The European Commission has granted approval to a €6.5bn German scheme designed to offer partial compensation to energy-intensive companies. This compensation addresses the potential risk of carbon leakage caused by higher fuel prices resulting from Germany's fuel emission trading system (German fuel ETS). The scheme aims to support companies that face international competition and operate in sectors susceptible to significant emission costs. The compensation, covering costs from 2021 to 2030, will be provided to eligible companies as a partial refund of their additional expenses incurred in the previous year, with the final payment scheduled for 2031. The level of compensation, ranging from 65% to 95% of costs, depends on the emission intensity of beneficiaries.
Incentives for companies to transition to cleaner fuels are maintained by calculating aid based on fuel and heat benchmarks. Companies are required to invest a significant portion of the aid amount in energy efficiency measures or decarbonisation efforts. The Commission's evaluation determined that the scheme aligns with EU State aid rules and contributes to the goal of cost-effective decarbonisation, in line with the European Green Deal objectives. The approval is conditional on the measure's compliance with applicable EU ETS rules and guidelines.
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