Greece: EU Commission approves €150m state aid for carbon storage in Prinos

The Greek measure

The measure notified by Greece will be fully financed by the RRF, following the Commission’s positive assessment of Greece’s Recovery and Resilience Plan and its adoption by the Council.

The beneficiary of the measure is EnEarth Ltd, a Greek subsidiary of Energean plc, an exploration and production company focused on developing resources in the Mediterranean and North Sea.

The aid will partially finance the construction costs of the onshore and offshore infrastructure for the creation of the carbon storage facility. The facility will be deployed in two phases, but only the first one will be financed under the current measure. Under the first phase, EnEarth will deploy a large-scale pipeline to transport, from the onshore collecting site to the offshore storage site, up to 1 million tonnes of CO₂ per year emitted by industrial players. This ramp-up phase will precede the facility’s future expansion up to 2.5 million tonnes of CO₂ per year planned under the second phase.

The aid will take the form of a direct grant, which will be disbursed in three instalments until 2026. The facility is expected to start the ramp-up phase in 2027 and become fully operational in 2030. The grant, which amounts to €150 million, will cover around 90% of the funding gap. If the project turns out to be very successful, generating extra net revenues, the beneficiary will return to Greece part of the aid received (claw-back mechanism).

The Commission’s assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107 (3)(c) of the Treaty on the Functioning of the EU, which enables Member States to support the development of certain economic activities subject to certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG‘).

The Commission found that:

• The measure facilitates the development of an economic activity, in particular carbon storage. At the same time, it supports the objectives of key EU policy initiatives, such as the European Green Deal and the EU Industrial Carbon Management Strategy
• The measure is necessary and appropriate to meet the EU’s and Greece’s national climate targets.
• The measure is proportionate as the aid is limited to the minimum necessary to trigger the investment. Moreover, there are safeguards, including the claw-back mechanism, to ensure that undue distortions of competition are limited.
• The aid has an incentive effect, as the beneficiary would not carry out the investments without public support.
• The aid brings positive effects that outweigh any potential distortion of competition and trade in the EU.

On this basis, the Commission approved the Greek measure under EU State aid rules.

Background

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

With the European Green Deal Communication in 2019, the Commission set an objective of net zero emissions of greenhouse gases in 2050 that is enshrined in the European Climate Law. In force since July 2021, the law also introduced the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030. Through the adoption of the ‘Fit for 55′ legislative proposals, the EU has in place legally binding climate targets covering all key sectors in the economy.

The non-confidential version of the decisions will be made available under the case number SA.108267 in the State aid register on the Commission’s Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.