The large industrial sector is putting pressure on the Government to unleash more direct subsidies that help reduce the impact of electricity costs on company bills and on their competitive standing against European rivals. Big industrial groups benefit each year from a compensation system tied to the indirect CO2 emissions costs, yet firms argue that the funds allocated in recent years have fallen short and now demand more than three times the support they will receive this year.
The General State Budgets (PGE) for 2023 included a 244 million euro allocation for these subsidies, mirroring the amount distributed the previous year. The Government has temporarily extended these PGEs, at least until new budgets for 2024 can be approved with the parliamentary support needed. So, for now, the indirect CO2 emission compensation allocation remains 244 million for the coming year, pending new public accounts.
The Association of Large-Energy-Using Companies (AEGE) is calling for a budget expansion to offset indirect CO2 costs and warns that it has the right to compensation totaling 850 million euros, which would mean an increase of almost 250% compared with the amounts of the last two years.
The revenue from CO2 emission rights auctions last year reached 3.6 billion, and the Climate Change Law allows up to 25% of those funds to be distributed to energy-intensive industries at risk of relocation and to cover up to 75% of these indirect costs. That is why the major industry is demanding a substantial increase in this year’s budget.
In fact, AEGE argues that last year it would have been due 450 million euros, given the high CO2 emission rights prices and within the budget margins the EU imposes on this type of aid. The association, which groups electro-intensive multinationals such as ArcelorMittal, Acerinox, Sidenor, Ferroatlántica, and Tubos Reunidos, does not want a repeat of a year when the budget fell short.
Insufficient Budget
The president of AEGE and of the Sidenor group, José Antonio Jainaga, denounces the “insufficient budgetary contribution” to compensate the indirect CO2 costs to which the major industries have a right, compared with rivals in other European countries. “Right now, this is the main competitive disadvantage for the large electro-intensive industry against our European competitors,” he complains, urging a review to raise the compensations to which our companies are entitled for the indirect CO2 so they can compete on an equal footing.
The electro-intensive industry notes that last year it recorded an 8% drop in electricity consumption, and over the past two years the decline has reached 30% due to the persistent energy price crisis. “The competitive disadvantage in paying the electricity bill is the primary cause of the fall in our industry’s electrical consumption,” states José Antonio Jainaga, calling for urgent measures to shield the large industry from this impact.
Brussels Opens the Door
The European Commission approved last year a revision of Spain’s government aid plan for a full decade. The previous plan earmarked 2.9 billion euros to offset part of the indirect CO2 costs between 2021 and 2030. Under the new program, Brussels will allow Spain to allocate up to 8.51 billion euros between 2022 and 2031. With these new budget ceilings, and given the rise in CO2 prices, the industry association sees justification for more than tripling the annual aid for this year.