The European Commission has approved, under EU State aid rules, a 612 million Portuguese scheme to lower electricity levy rates for energy-intensive companies.
The scheme intends to reduce the risk that these energy-intensive companies relocate their activities to countries outside the EU with less ambitious climate policies.
An energy-intensive company is a business that consumes a large amount of energy as a core part of its production process. The Portuguese scheme Portugal has implemented several levies to fund its energy and environmental policies.
This includes levies financing (i) electricity production from renewable energy sources, (ii) support for energy efficiency, and (iii) social tariffs and promotion of electricity generation in isolated regions.
The State aid scheme aims at lowering the levy rates for energy-intensive companies, to mitigate the risk that they relocate their activities to locations outside the EU with less ambitious climate policies.
The scheme will run until 22 April 2035 and has an estimated budget of 612 million.
The measure will benefit companies in sectors that rely heavily on electricity and are particularly exposed to international trade, as listed in Annex 1 of the 2022 Guidelines on State aid for climate, environmental protection and energy (CEEAG').
Beneficiaries 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.
Under the scheme, beneficiaries will have to either (i) implement certain energy audit recommendations, (ii) cover at least 30% of electricity consumption with renewable energy sources, or (iii) invest at least 50% of the aid in projects leading to substantial reductions of the installation's greenhouse gas emissions. The Commission's assessment The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU'), which enables Member States to support the development of certain economic activities subject to certain conditions.
The Commission also assessed the scheme under the CEEAG, which allow Member States to grant aid in the form of reductions from electricity levies for energy-intensive users.
In particular, the Commission found that:
- The scheme facilitates the development of certain economic activities relying heavily on electricity and particularly exposed to international competition.
- The measure is necessary and appropriate to contribute to achieving the Clean Industrial Deal objectives.
- The measure is proportionate, as (i) the individual aid amounts do not exceed the maximum aid amount allowed under the CEEAG and (ii) it is limited to sectors listed in the CEEAG.
- The positive effects of the scheme outweigh any possible negative effects on competition and trade in the EU.
Faced with high energy costs and fierce and often unfair global competition, the Clean Industrial Deal recognises that European industries need urgent support.
The Clean Industrial Deal also positions decarbonisation as a powerful driver of growth for European industries and aims to support their competitiveness and resilience.
In this way, this framework can drive competitiveness as it gives certainty and predictability to companies and investors that Europe remains committed to become a decarbonised economy by 2050.
The non-confidential version of the decision will be made available under the case number SA.111450 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved.
New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News. " This 612 million scheme enables Portugal to support companies particularly exposed to international trade and relying heavily on electricity for their activities.
The scheme maintains incentives for an effective decarbonisation of the Portuguese economy, while keeping distortions of competition to a minimum.
It also strengthens the competitiveness of the supported companies, in line with the Clean Industrial Deal objectives", said Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition.