EU refineries, hydrogen and primary polyethylene producers will be allowed to receive state aid to compensate for any higher electricity costs caused by high EU carbon prices, the European Commission said Sept. 21.
The aim is to protect the global competitiveness of these sectors while still encouraging them to switch more of their energy demand to low-carbon electricity, in line with the EU's efforts to become climate neutral by 2050.
These sectors are among those the EC identified as at risk of carbon leakage based on their high indirect emissions costs and strong exposure to international trade, the EC said in updated EU Emissions Trading System state aid guidelines.
Carbon leakage occurs when companies move their plants from the EU to regions with less strict carbon constraints.
National governments will have to ensure that any beneficiaries of such aid conduct an energy audit to look for ways to cut their energy demand and emissions.
The beneficiaries can choose to source at least 30% of their electricity from carbon-free sources to meet their obligations for receiving such aid.
This could involve signing corporate renewable power purchase agreements, for example, said an EU source.
Other options include implementing the energy audit report's recommendations, or investing at least half of the aid into projects that significantly cut the plant's emissions.
National governments have to notify the EC of any planned aid and wait for the EC to approve it before they can make payments.
The EC will use the new guidelines to assess national governments' aid schemes.
