The push that allowed companies to have the support of the State to curb high energy prices as a result of the war in Ukraine will continue for another six months. The European Commission announced yesterday the extension of the public aid framework for companies until June 30, 2024.
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, as companies have to make payments later than when consumption occurs.
The European Commission has been warning countries that have to reduce aid for months, but European sources say that the support that is being extended is "very focused" for companies directly affected by energy prices and, therefore, to avoid inflation soared.
While it is true that prices are far from reaching the figures of a year ago, they are still much higher than before the invasion of Ukraine. "The situation in the energy markets, and particularly gas, seems to have stabilised", admits the Community Executive in a statement. At the same time, he warns that the conflict resulting from the invasion of Russia and "geopolitical tensions are still a source of uncertainty" for the European economy. "Despite the general positive trend, the energy markets are still vulnerable", he points out.
The new extension proves 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”. In addition, aid to companies in the agricultural sector (from 250,000 to 285,000 euros) and fishing (330,000 to 335,000) is not only extended, but also increased. 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 these grants will be extended. The rest, such as state guarantees, soft loans or measures to promote the reduction of electricity demand, will not be extended and will end on December 31. Aid announced to accelerate the energy transition and decarbonisation and thus avoid a loss of competitiveness, especially against China and the United States, which have injected huge amounts of money (especially the US with the known as Inflation Reduction law). This aid framework will continue, as planned, until December 31, 2025.
It is expected that the State aid that is now being extended will end in June, more than two years after it was applied. It was one of the first measures taken by the European Commission after the outbreak of war in Ukraine, especially due to the European Union's enormous dependence on Russian gas. A decision that was taken after the good results that the same measure had had during the crisis derived from the covid pandemic, when the countries had the approval of Brussels to throw a lifeline to the companies after the economic shock that caused the virus.
