COMMISSION - ACTIVATES EMERGENCY AID PACKAGE FOR INDUSTRY DUE TO CRISIS - Filenews 15/4 by Haris Floudopoulis
The European Commission is entering a phase of rapid activation of a new state aid framework to support European industry, attempting to respond to the unprecedented pressures caused by the energy crisis, spearheaded by the Middle East.
The initiative, announced by the President of the Commission, comes at a time of intense turmoil in energy markets, with prices having soared to levels that even exceed those of the 2022 crisis.
According to the draft of the new "Temporary Energy Framework for the Iran Crisis", which is already in consultation with member states, the Commission seeks to establish a more flexible and strengthened state aid regime, with the aim of mitigating the impact of energy price increases and preventing serious effects on the competitiveness of the European economy.
Emergency intervention due to soaring prices
The need for immediate intervention is also reflected in the data cited by the Commission itself: between the end of February and 20 March, oil prices rose by 51% and natural gas by 85%, a development that creates suffocating conditions for industry, especially in energy-intensive sectors.
In light of this, the Commission is making significant amendments to the existing CISAF (Temporary Crisis and Transition Framework), attempting to increase the intensity of support and adapt the rules to the new, exceptional circumstances.
What changes in CISAF
The main change concerns the increase in the subsidy rate of the electricity price. Specifically, it is proposed to cover up to 70% of the increase in the annual average wholesale price, compared to 50% that was in force until today. The aid will continue to concern up to 50% of consumption and with a maximum of €50 per MWh.
At the same time, the basic philosophy of the mechanism is maintained, according to which 50% of the aid should be directed to investments that enhance the clean energy transition, such as RES, storage, energy efficiency and flexibility projects.
Of particular importance is the provision for the possibility of cumulative aid, as the Commission paves the way for a combination of CISAF payments with the ETS CO2 cost compensation measures, up to a limit of 50% for the same eligible consumption. This is a crucial intervention, which attempts to increase the real level of support for businesses.
The new regime, if approved, will be valid until the end of 2026, giving a visible time horizon to the industry.
Broadening the areas of
support In addition to industry, the new framework provides for the possibility of supporting other critical sectors affected by the energy crisis, such as agriculture and fisheries, road transport and short sea shipping within the EU.
In addition, the Commission gives the green light for targeted interventions in the cost of natural gas used for electricity production, but under strict conditions so as not to disrupt the functioning of the internal market and to maintain investment signals for the energy transition.
Such interventions should be limited in time, not cover the cost of CO2 emissions, avoid distortions of competition and ensure that the benefit is passed on to final consumers.
