aid for Dutch industries is also set at 75% of indirect emission costs, whereas the compensation for Finnish companies only amounts to 25%.

Gas and power prices have soared to fresh heights in recent months, amid further cuts in Russian gas supply and a summer heatwave that has driven up cooling demand and impacted water levels at hydroelectric dams.