State aid: Commission prolongs and amends Temporary Crisis Framework

Today, the European Commission has adopted an amendment to the State aid Temporary Crisis Framework to enable Member States to continue 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 adopted on 23 March 2022 and first amended on 20 July 2022, to complement the Winter Preparedness Package and in line with the REPowerEU Plan objectives.

Taking into account the feedback received from Member States in the context of a survey and targeted consultations of 5 October 2022 and of 25 October 2022, and in light of the recent Regulation on an emergency intervention to address high energy prices (‘Regulation (EU) 2022/1854') and the Commission's proposal on a new emergency regulation to address high gas prices in the EU and ensure security of supply this winter, today's amendment:

• Prolongs all measures set out in the Temporary Crisis Framework until 31 December 2023.
• Increases the ceilings set out for limited amounts of aid up to the amount of €250,000 and €300,000 for companies active in the agriculture, and fisheries and aquaculture sectors, respectively, and up to €2 million for companies active in all other sectors.
• Introduces additional flexibility for liquidity support to energy utilities for their trading activities. In exceptional cases and subject to strict safeguards, Member States may provide public guarantees exceeding 90% coverage, where they are provided as financial collateral to central counterparties or clearing members. This is in line with the Delegated Act adopted by the Commission on 18 October 2022, which allows for the use of uncollateralised bank and public guarantees, under specific conditions, as eligible collateral for meeting margin calls.
• Increases flexibility and support possibilities for companies affected by rising energy costs, subject to safeguards. Member States will be entitled to calculate support based on either past or present consumption, taking into account the need to keep intact market incentives to reduce energy consumption and to ensure the continuity of economic activities. In addition, Member States may provide support more flexibly, including to particularly affected energy-intensive sectors, subject to safeguards to avoid overcompensation. For companies receiving larger aid amounts, the Temporary Crisis Framework foresees commitments to set a path towards reducing the carbon footprint of energy consumption and implementing energy efficiency measures.
• Introduces new measures aimed at supporting electricity demand reduction, in line with Regulation (EU) 2022/1854.
• Clarifies the criteria for the assessment of recapitalisation support measures. In particular, such solvency support would have to be (i) necessary, appropriate and proportionate; (ii) involve adequate remuneration of the State; and (iii) be accompanied by appropriate competition measures to preserve effective competition, including a ban on dividend and bonus payments and acquisitions.

The measures provided for in the Temporary Framework are without prejudice to the possibility to authorise other necessary and proportionate measures directly under the Treaty, and notably under Article 107(3)(b) TFEU.

Furthermore, today the Commission has decided to prolong the possibility to grant investment support measures towards a sustainable recovery under the State aid COVID Temporary Framework until 31 December 2023.

A statement by Executive Vice-President Margrethe Vestager, in charge of competition policy, is available here.

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 was first amended on 20 July 2022, to complement the Winter Preparedness Package and in line with the REPowerEU Plan objectives.

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

The Temporary Crisis Framework will be in place until 31 December 2023. With a view to ensuring legal certainty, the Commission will assess at a later stage the need for an extension.

More information on the Temporary Crisis Framework and other actions taken by the Commission to address the economic impact of Russia's invasion of Ukraine can be found here. The Commission most recently set out its overall approach to dealing with the energy crisis in its Communication of 18 October 2022 ‘Energy Emergency - preparing, purchasing and protecting the EU together'. It is crucial that common shared EU solutions are pursued avoiding piecemeal national solutions dependent on the different fiscal space of Member States. The Commission will assess the needs for REPowerEU, covering investments to speed up the clean energy transition and avoid fragmentation in the single market, considering investment absorption capacity and drawing on the lessons learnt from successful EU financial solidarity mechanisms. Based on this examination of complementary sources of funding for REPowerEU, the Commission stands ready to propose further steps so as to ensure competitiveness of European industry and energy independence across the EU.

For an overview on the support possibilities for aid for additional costs due to exceptionally severe increases in natural gas and electricity prices please see here.