The European Commission has approved, under EU State aid rules, a €36 million Estonian scheme to lower electricity levy rates for energy-intensive companies. The scheme aims to reduce the risk of these companies relocating their activities to countries outside the EU with less ambitious climate policies, which would result in an increase in global greenhouse gas emissions.
The scheme will benefit companies in sectors listed in Annex 1 of the 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’). Those sectors rely heavily on electricity and are particularly exposed to international trade. Under the scheme, targeted companies will receive a levy reduction between 75% and 85%, depending on their risk exposure. The applicable reduction must not result in a levy below €0.5/MWh. Beneficiaries will have to implement certain energy audit recommendations, cover at least 30% of electricity consumption with renewable energy sources, or invest at least 50% of the aid in projects leading to substantial reductions of the installation’s greenhouse gas emissions. The scheme will cover levy reductions until 31 December 2029.
The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU, which enables Member States to support the development of certain economic activities under certain conditions, and the CEEAG. The Commission concluded that the scheme is necessary and appropriate to avoid relocation. Furthermore, the Commission found that the scheme is proportionate, as it is limited to the minimum necessary and has limited impact on competition and trade between Member States. On this basis, the Commission approved the Estonian scheme under EU State aid rules.
The non-confidential version of the decision will be made available under the number SA.121622 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.
