Czech firms to benefit: State may now cover up to 80 percent of energy costs

The European Commission (EC) has approved changes to the Czech Republic’s state aid scheme for energy-intensive companies, which is intended to help businesses cope with higher electricity costs caused by emissions allowance prices. The range of industries eligible for support will now be expanded to include additional sectors listed in the updated EU rules. At the same time, the maximum share of costs that the state may compensate companies for will increase to 80 percent from the previous 75 percent. The Commission said so today in a press release.

Alongside the Czech Republic, the Commission also approved adjustments to these support schemes in France, the Netherlands and Slovakia. The EU executive said that all the approved schemes comply with EU state aid rules and will have a limited impact on competition and trade between member states.

The support concerns so-called indirect emissions costs. These arise because electricity producers pass on the costs of purchasing emissions allowances under the EU ETS to electricity prices. Energy-intensive companies – for example, in industrial sectors with high electricity consumption – therefore face higher costs that may weaken their competitiveness against businesses outside the EU.

According to the EC, the aim of the support is to prevent companies from relocating production to countries with less stringent climate rules because of high costs. Such a move could result in rising global emissions rather than reducing them.

In the case of the Netherlands and Slovakia, the total budgets of the schemes will also increase, among other adjustments. For the Netherlands, they will rise to EUR 3.6 billion (CZK 87 billion), and for Slovakia to EUR 710 million (CZK 17.2 billion).

In 2022, the European Commission approved a scheme for the Czech Republic to compensate indirect emissions costs, under which the state may pay out up to EUR 1.4 billion (CZK 33.8 billion) by 2030. For compensation of costs incurred in 2025, the government has allocated CZK 3.43 billion, according to the Ministry of Industry and Trade.