EU carbon rules / Regulations / State Aid Guidelines on Indirect Cost Compensation (EEI)
In force Framework Carbon pricing & border adjustment
State Aid Guidelines on Indirect Cost Compensation (EEI)
State aid rules for Member State compensation of industrial indirect emission costs
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Who the regulation applies to
This regulation applies to:
- State aid granted by Member States to energy-intensive sectors/sub-sectors facing a risk of carbon leakage from indirect emission costs (compensating for indirect costs caused by the EU ETS raising electricity prices)
- Beneficiary sectors are listed in Annex I to the guidelines: Table 1 covers sectors recognised since 2020 (iron and steel, aluminium, paper, refined petroleum, non-ferrous metals, certain plastics/casting, etc.), with a compensation ceiling of 80%; Table 2 covers sectors added by the December 2025 revision (e.g. fertilisers/nitrogen compounds NACE 20.15, iron ore mining 07.10, etc.), with a compensation ceiling of 75%
- (Condition) Member State aid schemes must be approved by the Commission; aid expenditure may not exceed 25% of their ETS revenue
- (Not applicable) The guidelines apply only to aid measures under Article 10a(6) and Article 10b of Directive 2003/87/EC, and do not apply to undertakings in difficulty
State aid rules for Member State compensation of the indirect emission costs of industry; amended by Communication C(2025) 9298 of 2025-12-23 (OJ C/2026/196, CELEX 52026XC00196), which expands the eligible sectors in Annex I and raises the compensation ceilings (80% in Table 1 and 75% in Table 2), applicable to indirect costs incurred from 2025.
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What the regulation requires
| Duty | Trigger | Evidence | Timing |
|---|---|---|---|
| Design indirect cost compensation in line with the EEI Guidelines Member State compensation for indirect electricity costs must comply with the State aid guidelines. | A Member State establishes an electricity indirect cost compensation scheme | Member State aid notification, European Commission approval | 2025–2030 |
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Industry dossiers covering this regulation
- Aluminium and non-ferrous metals Indirect emissions (the electricity mix) are the main variable in CBAM cost; proof of green power is the competitive edge. NACE C24.4–C24.5
- Cement, glass and ceramics Process emissions dominate; cement is directly covered by CBAM, and embodied carbon in building materials is spreading through public procurement. NACE C23
- Pulp and paper Not on the CBAM list, but EUDR timber traceability and PPWR recycled-content rules determine market access. NACE C17
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Related regulations
- EU ETS Directive Directive 2003/87/EC In force
- ETS Revision (Fit for 55) Directive (EU) 2023/959 In force
- ETS Transitional Rules for Free Allocation Delegated Reg (EU) 2019/331 (as amended by 2024/873) In force
- ETS Auctioning Regulation Delegated Reg (EU) 2023/2830 In force
- CBAM Regulation Regulation (EU) 2023/956 In force
- CBAM Simplification Amendment Regulation (EU) 2025/2083 In force
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