State aid: Commission approves €1.4 billion Dutch scheme to support energy-intensive companies in the context of Russia’s war against Ukraine

The European Commission has approved a €1.4 billion Dutch scheme to support energy-intensive small and medium-sized enterprises (‘SMEs’) facing increased energy costs in the context of Russia’s war against Ukraine. The scheme was approved under the State aid Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023 to foster support measures in sectors which are key to accelerate the green transition and reduce fuel dependencies. The new Framework amends and prolongs in part the Temporary Crisis Framework, adopted on 23 March 2022 to enable Member States to support the economy in the context of the current geopolitical crisis, already amended on 20 July 2022 and on 28 October 2022.

The Dutch measure

The Netherlands notified to the Commission, under the Temporary Crisis and Transition Framework, a €1.4 billion scheme to support energy-intensive SMEs facing increased energy costs in the context of Russia’s war against Ukraine.

Under the scheme, the aid will take the form limited amounts of aid in form of direct grants.

The purpose of the scheme is to cover part of the increased costs of natural gas and electricity and to mitigate their impact on those companies currently unable to cope with them.

The scheme will be open to SMEs across sectors, active in the Netherlands, whose purchases of natural gas and electricity amount to at least 7% of their annual turnover for year 2022. Credit or other financial institutions are excluded from the scheme.

Each potential beneficiary will be entitled to receive an aid amount covering 50% of the eligible costs, up to a maximum of €160,000.

The Commission found that the Dutch scheme is in line with the conditions set out in the Temporary Crisis and Transition Framework. In particular, the aid (i) will not exceed €250,000 per company active in the primary production of agricultural products, €300,000 per company active in the fishery and aquaculture sectors and €2 million per company active in all other sectors; and (ii) will be granted before 31 December 2023.

The Commission concluded that the Dutch scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis and Transition Framework.

On this basis, the Commission approved the aid measure under EU State aid rules.

Background

On 9 March 2023, the Commission adopted a new Temporary Crisis and Transition Framework to foster support measures in sectors which are key for the transition to a net-zero economy, in line with the Green Deal Industrial Plan. Together with the amendment to the General Block Exemption Regulation (‘GBER’) that the Commission endorsed on the same day, the Temporary Crisis and Transition Framework will help speeding up investment and financing for clean tech production in Europe. It will also assist Member States in delivering on specific projects under National Recovery Plans which fall within their scope.

The new Framework amends and prolongs in part the Temporary Crisis Framework, adopted on 23 March 2022 to enable Member States to use the flexibility foreseen under State aid rules to support the economy in the context of Russia’s war against Ukraine. The Temporary Crisis Framework has been first amended on 20 July 2022, to complement the Winter Preparedness Package and in line with the REPowerEU Plan objectives, and further revised on 28 October 2022, in line with the  Regulation on an emergency intervention to address high energy prices (‘Regulation (EU) 2022/1854‘) and the Commission’s proposal on a new emergency regulation to address high gas prices in the EU and ensure security of supply this winter.

The Temporary Crisis and Transition Framework provides for the following types of aid, which can be granted by Member States:

• Limited amounts of aid, in any form, for companies affected by the current crisis or by the subsequent sanctions and countersanctions up to the increased amount of €250,000 and €300,000 in the agriculture, and fisheries and aquaculture sectors respectively, and up to €2 million in all other sectors;
• Liquidity support in form of State guarantees and subsidised loans. In exceptional cases and subject to strict safeguards, Member States may provide to energy utilities for their trading activities public guarantees exceeding 90% coverage, where they are provided as unfunded financial collateral to central counterparties or clearing members.
• Aid to compensate for high energy prices. The aid, which can be granted in any form, will partially compensate companies, in particular intensive energy users, for additional costs due to exceptional gas and electricity price increases. The individual aid amount may be calculated based on either past or present consumption, taking into account the need to keep market incentives to reduce energy consumption and to ensure the continuity of economic activities. In addition, Member States may provide support more flexibly, including to particularly affected energy-intensive sectors, subject to safeguards to avoid overcompensation. Further details on the support possibilities for high energy prices, including on the methodology to calculate individual aid amounts, are available here;
• Measures accelerating the rollout of renewable energy. Member States can set up schemes for investments in all renewable energy sources, including renewable hydrogen, biogas and biomethane, storage and renewable heat, including through heat pumps, with simplified tender procedures that can be quickly implemented, while including sufficient safeguards to protect the level playing field. In particular, Member States can devise schemes for a specific technology, requiring support in view of the particular national energy mix. The conditions for the granting of aid to small projects and less mature technologies, such as renewable hydrogen, have been simplified by lifting the need for a competitive bidding process, subject to certain safeguards;
• Measures facilitating the decarbonisation of industrial processes. To further accelerate the diversification of energy supplies, Member States can support investments to phase out from fossil fuels, in particular through electrification, energy efficiency and the switch to the use of renewable and electricity-based hydrogen which complies with certain conditions, with expanded possibilities to support the decarbonisation of industrial processes switching to hydrogen-derived fuels. Member States can either (i) set up new tender based schemes, or (ii) directly support projects, without tenders, with certain limits on the share of public support per investment. Specific top-up bonuses would be foreseen for small and medium-sized enterprises as well as for particularly energy efficient solutions. In the absence of tenders, a further simpler method has been introduced to determine the level of maximum support; and
• Measures aimed at supporting electricity demand reduction, in line with Regulation (EU) 2022/1854.
• Measures to further accelerate investments in key sectors for the transition towards a net-zero economy, enabling investment support for the manufacturing of strategic equipment, namely batteries, solar panels, wind turbines, heat-pumps, electrolysers and carbon capture usage and storage as well as for production of key components and for production and recycling of related critical raw materials. More specifically, Member States may design simple and effective schemes, providing support capped at a certain percentage of the investment costs up to specific nominal amounts, depending on the location of the investment and the size of the beneficiary, with higher support possible for small and medium-sized enterprises (‘SMEs’) as well as companies located in disadvantaged regions, to ensure that cohesion objectives are duly taken into account. Furthermore, in exceptional cases, Member States may provide higher support to individual companies, where there is a real risk of investments being diverted away from Europe, subject to a number of safeguards. More information on the support possibilities for measures to accelerate the transition to a net-zero economy can be found here.

Sanctioned Russian-controlled entities will be excluded from the scope of these measures.

Measures particularly important to accelerate the green transition and reduce fuel dependencies will be in place until 31 December 2025. This concerns in particular measures accelerating the rollout of renewable energy and energy storage, measures facilitating the decarbonisation of industrial processes and measures to further accelerate investments in key sectors for the transition towards a net-zero economy.

The remaining provisions of the Temporary Crisis Framework aimed at providing a more immediate crisis response (limited amounts of aid, liquidity support in form of State guarantees and subsidised loans, aid to compensate for high energy prices, measures aimed at supporting electricity demand reduction), remain applicable until 31 December 2023. With a view to ensuring legal certainty, the Commission will assess at a later stage the potential need for an extension.

The Temporary Crisis and Transition Framework complements the ample possibilities for Member States to design measures in line with existing EU State aid rules. For example, EU State aid rules enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid. Furthermore, Article 107(2)(b) of the Treaty on the Functioning of the European Union enables Member States to compensate companies for the damage directly caused by an exceptional occurrence, such as those caused by the current crisis.

The non-confidential version of the decision will be made available under the case number SA.106377 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.

More information on the Temporary Crisis and Transition Framework and other actions taken by the Commission to address the economic impact of Russia’s war against Ukraine and foster the transition towards a net-zero economy can be found here.