EU clears Czech scheme compensating indirect carbon costs for industry

The European Commission has authorised amendments to the Czech scheme that compensates industry for the indirect costs of the EU Emissions Trading System (ETS), a decision adopted on 30 July 2026 and published in the Official Journal of the European Union on 21 August 2026. The measure, registered as State aid SA.123662, modifies the earlier scheme SA.100159 (2021/N) covering compensation for indirect ETS costs in Czechia for the period 2021–2030. The Commission raised no objections under Articles 107 and 108 of the Treaty on the Functioning of the European Union.

The scheme is designed to offset the higher electricity prices that energy-intensive sectors face because greenhouse gas emission costs are passed on in power prices, a risk that can push production to jurisdictions with weaker climate rules. The amended regime carries an overall budget of 35,600,000,000 CZK (about 3,560,000,000 CZK per year) and runs until 31 December 2031.

Legal basis and scope

The compensation is granted under Act No 383/2012 on the conditions relating to greenhouse gas emission allowance trading, as amended, together with Government Regulation No 565/2020 of 30 November 2020, which sets the conditions for granting compensation to sectors identified as having a significant risk of carbon leakage. The regulation has been amended several times, most recently by a 2026 regulation that introduces the changes now approved.

The measure is structured as a scheme of direct grants, with the Ministry of Industry and Trade (Na Františku 32, 110 15, Prague 1) acting as the granting authority. Its stated objectives are environmental protection and sectorial development.

Beneficiary sectors

The compensation is available to companies operating in two broad economic groupings:

• Section B – Mining and quarrying
• Section C – Manufacturing

These are the sectors judged most exposed to carbon leakage, where higher electricity costs could otherwise push activity and emissions abroad.

Impact

The decision gives Czech industrial operators a stable, state-backed cushion against rising carbon-related electricity costs through the end of the decade, supporting competitiveness while the EU’s carbon pricing framework tightens. For readers, it signals that Brussels continues to treat indirect-cost compensation as a legitimate tool to keep energy-intensive manufacturing anchored in Europe during the green transition.

Source: Official Journal of the European Union, C series, C/2026/4465, 21.8.2026, p. 1 (official reference: C/2026/4465, CELEX C_202604465).