The European Commission has approved a Dutch scheme to partially compensate energy-intensive companies for higher electricity prices resulting from indirect emission costs under the EU Emission Trading System (ETS).
The impact of carbon prices on electricity generation costs
The Dutch scheme, with a total estimated maximum budget of €834.6 million, will cover part of the higher electricity prices arising from the impact of carbon prices on electricity generation costs from 2021 to 2025. The support measure is aimed at reducing the risk of ‘carbon leakage’, where companies relocate their production to countries outside the EU with less ambitious climate policies, resulting in increased greenhouse gas emissions globally.
The Commission has approved the scheme with the idea to support energy-intensive companies to cope with the higher electricity prices and to avoid them relocating to countries outside the EU with less ambitious climate policies. Added, the scheme:
Allocation of the compensation
The compensation will be granted to eligible companies through a partial refund of the indirect emission costs incurred in the previous year, with the final payment to be made in 2026.
The maximum aid amount will be equal to 75 % of the indirect emission costs incurred.
In order to qualify for compensation, beneficiaries must reduce their greenhouse gas emissions by 3 % per year compared to 2020 level. In addition, beneficiaries must demonstrate that they either:
NextGenerationEU helps the European Union to overcome the damage caused by the coronavirus pandemic, both economically and socially. It is a tool to address the ecological crisis and enables the EU to become greener, more digital, resilient and better prepared for future challenges.