The European Commission is authorising Member States to provide energy-intensive companies with at times significant State aid to offset certain costs.
A case in point is Germany, authorised on Friday to shell out €27.5 billion to compensate for the indirect costs of such companies, and thus avert the risk of relocations to countries with less ambitious climate policies.
Such relocations would result in global increases in greenhouse gas emissions, a phenomenon known as "carbon leakage," the European executive explained.
At the same time, the measure will facilitate cost-effective decarbonisation of the German economy, in line with the objectives of the Green Deal, while limiting possible competition distortions, the European Commissioner for Competition, Margrethe Vestager, said in a communique.
Germany's notified scheme will cover part of the increase in electricity costs resulting from the impact of carbon prices on electricity production costs (so-called "indirect emission costs") incurred between 2021 and 2030. The maximum amount of aid will generally be equal to 75% of these costs.
Many other Member States can take advantage of this flexibility. On Friday, Finland and the Netherlands received the green light from the Commission for similar compensatory schemes.