The European Commission has approved a €1.34 billion (DKK 10 billion) Danish scheme to support energy intensive companies in the context of Russia's war against Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022 and amended on 20 July 2022 and on 28 October 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU'), recognising that the EU economy is experiencing a serious disturbance.
The Danish measure
Denmark notified to the Commission, under the Temporary Crisis Framework, a €1.34 billion scheme to support energy intensive companies in the context of Russia's war against Ukraine.
Under this measure, which will be administered by the Danish Business Authority, the aid will take the form of loans with subsidised interest rates.
The measure will be open to energy intensive small and medium-sized enterprises (‘SMEs') and large companies across sectors. Credit and financial institutions will be excluded from the measure.
The Commission found that the Danish scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, (i) the maturity of the loans will not exceed six years; (ii) the reduced interest rates respect the minimum levels set out in the Temporary Crisis Framework; (iii) the individual loan amount per SME and large company will cover the liquidity needs respectively for the 12 months and 6 months following the granting of the aid; and (iv) the support will be granted no later than 31 December 2023.
The Commission concluded that the Danish scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework.
On this basis, the Commission approved the aid measure under EU State aid rules.
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 has been further amended on 28 October 2022 in line with 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.
The Temporary Crisis Framework provides for the following types of aid, which can be granted by Member States:
The following types of aid are also possible on a case-by-case basis, subject to conditions: (i) support for companies affected by mandatory or voluntary gas curtailment, (ii) support for the filling of gas storages, (iii) transitory and time-limited support for fuel switching to more polluting fossil fuels subject to energy efficiency efforts and to avoiding lock-in effects, (iv) support the provision of insurance or reinsurance to companies transporting goods to and from Ukraine, and (v) support for recapitalisation measures where such solvency support is necessary, appropriate and proportionate.
Sanctioned Russian-controlled entities will be excluded from the scope of these measures.
The Temporary Crisis Framework includes a number of safeguards:
The Temporary Crisis Framework will be in place until 31 December 2023 for all measures. With a view to ensuring legal certainty, the Commission will assess at a later stage the need for an extension.
The Temporary Crisis Framework complements the ample possibilities for Member States to design measures in line with existing EU State aid rules. For example, EU State aid rules enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid. Furthermore, Article 107(2)(b) of the Treaty on the Functioning of the European Union enables Member States to compensate companies for the damage directly caused by an exceptional occurrence, such as those caused by the current crisis.
Furthermore, on 19 March 2020, the Commission adopted a Temporary Framework in the context of the coronavirus outbreak. The COVID Temporary Framework was amended on 3 April, 8 May, 29 June, 13 October 2020, 28 January and 18 November 2021. As announced in May 2022, the COVID Temporary Framework has not been extended beyond the set expiry date of 30 June 2022, with some exceptions. In particular, investment and solvency support measures may still be put in place until 31 December 2023. In addition, the COVID Temporary Framework already provides for a flexible transition, under clear safeguards, in particular for the conversion and restructuring options of debt instruments, such as loans and guarantees, into other forms of aid, such as direct grants, until 30 June 2023.
The non-confidential version of the decision will be made available under the case number SA.104505 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.
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.