ESA approves amendments to Norwegian CO2 compensation scheme
The scheme compensates undertakings in certain energy-intensive industries for increases in electricity prices resulting from indirect emission costs under the European Emissions Trading System (ETS) and is aimed at reducing the risk of carbon leakage, which may follow from companies relocating their production to countries outside Europe with weaker emission constraints.
The EFTA Surveillance Authority (ESA) initially approved the Norwegian scheme in 2022 and adopted amendments in 2023 as well as in April and December 2024. Today’s approval concerns the following amendments:
- An expansion of the list of sectors that are eligible for aid to include the sectors added by ESA’s 2026 amendments to the Guidelines.
- An increase of the maximum aid intensity that can be granted to sectors that were included in the original scheme from 75% to 80%, for costs incurred as of 2026. For newly added sectors the maximum aid intensity will remain at 75%.
- An update of the methodology for setting the Norwegian CO2 emission factor and the setting of a new CO2 emissions factor for Norway.
The scheme remains subject to an annual compensation cap of NOK 7 billion.
ESA assessed the amendments under Article 61(3)(c) of the EEA Agreement and the ETS Guidelines and concluded that the scheme remains compatible with the functioning of the EEA Agreement.
For further information, see ESA’s PR.