Current status of the approval procedure
European Commission approves BEHG Carbon Leakage Ordinance
On 10/08/2023, the European Commission approved the BEHG Carbon Leakage Ordinance (State Aid SA.63191 (2023/N) - Germany). This is essential in order for carbon leakage compensation to be granted in accordance with section 27 of the BECV. In the approval procedure for the BECV, the Federal Republic of Germany commited to the European Commission to implement additional transparency requirements for companies receiving individual aid of more than 100,000 euros. The European Commission published the decision on the following website (see link).
Therefore, all companies with an individual aid award above 100,000 euros will be published within 6 months from the granting act, including their names, size, region and main economic sector.
We have already contacted the companies concerned before making a final decision on their applications for the accounting year 2021 and have informed them about the further proceedings.
What is the purpose of the state aid procedure?
The state aid is intended to prevent the risk of carbon leakage due to the relocation of production enterprises and associated greenhouse gas emissions.
In cases where the increase in CO2 price-related costs cannot be passed on prices due to the international competitive situation, there is a risk that the affected companies will move abroad as a result of competitive disadvantages. This could possibly lead to higher emissions overall (that is "carbon leakage").
Pursuant to section 11(3) of the fuel emissions trading act (BEHG), the federal government is empowered to regulate the measures necessary to prevent carbon leakage and to maintain the Europe-wide and international competitiveness of companies affected by the introduction of the national carbon price. To this end, the federal government, with the consent of the Bundestag, has issued the ordinance on measures to prevent carbon leakage due to national fuel emissions trading (BECV). This ordinance entered into force on 28/07/2021.
Who can apply for state aid?
The conditions for eligibility are set out in Section 4 of the BEHG carbon leakage ordinance (BECV) and are explained below.
According to section 4(2) BECV, the applicant company must fulfil the following requirements:
- It must be assigned to a sector eligible for assistance according to the specifications of section 5 and
- has provided the envisaged ecological service in return in accordance with section 10 to 12 BECV as of the 2023 accounting year.
Pursuant to section 5(1) BECV, an enterprise is eligible for state aid if it can be assigned to a sector or subsector eligible for state aid. Eligible sectors or subsectors are those listed in Tables 1 and 2 of the annex to the BECV or subsequently recognised in the procedure according to section 6 (Sections 18 to 22 BECV) and published in the federal gazette.
The crucial factor for the assignment is the production of a product that falls under one of the (sub)sectors mentioned. Thus, in individual cases, the assignment to a sector may deviate from the classification of the enterprise by the states (Länder) statistical offices. In this case, the deviation must be justified by the applicant enterprise or an independent part of the enterprise.
Guideline (available in German only)
Presentation of our info event (available in German only)
Must compensatory measures be provided?
From the 2023 accounting year onwards, the BECV links the granting of State aid to the provision of ‘environmental compensatory measures’ in accordance with Sections 10 to 12. Ecological compensatory measures include the operation of an energy or environmental management system (Section 10 BECV) and investment in climate protection measures (Section 11 BECV).
Industrial production needs to undergo a transformative process to meet climate protection targets. Within this process, BECV aims to combine the targeted reduction of operating costs with State aid for companies in industrial sectors at risk of carbon leakage and the implementation of climate-friendly approaches within companies.
How does the environmental compensatory measure proceed in accordance with the BECV?
According to Section 10 BECV, the applicant company must operate an energy or environmental management system in order to receive State aid. In principle, the system should be certified in accordance with DIN EN ISO 50001 or entered in the registry in accordance with EMAS.
A company receives State aid under the BECV if, in addition to the other requirements of this Ordinance, it has made investments in measures to improve energy efficiency from the 2023 accounting year that have been specifically identified and assessed as economically feasible as part of the respective energy management system in accordance with Section 10 BECV. Companies can also invest in measures to decarbonise production processes (Section 11(4) BECV) as an alternative to investing in energy efficiency measures.
The applicant company must provide us, the German Emissions Trading Authority, with evidence that they have performed the environmental compensatory measures in accordance with Section 12 BECV. The company's relevant declarations must be confirmed by an authorised verifier.
Further information of performing and evidence handling of environmental compensatory measures in accordance with BECV can be found in the updated ‘BEHG Carbon Leakage Guidance Note – Environmental Compensatory Measures by Companies (Sections 10 to 12 BECV)’.
