The EU Commission modifies specific crisis measures within the State Aid Temporary Crisis and Transition Framework
Today, the European Commission has approved a modification to the State Aid Temporary Crisis and Transition Framework, extending certain provisions by six months. These adjustments are targeted at addressing the repercussions of Russia's aggression against Ukraine and the unprecedented surge in energy prices.
Since the beginning of Russia's conflict with Ukraine and its various direct and indirect implications for the EU economy, the State Aid Temporary Crisis Framework, initially endorsed on 23 March 2022, and subsequently modified in July and October 2022, was replaced on March 9, 2023, by the Temporary Crisis and Transition Framework. This framework empowers Member States to provide prompt, precise, and proportionate assistance to businesses facing challenges. It has enabled swift and effective responses from Member States to support companies dealing with substantial economic uncertainties, disrupted trade routes, supply chain interruptions, and notably, unprecedented price hikes in natural gas, electricity, and various other essential inputs and raw materials. The cumulative impact of these factors has resulted in a significant disturbance across a diverse array of economic sectors in all Member States.
In response to feedback from Member States, the amendment delays the phasing out of provisions related to the allocation of limited aid amounts (section 2.1 of the Framework) and aid to offset high energy prices (section 2.4 of the Framework). This adaptation allows Member States to sustain their support programmes through the upcoming winter heating period, serving as a safety net for businesses still grappling with the economic impact of Russia's actions in Ukraine.
At the same time, this extension provides Member States with additional time beyond the winter period to implement necessary measures, facilitating the practical implementation of support initiatives.
Adjusted phase-out schedule of the Temporary Crisis and Transition Framework
As Russia's war of aggression against Ukraine continues, the EU's economic situation is showing resilience in the face of the shocks it has endured. The situation in the energy markets and in particular gas and average electricity prices seem to have stabilized. While overall, the risks of energy supply shortages have receded, among other things due to the measures taken by Member States to diversify energy sources, the Autumn 2023 Economic Forecast notes that Russia's ongoing war against Ukraine and wider geopolitical tensions continue to pose risks and remain a source of uncertainty. In spite of the general positive trend, energy markets still remain vulnerable.
Today’s decision, which takes into consideration the feedback received from Member States through a survey on July 2023, and a recent consultation on 6 November 2023, the Commission has implemented revisions to the provisions of the Temporary Crisis and Transition Framework. These revisions empower Member States to provide:
Limited amounts of aid (section 2.1 of the Framework): This section is extended by six months, until 30 June 2024. Additionally, the ceilings for limited aid amounts are adjusted to accommodate the winter heating period:
- For the agricultural sector: from 250,000 euros to 280,000 euros
- For the fisheries and aquaculture sectors: from 300,000 euros to 335,000 euros
- For all other sectors: from 2 million euros to 2.25 million euros.
Aid to compensate for high energy prices (section 2.4 of the Framework): This section is also extended by six months, remaining applicable until June 30, 2024. Member States can continue providing support by covering portions of additional energy costs, specifically when energy prices significantly exceed pre-crisis levels.
These amendments enable Member States to extend their support initiatives as needed, ensuring that companies still grappling with the crisis receive necessary assistance during the upcoming winter heating period. Simultaneously, the extension facilitates the practical implementation of support measures by granting Member States ample time until the end of June 2024.
Importantly, the adopted changes do not impact the remaining provisions of the Temporary Crisis and Transition Framework:
- Other crisis-related sections (i.e., sections 2.2 and 2.3 on liquidity support in the form of State guarantees and subsidized loans, and section 2.7 on measures supporting electricity demand reduction) will not be extended beyond their current expiration date, which is December 31, 2023.
- Sections of the Framework focused on the transition to a net-zero economy (sections 2.5, 2.6, and 2.8), vital for further decarbonizing the European economy and reducing dependence on fossil fuels, are unaffected by today's amendment and will remain available until December 31, 2025.
The Commission said that it remains vigilant in monitoring economic developments and is prepared to respond swiftly to any new crisis situation. However, there are currently no plans to consult Member States again on the crisis-related tools of the Temporary Crisis and Transition Framework, which are set to phase out on 30 June 30 2024.