The European Commission has approved changes to its guidelines on state aid for industries at risk of carbon leakage due to rising emissions costs under the EU Emissions Trading System (ETS).
The amendment expands support to 20 new sectors and two new subsectors, including manufacturers of organic chemicals and some activities in the ceramics, glass, and batteries industries, the Commission informed on Tuesday.
Carbon leakage occurs when companies move production to countries with fewer environmental regulations, or when EU goods are replaced by more carbon-intensive imports, resulting in no overall reduction in greenhouse emissions.
State aid under the ETS guidelines allows EU countries to compensate businesses at genuine risk for part of their higher electricity costs, which result from carbon pricing.
The review follows sustained increases in emissions costs since the guidelines were last updated in 2020, which the Commission said have exposed more industries to international competition.
Expanded support and higher aid levels
The amended guidelines raise the maximum aid intensity from 75% to 80% for sectors already eligible, in response to increased carbon leakage risk.
The changes will also allow member states to propose further sectors for support, provided they can demonstrate significant vulnerability to carbon leakage.
Large companies receiving aid will be required to allocate some of their funding to projects that help reduce electricity system costs.
The Commission has also updated carbon dioxide (CO2) emission factors — which determine compensation amounts based on the fossil fuel content of electricity in different regions — for the period between 2026 and 2030.
Member states may apply a gradual transition for geographic areas where the CO2 emission factor decreases significantly compared with previous levels for 2021-2025.
The amended guidelines result from an evaluation and public consultation, the Commission said. The rules will continue to apply until 2030.
