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A French scheme, with a total estimated budget of €13.5 billion (£11.6bn), to partially compensate energy-intensive companies has approved by the European Commission.

The support measure will cover part of the higher electricity prices arising from the impact of carbon prices on electricity generation costs – i.e. indirect emission costs – incurred between 2021 and 2030.

It is aimed at reducing the risk of ‘carbon leakage’, where companies relocate their production to countries outside the EU with less ambitious climate policies, resulting in increased greenhouse gas emissions globally.

The scheme will benefit companies active in sectors at the risk of carbon leakage that face significant electricity costs and are particularly exposed to international competition.

The compensation will be granted to eligible companies through a partial refund of the indirect emission costs incurred in the previous year, with the final payment made in 2031.

Margrethe Vestager, Executive Vice-President in charge of competition policy said: “This €13.5 billion scheme will enable France to reduce the risk of carbon leakage for its energy-intensive industries. At the same time, the scheme maintains the incentives for a cost-effective decarbonisation of its economy, in line with the Green Deal objectives, while limiting undue competition distortions.”