State aid: Commission consults Member States on proposal to prolong and amend Temporary Crisis Framework

The European Commission has sent to Member States for consultation a draft proposal to prolong and adjust the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022 to enable Member States to use the flexibility foreseen under State aid rules to support the economy in the context of Russia's war against Ukraine. The Temporary Crisis Framework was first amended on 20 July 2022, to complement the Winter Preparedness Package and in line with the REPowerEU Plan objectives.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said “We are facing a severe energy crisis that is affecting households and businesses all over Europe. To this common challenge, we need a common and coordinated response that does not compromise on Europe's fundamental strength – our Single Market. That is why the Commission has put in place a State aid Temporary Crisis Framework. It sets clear and horizontal criteria, applicable to all Member States, enabling them to provide necessary and proportionate support to their economies in this crisis. As this crisis develops and continues to persist, we are ensuring that the Temporary Crisis Framework remains fit for purpose. We are consulting Member States on a proposal to prolong and amend the Temporary Crisis Framework to address developing needs of Member States and industry. At the same time, the proposal maintains and strengthens important safeguards to preserve a level playing field and to achieve our green objectives.” A full statement is available here.

In view of the economic fallout of Russia's war of aggression against Ukraine and of its impact on the energy situation, the Commission is proposing to prolong and amend the Temporary Crisis Framework. The proposed amendments sent to Member States complement the Commission's proposal on an emergency market intervention, on which a political agreement has been reached in Council on 30 September 2022. They aim at ensuring that the Temporary Crisis Framework continues to enable Member States to provide necessary and proportionate support to the economy while ensuring a level playing field. Among others, the Commission is consulting Member States on possible amendments relating to:

• A prolongation of the Temporary Crisis Framework;
• A proportionate increase of maximum aid ceilings foreseen in the provisions on limited amounts of aid, which enable Member States to provide direct grants or other forms of aid to companies in any sector affected by the crisis, including agriculture and fisheries;
• A targeted adjustment, in view of the high market volatility, to further facilitate access to liquidity support to energy companies in order to cover the financial collaterals for their trading activities;  
•  A simplification of the criteria that enable Member States to support businesses affected by high energy prices, including energy-intensive users, ensuring that support remains targeted and proportionate while maintaining incentives for reducing energy demand;
• A clarification on the criteria that the Commission intends to apply for the assessment of recapitalisation support measures, to preserve effective competition; and
• Additional measures aimed at supporting electricity demand reduction, in line with the Commission's proposal on an emergency market intervention, on which a political agreement has been reached in Council on 30 September 2022.

Member States now have the possibility to comment on the Commission's draft proposal.

Background

The State aid Temporary Crisis Framework, adopted on 23 March 2022, enables Member States to use the flexibility foreseen under State aid rules to support the economy in the context of Russia's war against Ukraine.

The Temporary Crisis Framework has been amended on 20 July 2022, to complement the Winter Preparedness Package and in line with the REPowerEU Plan objectives.

The Temporary Crisis Framework, as currently in force, provides for the following types of aid, which can be granted by Member States:

• Limited amounts of aid, in any form, for companies affected by the current crisis or by the subsequent sanctions and countersanctions up to the increased amount of 62,000€ and 75,000€ in the agriculture, and fisheries and aquaculture sectors respectively, and up to 500,000€ in all other sectors;
• Liquidity support in form of State guarantees and subsidised loans;
• Aid to compensate for high energy prices. The aid, which can be granted in any form, will partially compensate companies, in particular intensive energy users, for additional costs due to exceptional gas and electricity price increases. The overall aid per beneficiary cannot exceed 30% of the eligible costs and – in order to incentivise energy saving – should relate to no more than 70% of its gas and electricity consumption during the same period of the previous year, up to a maximum of €2 million at any given point in time. When the company incurs operating losses, further aid may be necessary to ensure the continuation of an economic activity. Therefore, for energy-intensive users, the aid intensities are higher and Member States may grant aid exceeding these ceilings, up to €25 million, and for companies active in particularly affected sectors and sub-sectors up to €50 million;
• Measures accelerating the rollout of renewable energy. Member States can set up schemes for investments in renewable energy, including renewable hydrogen, biogas and biomethane, storage and renewable heat, including through heat pumps, with simplified tender procedures that can be quickly implemented, while including sufficient safeguards to protect the level playing field. In particular, Member States can devise schemes for a specific technology, requiring support in view of the particular national energy mix; and
• Measures facilitating the decarbonisation of industrial processes. To further accelerate the diversification of energy supplies, Member States can support investments to phase out from fossil fuels, in particular through electrification, energy efficiency and the switch to the use of renewable and electricity-based hydrogen which complies with certain conditions. Member States can either (i) set up new tender-based schemes, or (ii) directly support projects, without tenders, with certain limits on the share of public support per investment. Specific top-up bonuses would be foreseen for small and medium-sized enterprises as well as for particularly energy efficient solutions.

Sanctioned Russian-controlled entities will be excluded from the scope of these measures.

The Temporary Crisis Framework, as currently in force, is applicable until 31 December 2022 for the liquidity support measures and measures covering increased energy costs. Aid supporting the roll-out of renewable energies and the decarbonisation of the industry may be granted until end of June 2023.

More information on the Temporary Crisis Framework and other actions taken by the Commission to address the economic impact of Russia's war against Ukraine can be found here.