What is the European Commission doing about 'carbon leakage'?

The European Commission is allowing more energy-intensive industries to receive compensation to offset costs related to EU emissions rules, aiming to prevent companies from relocating.

Which industries are now eligible for EU emissions cost compensation?

Twenty new sectors, including organic chemicals, ceramics, glass, and battery manufacturing, are now eligible for compensation to offset emissions costs.

How does the EU plan to keep its companies competitive?

By providing compensation for emissions costs, the EU aims to ensure European companies remain competitive and prevent them from moving operations to countries with weaker environmental regulations.

Home / Business and Economy / EU Fights Carbon Leakage with New Aid Rules

EU Fights Carbon Leakage with New Aid Rules

24 Dec

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Summary

EU Commission allows more energy-intensive industries to get compensation.
New guidelines aim to prevent companies from relocating outside the EU.
Twenty new sectors, including chemicals and batteries, are now eligible for aid.

EU Fights Carbon Leakage with New Aid Rules

The European Commission announced on Tuesday that it will permit more energy-intensive industries to receive financial compensation to offset the costs associated with adhering to EU emissions standards. This policy adjustment is designed to bolster the competitiveness of European companies and deter them from relocating their operations to regions outside the EU with less stringent environmental regulations.

These revised guidelines, which loosen previous state aid restrictions, will enable member states to compensate industries for a portion of their increased electricity expenses stemming from carbon pricing. The Commission indicated that these measures are crucial for preventing 'carbon leakage,' a phenomenon where production shifts to countries with weaker environmental constraints or where imports with a larger carbon footprint displace EU goods.