Temporary extension of six months to survive the winter. Brussels has allowed European states to extend energy aid to companies (which in principle should expire at the end of the year) until June 30, 2024, to prevent any possible further effects of the war in Ukraine and the new conflict in the East.
The Community Executive initially proposed to limit the extension to just three months (until March 31, 2024), but decided to extend it after a consultation with the Member States. The goal of the extra time is to give more time to governments to disburse subsidies given during the winter season.
The acting Competition Commissioner, Didier Reynders, says the expansion is justified because “uncertainty remains ahead of the coming winter warming season”. The extension will allow Member States to “provide a safety net to the affected companies,” he said.
Brussels said the “average price of gas and electricity seems to be stabilizing,” but warned that Russia’s ongoing war against Ukraine and geopolitical tensions in the Middle East “continue to pose risks and become a source of uncertainty.” “Despite the overall positive trend, energy markets remain weak, he said in a statement.
The Community Executive thus reiterated its request to Member States to withdraw all energy aid before the end of the year. Also, the president of the European Central Bank, Christine Lagarde, called for the end of these subsidies to avoid fueling inflation and putting at risk the effects of monetary policy.
A limited six-month extension will apply to two types of public assistance. First of all, the grants that reach 2.5 million euros (a threshold increased from the current 2 million euros) are for companies affected by the war in Ukraine. Second, help to compensate companies, especially energy-intensive users, for additional costs due to the extraordinary increase in gas and electricity prices.
The remaining crisis measures cannot be extended beyond their current expiration period, which is December 31, 2023. This includes public guarantees and subsidized loans to companies, as well as helping to reduce the demand for electricity. In contrast, national subsidies to accelerate the transition to a zero-emission economy will continue to be authorized until December 31, 2025.
