EC green lights €160M state aid to gas-intensive companies

The European Commission has on Friday approved a €160 million Portuguese state aid scheme to advance direct grants to gas-intensive companies due to the impacts on the energy sector of the war in Ukraine.

“The European Commission has approved a €160 million Portuguese scheme to support gas-intensive companies in the context of Russia’s invasion of Ukraine. The scheme was approved under the temporary state aid crisis framework, recognising that the EU economy is suffering a serious disruption” due to the war, the institution announced in a statement.

According to Brussels, this public support measure “will consist of limited amounts of aid in the form of direct grants” and will be available to “companies operating in the manufacturing industry which are particularly dependent on gas for their daily operations and which are affected by the high energy prices caused by the current geopolitical crisis” caused by the war.

“The Commission has concluded that the Portuguese scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state,” the EU executive adds.

It is planned that the state aid will not exceed €400,000 per beneficiary and that it will be granted until December 31, 2022 at the latest.

The ‘green light’ comes after the government announced in April the creation of a subsidy to support the increase in gas costs for energy-intensive companies, with €160 million of support, which will reach 3,000 companies.

According to the government, the support is aimed at industrial companies with establishments on the mainland whose unit gas costs between February and December this year are at least double the average costs of 2021 and which are in gas-intensive sectors or which have a total cost in gas purchases in 2021 greater than 2% of annual turnover.

Quoted in the statement today, executive vice-president for competition Margrethe Vestager stresses that “gas-intensive companies in the manufacturing industry have been particularly hit by the high energy prices caused by the Russian invasion of Ukraine and related sanctions”.

“This 160 million euro scheme will allow Portugal to support these companies,” stresses Margrethe Vestager, promising that Brussels will continue “to work closely with member states to ensure that national support measures can be implemented in a timely, coordinated and effective manner, while protecting the level playing field in the single market.”

The European Commission’s communication comes at a time of conflict in Ukraine caused by the Russian invasion, geopolitical tensions that have been putting pressure on the European energy market as the EU imports 90% of the gas it consumes, with Russia accounting for around 45% of those imports, at varying levels between member states.

Russia is also responsible for around 25% of the EU’s oil imports and 45% of coal imports.

Brussels has been arguing for the need to ensure the EU’s energy independence from unreliable suppliers and volatile fossil fuels like Russia.

At the same time, the European Commission has called on countries to adopt measures to support consumers, especially the most fragile.