Energy-intensive companies will be able to claim compensation for a portion of the indirect costs of greenhouse gas emissions after the European Commission approved Slovenia's €99.15 million compensation scheme. The measure will make companies more competitive EU-wide.

The government issued a regulation that will be the basis for compensation on 23 February in a move that has been welcomed by the Chamber of Commerce and Industry (GZS), which has been pushing for such an instrument for a decade.

The government estimates that between ten and 25 companies will be eligible. The GZS said that 19 companies will benefit.

The compensation will cover part of the companies' costs of higher electricity prices resulting from the impact of carbon prices on electricity generation costs, incurred between 2022 and 2024, under the EU Emission Trading Scheme.

The compensation will be paid for the costs incurred in the previous year, with the final payment to be made in 2025.

Each beneficiary will have to reduce their carbon footprint by covering at least 30% of their electricity needs from carbon-free sources. In addition, beneficiaries will have to allocate the whole amount of the compensation received for climate protection measures within two years of receiving the last aid payment.

Slovenia has not had a compensation scheme so far despite there being a legislative basis for that. As several other EU countries have taken such measures, this may have put Slovenian companies in the sectors concerned at a competitive disadvantage, the government said.

The same was pointed out by the GZS. Its director-general Vesna Nahtigal said the adoption of the regulation "has broken a ten-year Gordian knot and will allow Slovenia's energy-intensive industry to become more competitive".

The European Commission recognised more than 10 years ago that the introduction of greenhouse gas emissions trading, which is supposed to help make Europe more climate neutral and environmentally sustainable, has a negative impact on energy-intensive industries, the GZS said.

The Commission thus set up the first scheme with aid rules limited to companies considered to be at risk of carbon leakage.

Despite calls from the chamber to do so, Slovenia has not transposed the state aid rules laid down in the European guidelines at the time. As a result, Slovenian energy-intensive companies have lost tens of millions of euros over the years, Nahtigal said.

"Imagine where Slovenia would be today if these companies had been receiving this aid for 10 years," she added.