In addition, you will find instructions for the verifiers authorised to carry out audits in a separate guideline, in which we explain how the companies' declarations on their environmental compensatory measures should be checked and confirmed (Section 12 BECV).
Guidelines, assistance and presentations from the information event (24/04/2024) (available in German only)
How to submit a state aid application?
You can now find the updated ‘BEHG Carbon Leakage (CL) Guideline’ for the 2023 accounting year under ‘Guidelines and further assistance’.
From the 2023 accounting year, the environmental compensatory measures pursuant to Sections 10 to 12 BECV must be provided for the first time. For more information on this, please refer to Section ‘(D) Must compensatory measures be provided?’.
We, the German Emissions Trading Authority (DEHSt) at the German Environment Agency, are competent for the implementation and application procedures under the BECV in national emissions trading (pursuant to Section 3 BECV in conjunction with Section 13(1) BEHG).
You, as an applicant company, must prepare your application documents in accordance with the ‘BEHG Carbon Leakage (CL) Guideline’ and the Form Management System (FMS) and have your application data checked by an auditor.
You are required to use the accompanying forms. Please note that the forms ‘Breakdown of the expected relevant emission volume’ and ‘Calculation form for fuel amounts attributable to heat generation in non-high-efficiency CHP plants’ have been updated. All relevant documents are available for download under ‘Guidelines and further assistance’.
According to Section 13(1)(1) BECV, the deadline for submitting applications for State aid for the prevention of carbon leakage is 30 June of the year following the accounting year. You must submit the complete application to us by this date.
If 30 June falls on a weekend or public holiday, applications must be submitted by the end of the following working day at the latest.
You must also use the electronic application and communication system that we have stipulated (see Section F).
To stay up to date, subscribe to our newsletter which will keep you informed about all the latest news on the application procedure and national emissions trading.
Current information on applying for file numbers for the carbon leakage compensation procedure.
If you are an applicant submitting an application for the BECV compensation procedure for the first time, you must apply to us for a file number. If you have already received a file number in connection with the application for a previous accounting year, you should also use it for all subsequent accounting years.
Please note that you must submit your compensation application by the deadline of 01/07/2024, even if you do not yet have a file number. This means that you should forward your application to your auditing company and then submit it even if you do not have a file number. The deadline for submitting carbon leakage applications is a cut-off deadline (Section 13(1) BECV).
You will receive file numbers that are applied for by 21/06/2024 in good time before 01/07/2024. Please indicate the file number in the VPS message you send us which contains your application.
File numbers can no longer be applied for after 21/06/2024 because they are unlikely to be available in time before the application is submitted. In this case, we will assign you a carbon leakage file number after we receive your application.
Guidelines and further information (available in German only)
Electronic communication
From the 2023 accounting year, applications for State aid for the prevention of carbon leakage in accordance with the BECV consisted of two components for the first time.
The updated Form Management System (FMS) for submitting applications for the 2023 accounting year ("CL compensation") and, for the first time, the FMS application for providing evidence of environmental offsetting ("Evidence of environmental compensatory measures") are now available.
Please note that the application is only considered complete when both parts of the application data sets (application data from ‘CL compensation’ and ‘öGL evidence’) have been received by DEHSt. Both parts of the application must be submitted to DEHSt by 30 June ("substantive cut-off deadline") of the calendar year following the billing year ( compare Section 13 (1) BECV).
Please also note the information on the application deadline in 2024 in Section (E).
The server-based FMS web application must be used for the acquisition of your application data within the carbon leakage compensation.
The FMS supports applicants and auditors or applicants and authorised reviewers with completion instructions and input validations to ensure that the data sets submitted are both error-free and as complete as possible.
You must first set up user access in the FMS acquisition software to be able to submit a carbon leakage compensation application. The link to the FMS acquisition software and the FMS manual can be found on the right.
With the start date 01/04/2024, the new centralised user administration will be used in the "Form Management System" (FMS). You can then use your account in the FMS applications, CL compensation 2023 and certificates "öGL 2023". In addition, this account will also be valid for the FMS application "Electricity price compensation 2023". In future, you will therefore only need one account in the FMS and will be able to participate in all three procedures.
If you already have an account in the BEHG segment of the FMS, you can already use it and do not need to create a new account. Please note the information text on the welcome pages of the FMS applications.
