On Monday 13 April, the President of the European Commission, Ursula von der Leyen, announced plans to make the European rules on State aid more flexible by the end of the month, to enable Member States to take action to support their economies affected by the war in the Middle East.
The Commission has in fact presented a consultation “this week” on “more flexible State aid that will give Member States greater latitude”, with the aim of adopting a revised framework by April, declared Mrs von der Leyen at the end of a meeting of the College of Commissioners devoted to the geopolitical and macroeconomic repercussions for the European Union of the Israeli-US attacks on Iran.
The consultation with Member States focuses in particular on the possibility of authorising them to grant temporary, targeted support to the sectors most at risk:
- a support that covers part of the increases in fuel or fertiliser prices, compared with the period prior to 28 February 2026, based on the beneficiaries’ consumption;
- a simplified measure allowing a limited amount of aid per undertaking (with the exception of intra-EU cabotage). On this basis, Member States may rely on relevant statistics to avoid individual monitoring of actual consumption; as well as on an increase in the maximum aid intensity for electricity costs for energy-intensive industries under Section 4.5 of the CISAF, beyond the current ceiling of 50%.
On the fiscal front, Ms von der Leyen reiterated the Commission’s position that the conditions - i.e. a severe economic downturn at euro area or EU level - do not exist at this stage to suspend the application of the Stability and Growth Pact (see EUROPE 13845/4), as was the case during the Covid-19 pandemic.
She said that Member States could adopt emergency fiscal measures to “support vulnerable households and sectors”, provided that these measures were “targeted, timely and temporary” and did not lead to “an undue deterioration in government deficits”.
Energy. Although Europe has been less affected by the energy crisis than Asia, the cost of importing hydrocarbons has risen sharply. In 44 days of war, the bill has risen by “more than €22 billion”, noted the President of the Commission, estimating that the macroeconomic impact of the war in the Middle East on the EU will “persist”.
With a view to the extraordinary European summit on 23 and 24 April in Nicosia, the Commission will present, on Wednesday 22 April, a communication detailing the measures to be taken in the energy, climate and economic fields.
The EU is invited to reproduce the coordination mechanisms it set up for joint gas purchases in response to the inflationary shock caused by Russia’s military aggression against Ukraine in 2022. This time, the plan is to introduce a similar mechanism for gas storage “to avoid that many Member States go to the market at the same time and are competing against each other”, said Ms von der Leyen.
In her view, these two energy shocks in the space of a few years vindicate the strategy of decarbonising the economy, enabling the EU to reduce its costs and strengthen its independence. The Commission will therefore continue its efforts to reduce Europe’s demand for hydrocarbons, through the development of renewable and nuclear energies in the EU - which together generate “more than 70% of our electricity production”, according to Mrs von der Leyen - as well as increasing the energy efficiency of buildings.
Recalling the four components that determine the price of electricity (energy source, network, taxation and the ‘ETS’), Ms von der Leyen promised that the EU institution would present, “before the summer” a strategy for the electrification of the European economy that would contain “a new target” with figures, and aim to remove regulatory obstacles and accelerate public and private investment.
With regard to the taxation of energy products, the President of the Commission announced specific legislative proposals “in May”.
Finally, returning to the reform of the ‘ETS’ for trading CO2 emission allowances, she pointed out that following the proposal to reform the carbon market stability reserve mechanism (see EUROPE 13841/1), the Commission will propose updating the benchmarks used to calculate the number of free allowances available to industrial sectors exposed to the risk of carbon leakage. And, as requested by the European Council (see EUROPE 13832/1), a more substantial proposal to revise the ‘ETS’ will be presented “in July”. (Original version in French by Mathieu Bion)