Commission extends the temporal scope of certain provisions of the Temporary Crisis and Transition Framework

On November 20, 2023, the Commission amended the Temporary Crisis and Transition Framework (“TCTF”) to extend the temporal scope of certain provisions of the framework.[1]

The TCTF, which was initially adopted in March 2023, allows Member States to grant certain forms of aid and measures aimed at supporting the transition to climate neutrality.[2] 

The extension only concerns two Sections of the TCTF:

• Section 2.1, which allows Member States to grant temporary limited amounts of aid to undertakings affected by the Russian aggression against Ukraine and/or by its direct or indirect effects;[3] and
• Section 2.4, which provides for certain forms of aid aimed at alleviating the consequences of exceptionally severe increases in natural gas and electricity prices.

The provisions included in those Sections were initially set to expire on December 31, 2023.  With this amendment, Member States will have the possibility of extending national measures adopted under these two sections for six additional months, until June 31, 2024.

The remaining sections of the TCTF are not affected by the amendment, meaning that no liquidity support in the form of guarantees (section 2.2) or in the form of subsidized loans (2.3), nor aid for additional reduction of electricity consumption (2.7) can be granted after December 31, 2023.

As initially envisaged, Sections 2.5 (aid for accelerating the rollout of renewable energy and energy storage relevant for REPowerEU), 2.6 (aid for the decarbonisation of industrial production processes through electrification and/or the use of renewable and electricity-based hydrogen fulfilling certain conditions and for energy efficiency measures), and 2.8 (aid for accelerated investments in sectors strategic for the transition towards a net-zero economy) will remain available until December 31, 2025. This amendment follows a consultation with Member States in light of the evolution of the geopolitical context, such as the wars in Gaza and Ukraine.  In particular, the Commission recognized that, while “the situation in the energy markets and in particular gas and average electricity prices seem to have stabilized, […] Russia’s ongoing war against Ukraine and wider geopolitical tensions, in particular in the Middle East, continue to pose risks and remain a source of uncertainty.”[4]   According to media sources, France and Germany backed the Commission’s proposal.[5]  In contrast, the proposal faced opposition from certain smaller Member States.[6]

Co-authored with Giacomo Chiti

[1]           European Commission, Press release, Commission adjusts phase-out of certain crisis tools of the State aid Temporary Crisis and Transition Framework, November 20, 2023, available at https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5861.

[2]           See Cleary Gottlieb, Energy Resource Center, Commission adopts State Aid Temporary Crisis and Transition Framework, March 17, 2023, available at https://www.clearygottlieb.com/news-and-insights/publication-listing/commission-adopts-state-aid-temporary-crisis-and-transition-framework.  The TCTF prolonged parts of the March 2022 Temporary Crisis Framework (“TCF”), which provided for measures aimed at supporting the EU economy in the context of the Russian war against Ukraine.  See Cleary Gottlieb, Energy Resource Center, State Aid EU Response to the Energy Crisis Through State Aid Measures, November 9, 2022, available at https://www.clearygottlieb.com/news-and-insights/publication-listing/state-aid-eu-response-to-the-energy-crisis-through-state-aid-measures.

[3]           The overall aid cannot exceed EUR 2.25 million per undertaking per Member State.  See TCTF, Section 2.1, consolidated version available here https://competition-policy.ec.europa.eu/system/files/2023-11/20231120_informal_consolidated_temporary_crisis_and_transition_framework.pdf.

[4]           European Commission, Press release, Commission consults Member States on a proposal for a partial adjustment of the phase-out schedule of the State aid Temporary Crisis and Transition Framework in view of the upcoming winter heating period, November 6, 2023, available at https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5525.

[5]           See Financial Times, Why the EU plans to extend its emergency state aid rules, November 14, 2023, available at https://www.ft.com/content/aa2fb8b3-28a7-40ea-a0f2-9c26bb737ad1.

[6]           Ibid.