ESA amends ETS State aid guidelines

Today, the EFTA Surveillance Authority (ESA) has adopted amendments to its guidelines for assessing State aid for sectors exposed to the European Emission Trading System (ETS).

The amendments concern the Guidelines on certain State aid measures in the context of the system for greenhouse gas emissions trading post-2021. ESA first adopted these guidelines in December 2020 and supplemented them in January 2022 .

The guidelines allow Iceland, Liechtenstein and Norway to compensate sectors genuinely at risk of so-called carbon leakage for increased electricity costs driven by carbon pricing under the ETS. Carbon leakage is when companies shift production to countries outside the European Economic Area (EEA) with less ambitious climate policies, or when EEA-made products are replaced by more carbon-intensive imports, reducing economic activity in the EEA without lowering global emissions.

The amendments align ESA's ETS Guidelines with the European Commission's December 2025 update, ensuring their uniform application across the EEA. The Commission introduced its changes to address a rising risk of carbon leakage in further energy-intensive industries in addition to those already covered. This risk has been driven by sustained increases in ETS emission costs after the guidelines were first adopted in 2020. Bringing additional sectors into scope will help safeguard the competitiveness of European industry while continuing to encourage decarbonisation.

ESA has adopted the following amendments to the current guidelines:

• Extension of eligible sectors: The list of industrial sectors entitled to compensation has been expanded, with 20 new sectors and two sub-sectors now included.
• Higher aid intensity: For sectors already eligible before the amendment, the maximum aid intensity increases from 75% to 80%.
• Flexibility to notify additional sectors: EEA EFTA States may notify sectors or sub-sectors not included in the revised list, provided they can demonstrate a genuine risk of carbon leakage.
• Stronger green-transition requirements: Large beneficiaries must now meet specific obligations contributing to the green transition.

Updates have also been made to the emission factors and geographic areas applied to EU Member States for the 2026-2030 period. The 2020 ETS Guidelines 2020 allow the EEA EFTA States to submit their own methodology for determining the carbon factor, subject to ESA's review. The amended guidelines further permit EEA EFTA States to introduce a gradual transition from 2026 to 2030 when the reduction in the maximum regional CO₂ emission factor, compared with the 2021-2025 period, is particularly substantial.

You can read ESA's decision here and access the amendments here.

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