State aid: Amendments to the European Commission's Temporary Crisis Framework in the context of the Russian invasion of Ukraine

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On 20 July 2022, the European Commission adopted an amendment to the Temporary Crisis Framework for State aid measures to support the economy following Russia's aggression against Ukraine. The amendments include an increase in the limited amount of assistance and technical adjustments. It also provides for new categories of aid to support Member States' efforts to enable the EU to become independent of fossil fuels.

Since its adoption on 23 March 2022 (see our article of 25 March 2022), the Temporary Crisis Framework has allowed Member States to implement numerous aid schemes in an effort to support businesses affected by the Russian invasion of Ukraine.

The different categories of aid schemes that can be granted until 31 December 2022 are as follows:

  • limited amounts of aid, initially capped at EUR 400,000 per company and per country (except for agriculture, fisheries and aquaculture, which are subject to a specific threshold);

  • guarantees and subsidised loans;

  • aid to compensate for high energy prices.

Member States must notify the European Commission of planned aid schemes before they are implemented in order to obtain formal approval. The Temporary Framework sets out the conditions of compatibility for such aid to be authorised.

Since the entry into force of the Temporary Crisis Framework, the Commission has approved more than 50 schemes notified by Member States.

The amendment adopted on 20 July 2022 has several objectives.

First, with regard to aid schemes already covered, the amended Temporary Crisis Framework increases the maximum amount of aid that can be authorised for the limited amount category of aid. Member States may now grant limited amounts of aid of up to EUR 500,000 per undertaking and per country, and up to EUR 62,000 and EUR 75,000 in the agriculture, fisheries and aquaculture sectors respectively.

The Commission provides some technical clarifications regarding aid in the form of guarantees and loans.

The Commission has also clarified the conditions under which Member States may grant aid as compensation for the recent increase in the cost of gas and electricity for businesses. Among other things, such aid may not cover more than 70% of the beneficiary's gas and electricity consumption during the same period in the previous year.

Under the amended Framework, Member States will be able to implement aid schemes that allow them to support the important and one of the urgent objectives of the REPowerEU plan, which is to accelerate the diversification of energy supplies to become independent of fossil fuels even faster.

Adopted on 18 May 2022, the REPowerEU plan aims to transform Europe's energy system to address the European Union's dependence on Russian fossil fuels and to combat the climate crisis. Under the plan, the EU and Member States will achieve these goals through energy savings, diversification of energy supplies and accelerated deployment of renewable energy to replace fossil fuels in homes, industry and power generation.

Two new support measures have been introduced by the amendment adopted by the Commission:

  • Measure to accelerate the deployment of renewable energy: Member States can set up schemes with simplified tendering procedures. In particular, Member States are able to design schemes for a specific technology requiring support in view of the particular national energy mix. This measure will facilitate investments in renewable energy, including renewable hydrogen, biogas and biomethane, storage and renewable heat, including heat pumps.

  • Measure facilitating the decarbonisation of industrial processes: Member States can support investments that will further accelerate the diversification of energy supplies, reducing dependence on imported fossil fuels. This amendment will allow Member States to either set up new schemes based on tenders or to support projects directly, without tenders, with certain limits on the share of public support per investment.

These projects will have to be implemented within a specific timeframe in order to meet REPowerEU's objectives. Therefore, support can be granted until 30 June 2023.

Finally, the new Temporary Crisis Framework also complements the Winter Preparedness Package that was adopted on the same day. This Package is a new legislative tool and aims at reducing gas consumption in Europe by 15% until next spring. Therefore, in the amendment, the Commission pointed out that the following types of aid will be possible on a case-by-case basis:

  • Support for companies affected by the reduction in gas consumption (on both a mandatory and voluntary basis).

  • Support for the filling of gas storage facilities.

  • Transitional and time-limited support for switching to more polluting fossil fuels subject to energy efficiency efforts and to avoid lock-in effects.

  • Support for the provision of insurance or reinsurance to companies transporting goods to and from Ukraine.

The Commission will assess at a later stage the option of prolonging the Temporary Framework Crisis beyond 2022.