In response to Russia’s aggression against Ukraine and the significant challenges faced by the EU economy, the European Commission has presented a draft proposal to member states for consultation. This proposal aims to partially adjust the phase-out schedule of the State aid Temporary Crisis and Transition Framework, which has provided critical support to businesses in need during these tumultuous times.
Background:
The State aid Temporary Crisis Framework was initially adopted on March 23, 2022, to enable member states to provide timely and targeted support to businesses affected by Russia’s war against Ukraine. Subsequently, the Temporary Crisis Framework was amended on multiple occasions to complement various plans and regulations, such as the Winter Preparedness Package and the REPowerEU Plan objectives. On March 9, 2023, the Commission adopted the Temporary Crisis and Transition Framework, aligning it with the Green Deal Industrial Plan to facilitate the transition to a net-zero economy.
Current Economic Situation:
Despite the ongoing war and geopolitical tensions, the EU economy has demonstrated resilience. The Commission’s Summer 2023 Economic Forecast indicates that while the EU economy continues to grow, the momentum has slowed. Notably, the energy markets, including gas and electricity prices, seem to have stabilized, and the risks of supply shortages have diminished. This improvement can be attributed to the measures taken by member states to diversify energy sources. However, it is important to acknowledge that the risks and uncertainties associated with Russia’s aggression against Ukraine and wider geopolitical tensions persist.
Proposed Amendments:
Considering the current economic landscape and the need for continued support to businesses affected by the crisis, the European Commission has submitted a draft proposal to member states. The proposed amendment suggests a limited prolongation of three months, allowing member states to grant limited amounts of aid (section 2.1) and aid to compensate for high energy prices (section 2.4) until March 31, 2024. This extension aims to ensure that companies still facing the consequences of the crisis receive necessary support during the upcoming winter heating period. It is worth noting that the other crisis-related sections of the Framework will not be extended beyond their current expiry date of December 31, 2023. The provisions aimed at promoting the green transition and reducing fuel dependencies will remain available until December 31, 2025.
Member States’ Feedback:
The draft proposal is currently open for consultation, allowing member states to provide their input. The European Commission will consider the feedback received before finalizing the limited amendment to the Temporary Crisis and Transition Framework in the coming weeks.
The European Commission’s draft proposal to partially adjust the State aid Temporary Crisis and Transition Framework signifies its commitment to supporting businesses affected by Russia’s aggression against Ukraine. While the EU economy shows signs of recovery, it is crucial to provide continued assistance where needed. By extending provisions related to limited aid and compensation for high energy prices, member states can ensure that affected companies receive the support required for their sustained operations. The Commission remains responsive to member states’ feedback as it works towards adopting these amendments in the near future.
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