EC okays Poland's EUR 10-bln aid to energy-intensive industry

Monika Skolimowska/PAP/DPA

The European Commission (EC) has approved a EUR 10-billion Polish subsidy scheme to shield energy-intensive firms from rising natural gas and electricity tariffs.

Soaring energy prices caused by inflation and the Ukraine war mean firms that use a lot of electricity could be hit by sky-high bills.

"The European Commission has approved, under EU State aid rules, a Polish scheme to partially compensate energy-intensive companies for higher electricity prices resulting from indirect emissions costs under the EU Emission Trading System ('ETS')," the EC said in a statement published online on Monday.

"The scheme notified by Poland, with a total estimated budget of EUR 10 billion will cover part of the higher electricity prices arising from the impact of carbon prices on electricity generation costs (so-called 'indirect emission costs') incurred between 2021 and 2030," the EC wrote.

EC Vice-President Margrethe Vestager, in charge of competition policy, said that the scheme "paves the way for Poland to reduce the risk of carbon leakage for its energy-intensive industries."

"At the same time, the incentives for a cost-effective decarbonisation of its economy will be maintained, in line with the Green Deal objectives, and undue competition distortions will be limited," added Vestager, as cited in the press release.

On September 20, the Polish government approved plans to spend PLN 17.4 billion (EUR 3.61 bln) on compensations for energy-intensive firms in relation to energy and natural gas price hikes in the years 2022-2024, including over PLN 5 billion (EUR 1.03) in 2022 alone. In 2023, the support will reach over PLN 8.2 billion (EUR 1.7 bln) and in 2024 over PLN 4.1 billion (EUR 0.85 bln).

The support scheme is aimed at reducing the risk of 'carbon leakage,' a situation where companies relocate their production to non-EU countries with less ambitious climate policies, increasing overall greenhouse gas emissions worldwide.