Commission approves amendments to Spanish State aid scheme, including €5.61 billion budget increase, to compensate energy-intensive companies for indirect emission costs

The European Commission has approved, under EU State aid rules, amendments to a Spanish scheme to partially compensate certain energy-intensive companies for higher electricity prices resulting from the impact of carbon prices on electricity costs (so-called ‘indirect emission costs’) under the EU Emission Trading Scheme (‘ETS’).

The scheme was originally approved by the Commission on 16 March 2022 (SA.100004). Under the scheme, the compensation is granted to eligible companies through a partial refund of the indirect emission costs incurred between 2021 and 2030. The compensation is granted for indirect emission costs incurred in the previous year, with the final payment to be made in 2031.

Spain notified the following modifications to the existing scheme: (i) a budget increase of €5.61 billion leading to an overall budget of €8.51 billion to compensate costs from 2022 to 2030, to account for the increase in the forward price of EU ETS allowances; and (ii) the introduction of an additional eligibility requirement, according to which beneficiaries of aid above €30,000 must pay their suppliers within a maximum of 60 days in line with national rules.

The Commission assessed the amended scheme under EU State aid rules, and in particular the Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2021 (‘ETS State aid Guidelines’). The Commission found that the amended scheme remains necessary and appropriate to support energy-intensive companies to cope with the higher electricity prices and to avoid that companies relocate to countries outside the EU with less ambitious climate policies, resulting in an increase in global greenhouse gas emissions. Moreover, the Commission found that the amended scheme continues to comply with the requirements set out in the ETS State aid Guidelines. Finally, the Commission concluded that the aid granted continues to be limited to the minimum necessary and will not have undue negative effects on competition and trade in the EU. On this basis, the Commission approved the amendments under EU State aid rules.

The non-confidential version of the decision will be made available under the number SA.106491 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.