The European Commission has approved a €612 million Portuguese scheme to reduce electricity levies for energy-intensive companies. The scheme aims to prevent these companies from relocating to non-EU countries with less ambitious climate goals. An energy-intensive company consumes a large amount of energy as a core part of its production process.

The Portuguese scheme

Portugal has implemented various levies to fund its energy and environmental policies. This includes levies for (i) electricity production from renewable sources, (ii) support for energy efficiency, and (iii) social tariffs and promotion of electricity generation in isolated regions.

The State aid scheme aims to lower the levy rates for energy-intensive companies to mitigate the risk of them relocating to locations outside the EU with less ambitious climate policies. The scheme will run until 22 April 2035, with an estimated budget of €612 million.

The measure will benefit companies in sectors heavily reliant on electricity and exposed to international trade, as listed in Annex 1 of the 2022 Guidelines on State aid for climate, environmental protection, and energy (CEEAG). Beneficiaries will receive a levy reduction between 75% and 85%, depending on their risk exposure. The reduction must not result in a levy below €0.5/MWh.

Under the scheme, beneficiaries must either (i) implement certain energy audit recommendations, (ii) cover at least 30% of electricity consumption with renewable energy sources, or (iii) invest at least 50% of the aid in projects leading to substantial reductions in greenhouse gas emissions.

The Commissions assessment

The Commission assessed the scheme under EU State aid rules, particularly Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows Member States to support certain economic activities under specific conditions. The Commission also assessed the scheme under the CEEAG, allowing Member States to grant aid as reductions from electricity levies for energy-intensive users.

The Commission found that:

• The scheme facilitates the development of certain economic activities reliant on electricity and exposed to international competition.
• The measure is necessary and appropriate to contribute to the Clean Industrial Deal objectives.
• The measure is proportionate, as (i) the individual aid amounts do not exceed the maximum aid allowed under the CEEAG, and (ii) it is limited to sectors listed in the CEEAG.
• The positive effects of the scheme outweigh any possible negative effects on competition and trade in the EU.

On this basis, the Commission approved the Portuguese scheme under EU State aid rules.

Background

The 2022 CEEAG provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures subject to notification under Article 107(3)(c) TFEU.

On 26 February 2025, the Commission published the Communication on the Clean Industrial Deal: A joint roadmap for competitiveness and decarbonization. Faced with high energy costs and fierce global competition, the Clean Industrial Deal acknowledges that European industries need urgent support. It positions decarbonization as a driver of growth for European industries, aiming to support their competitiveness and resilience. This framework can drive competitiveness by ensuring that Europe remains committed to becoming a decarbonized economy by 2050.

The non-confidential version of the decision will be available under case number SA.111450 in the State aid register on the Commissions competition website once any confidentiality issues are resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.