On 14 January 2020, the European Commission (the Commission) launched a public consultation on proposed revisions to EU State aid guidelines which set out the conditions under which EU Member States may compensate industrial companies for certain costs incurred due to the EU’s Emission Trading System (ETS). The proposed amendments must be seen in the context of the EU’s climate policy goals: the Commission suggests tightening the conditions for compensation of indirect emission costs, including by reducing the number of eligible sectors from fifteen to eight, lowering the compensation level from 85% to 75% and making compensation conditional upon decarbonization efforts by the companies concerned. Stakeholders are now invited to make their views known on the proposed changes, in particular as regards their impact on the risk of carbon leakage, the effectiveness of the ETS, and possible distortions of competition. The consultation runs until 10 March 2020.

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