Energy and environmental challenges for undertakings: available State aid

5 mn

On 15 July 2022, in response to the rise in energy prices caused by the war in Ukraine on the one hand, and to the push for stronger environmental protections on the other, Luxembourg adopted three new State aid regimes to support undertakings based in the country.

The first two regimes help undertakings impacted by the long-running conflict in Ukraine, in particular those affected by the rise in energy prices.

The third regime is being run in connection with the greenhouse gas emissions allowance trading system for the period 2021 to 2030. It is in line with the EU industrial strategy to decarbonise energy-intensive sectors and with the EU greenhouse gas emissions trading system. This emissions trading system (“ETS”) State aid scheme will join the existing State aid measures in the environmental field included in the law of 15 December 2017.

1. State aid schemes supporting undertakings in the context of the war in Ukraine


On 23 March 2022, the Commission adopted a Temporary Crisis Framework (“TCF”) for State aid measures to support the economy following the aggression against Ukraine by Russia.

The TCF provides specific criteria for assessing the compatibility with the internal market of State aid measures taken by Member States to remedy the economic effects following (i) Russia’s aggression against Ukraine and (ii) the sanctions imposed by the EU and international partners and the counter-measures taken.

Luxembourg has adopted the following laws as part of the TCF:


Both regimes allow aid grants to be issued until the end of 2022. For each month of the eligible period, the undertaking must apply for aid by 30 September 2022 (for the months February to June 2022) or by 9 December 2022 (for the remaining months).

 

2.  ETS State aid scheme for the period 2021 to 2030


The law introducing the ETS State aid scheme[4] is intended to cover part of the costs of indirect emissions of companies in electricity-intensive sectors and sub-sectors for the years 2021 to 2030, with a total budget of EUR 500 million.

In particular, the ETS State aid scheme aims to mitigate the risk that companies will relocate production to countries with laxer environmental protections or replace products with more carbon-intensive inputs. This State aid may be granted under the following conditions:


Certain prerequisites apply to undertakings with energy consumption above 3 GWH per year. Notably, they must carry out an energy audit and adopt decarbonisation measures by investing in projects to reduce greenhouse emissions.

Note that requests for aid can be submitted either in the year following the one for which it is needed (by 15 November 2022 for 2021, and thereafter by 31 March) or in the same year (by 30 September for 2022, and thereafter by 31 March). 

 

Our expertise


Contact our experts Philippe-Emmanuel Partsch, Miriam Postiglione and Achet-Billa Saleh in the EU Financial & Competition Law practice for assistance in understanding these measures and how they could potentially impact your activities.

This communication, which we believe may be of interest to our clients and friends of Arendt, is for general information only. It is not a full analysis of the matters presented and should not be relied upon as legal advice.


[1] Loi du 15 juillet 2022 instaurant un régime d’aide dans le contexte du système d’échange de quotas d’émission de gaz à effet de serre pour la période 2021-2030, Mémorial A no. 356/2022.

[2] Sectors listed at the Annex I of the Guidelines on certain State aid measures in the context of the system for greenhouse gas emission allowance trading post-2021 (2020/C 317/04).

[3] For definitions, see the Grand-Ducal regulation adopted in execution of Article 12 of the amended law of 2 September 2011 regulating access to the professions of craftsman, trader, industrialist and certain liberal professions.

[4] Loi du 15 juillet 2022 instaurant un régime d’aide dans le contexte du système d’échange de quotas d’émission de gaz à effet de serre pour la période 2021-2030, Mémorial A no. 356/2022.

[5] Sectors listed at the Annex I of the Guidelines on certain State aid measures in the context of the system for greenhouse gas emission allowance trading post-2021 (2020/C 317/04).

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