The European Commission has approved a €612 million Portuguese scheme under EU State aid regulations designed to reduce electricity levy rates for energy-intensive companies. This initiative aims to mitigate the risk of these companies relocating their operations to countries outside the EU that maintain less rigorous climate policies.
Energy-intensive companies significantly rely on electricity as an integral part of their production processes. Portugal has implemented various levies to support its energy and environmental strategies, including financing electricity generated from renewable sources, promoting energy efficiency, and facilitating social tariffs related to electricity production in remote regions.
The primary objective of this State aid scheme is to decrease the levy rates for energy-intensive companies, thereby helping to safeguard their operations within the EU. This initiative will be effective until 22 April 2035, with an estimated budget of €612 million. It is designed to benefit companies operating in sectors heavily reliant on electricity and particularly vulnerable to international competition, as outlined in State Aid for Climate, Environmental Protection, and Energy (CEEAG).
Eligible beneficiaries of this scheme will receive a levy reduction ranging from 75% to 85%, contingent upon their risk exposure. Notably, the levy reductions must not fall below €0.5 per MWh.
To qualify for this aid, beneficiaries must either implement specific recommendations arising from energy audits, source at least 30% of their electricity consumption from renewable energy sources, or invest at least 50% of the aid into projects that substantially reduce their greenhouse gas emissions.
The Commission has conducted a thorough assessment of the scheme by EU State aid regulations, particularly Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU). This article allows Member States to support the development of certain economic activities under specified conditions. Additionally, the assessment included a review under the CEEAG, which permits Member States to provide aid in the form of reductions from electricity levies for energy-intensive users.
