The European Commission has approved new support schemes in Austria and Spain aimed at helping energy-intensive industries manage rising electricity costs linked to carbon pricing under the EU Emissions Trading System (EU ETS).
The measures are designed to reduce the risk of carbon leakage, where companies relocate production outside the EU to regions with less stringent climate regulations, potentially leading to higher global greenhouse gas emissions.
The EU ETS, launched in 2005, is the European Union's carbon pricing mechanism that places a cost on emissions from energy-intensive sectors such as power generation, steel, cement, chemicals, paper, refining, and aviation.
Austria's €900 Million Support Scheme
Under the newly approved Austrian program:
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Eligible companies can receive refunds of up to 75% of ETS-related indirect electricity costs incurred during the previous year.
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The scheme will remain in effect until 2030.
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Compensation levels will be based on electricity efficiency benchmarks to encourage energy savings.
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Beneficiaries must invest at least 80% of the aid received in energy efficiency improvements or other decarbonization initiatives.
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The scheme targets sectors highly exposed to international competition, including iron and steel, aluminum, other metals, paper, and chemicals.
The European Commission approved the Austrian scheme with a total budget of up to €900 million.
Spain Expands Existing ETS Compensation Program
Spain has also received approval to amend its existing ETS compensation mechanism.
Key changes include:
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Expanding eligibility to additional sectors identified as being at risk of carbon leakage.
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Increasing the maximum compensation level from 75% to 80% of indirect ETS-related electricity costs.
Growing Debate Over ETS Impacts on Industry
The approval comes amid increasing concerns about Europe's industrial competitiveness and energy costs. Several EU member states have recently urged the European Commission to reassess aspects of the ETS as businesses continue to face elevated energy prices.
Why It Matters
These measures reflect the EU's ongoing effort to balance ambitious climate objectives with industrial competitiveness. By providing targeted financial support, Austria and Spain aim to help energy-intensive industries remain competitive while continuing to invest in energy efficiency and decarbonization, supporting the EU's broader climate transition goals.
