The lifeline that allowed companies to have State support to stop high energy prices as a result of the war in Ukraine will continue for six more months. The European Commission announced yesterday the extension until June 30, 2024 of the public aid framework for companies.
At the beginning of November, and after a public consultation, Brussels had studied the possibility of extending state aid until March. These would only strictly cover the winter, when bills skyrocket for heating, but at the request of several countries they will finally be extended until the end of June, community sources confirm, since companies must make payments later than when consumption occurs. .
The European Commission has been warning countries for months that they must reduce aid, but European sources assure that the support that is being extended is “very focused” on companies directly affected by energy prices and thus prevent inflation from skyrocketing. .
While it is true that prices are far from reaching the levels of a year ago, they are still much higher than before the invasion of Ukraine. “The situation in the energy markets, and in particular gas, seems to have stabilized,” admits the Community Executive in a statement. At the same time, it warns that the conflict derived from Russia's invasion and "geopolitical tensions continue to be a source of uncertainty" for the European economy. “Despite the overall positive trend, energy markets remain vulnerable,” he notes.
This new extension tries to be a “safety net” for companies, the Commission explains. During this period, states will be able to continue compensating companies if costs “significantly exceed pre-crisis levels.” Likewise, not only are they prolonged, they also increase aid to companies in the agricultural sector (from 250,000 to 285,000 euros) and fishing (330,000 to 335,000). For the rest of the sectors it will go from 2 to 2.25 million euros.
According to the decision of the European Commission, only this aid will be extended. The rest, such as state guarantees, soft loans or measures to promote the reduction in electricity demand, will not be extended and will end on December 31. The aid announced to accelerate the energy transition and decarbonization will also not be affected and thus avoid a loss of competitiveness, especially in the face of China and the United States, which have injected enormous amounts of money (especially the United States with the so-called law of Inflation Reduction). This aid framework will continue, as planned, until December 31, 2025.
The state aid that is now being extended is expected to end in June, more than two years after its application. It was one of the first measures taken by the European Commission after the outbreak of the war in Ukraine, especially due to the enormous dependence of the European Union on Russian gas. A decision that was made after the good results that the same measure had had during the crisis caused by the covid pandemic, when countries had the green light from Brussels to throw a lifeline to their companies after the economic shock caused by the virus. .
