The European Commission has approved, under EU State aid rules, a Finnish scheme to partially compensate energy-intensive companies for higher electricity prices resulting from indirect emission costs under the EU Emission Trading System (‘ETS').
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The scheme notified by Finland, with a total estimated budget of €687 million, 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 2025.
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 2026.
The maximum aid amount per beneficiary will be equal to 25 % of the indirect emission costs incurred. The total aid amount granted under the scheme cannot exceed €150 million per year.
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, all beneficiaries will have to either demonstrate that their installations' greenhouse gas emissions are below the applicable benchmark used for free allocation in the EU ETS, or cover at least 30% 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).
Moreover, all companies must make additional investments so that, in total, they invest at least 50 % of the aid amount in measures promoting carbon neutrality, and thus companies that were below the applicable benchmark will reduce further the emissions to a level well below the applicable benchmark. ■