Commission approves €578 million Romanian State aid scheme to support energy-intensive companies

This article is brought to you in association with the European Commission.

The European Commission has approved, under EU State aid rules, a €578 million (RON 2.9 billion) Romanian scheme to lower an electricity levy rate for energy-intensive companies. The levy is intended to promote electricity from renewable energy sources. The scheme aims at mitigating the risk that, due to this levy, energy-intensive companies may relocate their activities to locations outside the EU with less ambitious climate policies.

The Romanian scheme

In 2011, Romania introduced green certificates for promoting electricity from renewable sources, under which eligible producers of electricity from renewable energy sources receive green certificates for each megawatt hour produced and delivered to the grid. Electricity suppliers are obliged to purchase a mandatory quota of green certificates. The costs of the green certificates are ultimately passed on to consumers through a levy.

The scheme is aimed at lowering the levy rate for energy-intensive companies, thus mitigating the risk that the companies relocate their activities to locations outside the EU with less ambitious climate policies. The scheme will run until 31 December 2031 and has an estimated budget of €578 million (RON 2.9 billion).

The measure will benefit companies in sectors listed in Annex 1 of the 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’). Those sectors rely heavily on electricity and are particularly exposed to international trade. Beneficiaries will receive a levy reduction between 75% and 85%, depending on their risk exposure. The applicable reduction must not result in a levy below 0.5 EUR/MWh.

Under the scheme, beneficiaries will have to either (i) implement certain energy audit recommendations, (ii) cover at least 30% of electricity consumption with carbon-free sources, or (iii) invest at least 50% of the aid in projects leading to substantial reductions of the installation’s greenhouse gas emissions.

The scheme approved today replaces an earlier scheme approved by the Commission in October 2014, which had same objective, and aligns the scheme with the CEEAG rules.

The Commission’s assessment

The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU’), which enables Member States to support the development of certain economic activities subject to certain conditions, as well as under the CEEAG, which allow Member States to grant aid in the form of reductions from electricity levies for energy-intensive users.

In particular, the Commission found that:

• The scheme facilitates the development of certain economic activities relying heavily on electricity and particularly exposed to international competition.
• The measure is necessary and appropriate to contribute to achieving the European Green Deal objectives.
• The measure is proportionate, as (i) the individual aid amounts do not exceed the maximum aid amount allowed under the CEEAG and (ii) it is limited to sectors listed in the CEEAG.
• The positive effects of the scheme outweigh any possible negative effects on competition and trade in the EU.

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

Background

The 2022 CEEAG provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU.

With the European Green Deal Communication in 2019, the Commission set an objective of net-zero emissions of greenhouse gases in 2050 that is enshrined in the European Climate Law. In force since July 2021, the law also introduced the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030. Through the adoption of the ‘Fit for 55′ legislative proposals, the EU has in place legally binding climate targets covering all key sectors in the economy.

The non-confidential version of the decision will be made available under the case number SA.110166 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.

Quote(s)