War in Ukraine: Subsidies for energy-intensive companies

Af­ter the EU Com­mis­sion ap­pro­ved on July 14, 2022 the pa­ckage of mea­su­res of the Ger­man Fe­deral Go­vern­ment for com­pa­nies par­ti­cu­larly af­fec­ted by the con­se­quen­ces of the Ukraine war, en­ergy-in­ten­sive com­pa­nies can ap­ply for a cost sub­sidy since July 15, 2022.

Who is eligible to apply?

In prin­ci­ple, an ap­pli­ca­tion is eli­gi­ble if the com­pany is ac­tive in an en­ergy-in­ten­sive sec­tor as de­fi­ned in An­nex I of the Gui­de­lines on State Aid for cli­mate, en­viron­men­tal pro­tec­tion and en­ergy 2022 and its en­ergy costs in the last clo­sed fis­cal year amoun­ted to at least 3% of the va­lue of its pro­ducts. Com­pa­nies lis­ted in An­nex I of the Tem­porary Cri­sis Frame­work (TCF) may re­ceive a hig­her sub­sidy.

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In­itial ap­pli­ca­ti­ons must be sub­mit­ted no la­ter than Au­gust 31, 2022.

What is subsidized?

A share of the na­tu­ral gas and elec­tri­city costs from Fe­bru­ary to Sep­tem­ber 2022 is sub­si­di­zed, pro­vi­ded that the price has more than dou­bled com­pa­red with the aver­age price in 2021. The pro­por­tion is mea­su­red in th­ree steps de­pen­ding on the size of the com­pany:

  • 30% of the price dif­fe­rence (sub­sidy rate) and up to EUR 2 mil­lion for com­pa­nies that are ge­ne­rally eli­gi­ble to ap­ply for a sub­sidy.
  • 50% of the price dif­fe­rence and up to EUR 25 mil­lion will be gran­ted to com­pa­nies that can also prove an ope­ra­tive loss in the re­spec­tive month due to the ad­di­tio­nal en­ergy costs. The sub­sidy may not ex­ceed 80% of the ope­ra­ting loss.
  • Com­pa­nies from the 26 sec­tors lis­ted in An­nex 1 of the TCF that are par­ti­cu­larly af­fec­ted (in­clu­ding che­mi­cals, glass, steel, me­tals and cera­mics) and that meet all of the afo­re­men­tio­ned re­qui­re­ments will re­ceive 70% of the price dif­fe­rence and up to EUR 50 mil­lion.

The above-men­tio­ned sub­sidy ra­tes have been re­du­ced by 10 per­cen­tage points in July for the re­mai­ning term of the pro­gram.

In the sub­sidy pe­riods from July to Sep­tem­ber, na­tu­ral gas con­su­med will only be sub­si­di­zed up to 80% of the amount con­su­med by the com­pany in the same pe­riod of the pre­vious year, so that there is no in­cen­tive to in­crease na­tu­ral gas con­sump­tion.

Note: In ad­di­tion to the ba­sic sub­sidy re­qui­re­ments lis­ted here, there are other spe­cial sub­sidy re­qui­re­ments that should be ex­ami­ned in de­tail be­fore an ap­pli­ca­tion is fi­led. For ex­am­ple, the exe­cu­tive board of the ap­ply­ing com­pany must de­clare that it will waive any in­crease in its com­pen­sa­tion and the va­ria­ble por­tion of its com­pen­sa­tion for the cur­rent fis­cal year in full. Other­wise, there is a risk of a claim for re­pay­ment of the sub­sidy re­cei­ved.

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