A net-zero-emission economy is a state in which emissions of greenhouse gases released into the atmosphere are offset by absorption back into the environment orCO2-capturing technologies. To support the transition to a net-zero-emission economy, the European Commission has approved Poland’s €1.2 billion (PLN 5 billion) state aid program to support investment in strategic sectors.
Net zero-emission economy
A net-zero emissions economy is one of the biggest challenges facing the European Union today. To meet this challenge, transforming the way we produce, consume and move around is crucial. The energy sector is currently the source of about 75 percent. of greenhouse gas emissions, and its transformation is expected to be key to preventing the worst effects of climate change. Replacing polluting energy from coal, gas and oil with energy from renewable sources, such as wind or solar, dramatically contributes to reducingCO2 emissions. To support the implementation of a net-zero-emission economy, the European Commission is providing financial support to member countries.
EC support for Poland
The net-zero-emission economy will be supported in Poland under the Temporary Framework for State Aid in Emergencies and Transition. We wrote about this aid mechanism in a previous article: Consultation on the Transformation of the Temporary Emergency and Transition Framework has been launched.
The assistance provided under the program will be in the form of direct subsidies and will be available to companies that produce relevant equipment, namely batteries, solar panels, wind turbines, heat pumps, electrolyzers, carbon capture, utilization and storage equipment, as well as key components designed and used primarily as direct inputs for the production of such equipment or related critical raw materials necessary for their production.
The European Commission has found the program notified by the Polish authorities to be in line with the conditions of the Temporary State Aid Framework. The program, as envisioned, will incentivize the production of equipment relevant to the transition to a net-zero-emission economy, but provides for aid that will not exceed maximum ceilings, and limits the granting of support to December 31, 2025.
The European Commission said the Polish program is necessary, appropriate and proportionate to the goal of accelerating the green transition and facilitating the development of certain economic activities important for the implementation of the Green Deal industrial plan. Detailed information on Poland’s support can be found on the European Commission’s website.
Temporary framework for state aid
On March 9, 2023. The European Commission has adopted a new temporary framework for state aid to facilitate the provision of support in sectors that are key to the transition to a net-zero emissions economy, in line with the Green Deal industrial plan.
The interim framework for state aid provides for the following types of support that member states may grant to applicants until December 31, 2025. To accelerate the green transition:
- Measures to accelerate the introduction of renewable energy – Member states can establish programs for investment in all renewable energy sources, using simplified bidding procedures;
- Measures to facilitate the decarbonization of industrial processes – Member States may support investments in decarbonizing industrial activities to reduce dependence on fossil fuel imports, in particular through electrification, energy efficiency improvements, and a switch to renewable and electrolytic hydrogen that meets certain conditions;
- Measures to further accelerate investment in sectors critical to the transition to a net-zero-emission economy – Member States may grant investment support for the production of strategic equipment (namely, batteries, solar panels, wind turbines, heat pumps and electrolyzers, and equipment for carbon capture, use and storage), as well as for the production of key components and the production and recycling of related critical raw materials. Support is limited to a certain percentage of investment costs up to certain amounts, depending on the location of the investment and the size of the beneficiary. Higher support is allowed for small and medium-sized enterprises, as well as for enterprises in disadvantaged regions, to ensure that cohesion objectives are duly taken into account.