For the application procedure pursuant to Section 13 (1) BECV, DEHSt stipulates the use of the electronic form pursuant to Section 17 (1) BEHG - this includes both the use of the FMS forms and the use of the VPS (see BAnz AT 03.05.2022 B11 and BAnz AT 25.06.2024 B7).
Announcement in the Federal Gazette from 25.06.2024 B7 (available in German only)
Announcement in the Federal Gazette from 03.05.2022 B11 (available in German only)
All applications or their components must be submitted via the Virtual Post Office (VPS) together with a qualified electronic signature. Please refer to our ‘Electronic communication’ page.
We particularly recommend that all new applicants apply for a Qualified Electronic Signature card (QES) as soon as possible. Obtaining and activating a QES signature card can take up to three months under certain circumstances. Therefore, please plan to apply for the signature card as early as possible.
As a user of our Virtual Post Office (VPS), you are obliged to regularly check your mailbox for incoming messages. We recommend that you set up an automated email notification for incoming messages within the VPS server, accessible through the Options & email notification menu in your mailbox. This additional service does not replace regular checking of your VPS mailbox. Our electronic administrative files are considered notified three days after dispatch in accordance with Section 41 (2) of the Administrative Procedure Act.
Please note the technical process for submitting applications (see " BEHG Carbon Leakage (CL): Information paper on environmental compensatory measures by companies (sections 10 to 12 BECV)" in chapter 4.3.1.
Subsequent recognition procedure and special classification procedure
Please note that the application deadline for both procedures has already expired and no further procedures are being planned according to BECV.
A prerequisite for granting state aid under the BEHG carbon leakage ordinance (BECV) is the assignment of an applicant company to a sector or sub-sector eligible for aid. The annex of BECV specifies which (sub)sectors are eligible for aid under the aid procedure for preventing carbon leakage. Industrial sectors that are not already on the list of (sub)sectors eligible for aid could apply for subsequent recognition and thus inclusion of their (sub)sector in the list of the annex of BECV in accordance with sections 18 to 22 BECV. This recognition could be based on quantitative criteria (section 20 BECV) or qualitative criteria (section 21 BECV). Likewise, (sub)sectors already entitled to aid had the option of demonstrating an emission volume that deviated from BECV within the framework of the special classification procedure (section 23 BECV) and thus being assigned a higher grade of compensation.
There was the possibility for submitting an application for the period from 2021 to 2025 with a deadline of 28/04/2022 (‘First round’) and a later application for the period from 2023 to 2025 with a deadline of 31/12/2022 (‘Second round’) both for the subsequent recognition (sections 20, 21 BECV) and for the special classification procedure (section 23 BECV). While there was a restriction to the fuels in annex 2 of BEHG for the first round of the procedure, solid fuels such as coal could also be considered as eligible for aid in the second round of the procedure according to annex 1 of BEHG.
The applications had to be submitted to us, the German Emissions Trading Authority (DEHSt) at the German Environment Agency, in accordance with section 22(2)(1) and section 3 BECV in conjunction with section 13(1) BEHG. The decision about the subsequent recognition of a (sub)sector and the adjustment of the offset grade is made by the Federal Ministry for Economic Affairs and Climate Action (BMWK) in agreement with the Federal Ministries named in section 18 BECV, in accordance with section 18 BECV.
Applicants are informed about the subsequent recognition of a (sub)sector or the adjustment of their offset grade via an announcement in the electronic Federal Gazette (18(2) BECV). As soon as this has been done, the announcement will be linked on this page.
Below you will find guidelines, forms and a calculation template for both rounds of the procedure.
Evaluations and reports
Reports on the BECV consultation process
We have also been conducting an annual consultation (Section 26 (2) BECV) since 2022 to evaluate the impact of the BECV.
Further information and all previously published reports can be found at the following link.
Evaluation reports on carbon leakage compensation
Section 26 (1) BECV provides for the regular publication of the results of the application procedure in the year following the submission of the application. Detailed evaluation reports of the results for the accounting years 2021 and 2022 (CLK Report 2021 and 2022) were published on 27/03/2024 and 02/07/2024, respectively.
Transparency reports on carbon leakage compensation
According to the state aid approval of the BECV by the European Commission the Federal Republic of Germany is obliged to publish data from companies with aid amounts of over 100,000 euros. We complied with this obligation by publishing the transparency reports on carbon leakage compensation 2021 on 27/03/2024 and 2022 on 02/07/2024 respectively.