Green light for Spain’s €2.9bn scheme to compensate companies for indirect emission costs

It will cover part of energy-intensive firms’ higher electricity prices arising from the impact of carbon prices on power generation costs between 2021 and 2030

Big Zero Report 2022

The European Commission has given the green light for a €2.9 billion (£2.44m) Spanish scheme to partially compensate energy-intensive companies for indirect emission costs.

It will cover part of the higher electricity prices arising from the impact of carbon prices on power generation costs between 2021 and 2030.

The maximum aid amount will generally cover 75% of the indirect emission costs incurred, however, it can be higher in some instances to limit the remaining indirect emission costs incurred to 1.5% of the company’s gross value added.

The aid amount is calculated based on electricity consumption efficiency benchmarks, which ensure that the beneficiaries are encouraged to save energy.

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 less economic activity in the EU and no reduction in greenhouse gas emissions globally.

Executive Vice President Margrethe Vestager, in charge of competition policy said: “This €2.9 billion scheme enables Spain to reduce the risk of energy-intensive industries moving production to locations with less ambitious climate targets than the EU.

“At the same time, it will promote a cost-effective decarbonisation of the economy in line with the Green Deal objectives, while protecting competition in the Single Market.”

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