EU Boosts State Aid to Energy-Intensive Industries to Prevent Relocation

Brussels — The European Commission is allowing more state aid for energy-intensive industries to dissuade companies from relocating abroad.

Sectors that already receive support, such as the steel and chemical industries, will also be eligible to receive more state aid, the commission announced in Brussels on Tuesday.

Specifically, the so-called electricity price compensation will be expanded. This will indirectly relieve companies of the costs of CO₂ emissions trading.

The prices for so-called CO₂ certificates in EU emissions trading have risen in recent years. The certificates are an instrument for pricing greenhouse gas emissions to incentivize reductions.

The commission says the price increases pose the risk that more energy-intensive industries will relocate their production to countries outside the EU that have lower emission restrictions.

There is also a fear that imports that are more harmful to the climate will replace EU products, which the commission says "leads to less economic activity in the EU and does not reduce greenhouse gas emissions globally." 

In response to the increase in the price of greenhouse gas certificates, other industries such as ceramics, glass and batteries are now also to be eligible for support.

For existing industries, the maximum subsidy will also increase from 75% to 80% of indirect electricity costs.

At the same time, large recipients of aid must invest part of the money in projects that contribute to reducing the costs of the electricity system.

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