Green Forum • 11 October, 2024 at 8:43 PM
The European Commission has approved two Luxembourgish schemes with a total budget of €520 million to help manufacturing companies decarbonize their production processes and to support investments in strategic sectors to foster the transition to a net-zero economy. The schemes were approved under the State Aid Temporary Crisis and Transition Framework (‘TCTF') adopted by the Commission on 9 March 2023 and amended on 20 November 2023 and 2 May 2024.
Luxembourg notified the Commission, under the TCTF, two schemes with a total budget of €520 million to (i) support the decarbonization of industrial production processes (‘decarbonization scheme') and (ii) accelerate investments for the production of relevant equipment necessary to foster the transition to a net zero economy (‘scheme for investments in strategic sectors'). Under both schemes, the aid will take the form of direct grants.
The decarbonization scheme is open to companies active in the manufacturing sector currently relying on fossil fuels. To be eligible, projects must reduce the greenhouse gas emissions of the industrial installations concerned by at least 40% compared to the situation before the aid using electrification of their production processes.
The projects supported under the decarbonization scheme will be selected through a competitive bidding process. Applications will be ranked based on the aid amount requested per tonne of greenhouse gas emissions avoided. Those projects requesting the lowest aid amount will be ranked higher, thus ensuring that aid is granted to the most efficient projects. The budget of the decarbonization scheme is €500 million.
The scheme for investments in strategic sectors will support investments for the production of batteries, solar panels, wind turbines, heat pumps, electrolyzers, equipment for carbon capture usage and storage, as well as key components designed and primarily used as direct input for the production of such equipment or related critical raw materials necessary for their production. The budget of the scheme for investments in strategic sectors is €20 million.
The Commission found that the Luxembourgish schemes are in line with the conditions set out in the TCTF. In particular, the aid under the decarbonisation scheme will (i) not exceed €200 million per beneficiary; and (ii) be granted under the condition that the project must be completed within 36 months. Furthermore, the aid under the scheme for investments in strategic sectors will (i) incentivize the production of relevant equipment for the transition towards a net-zero economy; (ii) respect the maximum aid ceilings; and (iii) will be granted no later than 31 December 2025.
The Commission concluded that the Luxembourgish schemes are necessary, appropriate, and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPowerEU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) Treaty on the Functioning of the European Union and the conditions set out in the TCTF.
On this basis, the Commission approved the aid measures under EU State aid rules.