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Current status of the approval procedure
European Commission approves BEHG Carbon Leakage Regulation
On 10/08/2023, the European Commission approved the BEHG Carbon Leakage Regulation (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.
Start of state aid procedure
By the end of August 2023, we have already started the procedure of sending out the Carbon Leakage Compensation ("CLK") granting acts for the 2021 accounting year as well as paying out the state aid.
22/09/2023
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.
05/04/2023
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.
05/04/2023
Are there any services in return to be provided?
Sections 10 to 12 of the BECV tie state aid grants to the provision of "environmental services in return" from the 2023 accounting year onwards. The environmental service in return includes the operation of an energy/environmental management system (section 10 BECV) and investment in climate protection measures (section 11 BECV).
Within the necessary transformation process of industrial production, BECV intends to establish a link between the intended state aided relief of operating costs and incentives for the implementation of climate-friendly measures within the companies’ investment planning.
How is the environmental service provided in return under BECV?
The applicant company must operate an energy or environmental management system to be able to receive state aid according to section 10 BECV. The system should, in principle, be certified according to DIN EN ISO 50001 or EMAS.
Pursuant to § 11 BECV, climate-friendly investment measures should be carried out by companies as a service in return for the granting state aid. Investments for measures to improve energy efficiency and for decarbonisation measures are eligible.
For more information on the provision of environmental services in return in accordance with BECV, please refer to the ‘BEHG carbon leakage information paper – environmental services in return by companies’ (Sections 10 to 12 BECV).
05/04/2023
Guidelines and further information (available in German only)
Präsentationen der Informationsveranstaltung ökologische Gegenleistungen vom 24.04.2024:
How is an aid application created?
As of now, you can find the updated "BEHG carbon leakage (CL) guideline" for the accounting year 2022 under "Guidelines and further assistance."
We, the German Emissions Trading Authority (DEHSt) at the German Enviroment Agency (UBA), are responsible for the implementation and application process under the BECV as part of the German national emissions trading scheme (pursuant to § 3 BECV in connection with § 13 subsection 1 BEHG).
Companies that want to apply for state aid according to the BECV must prepare their application documents in accordance with the specifications in the "BEHG carbon leakage (CL) guidelines", fill out the forms in the „Forms Management System“ (FMS) and have their application data verified by an auditor.
In addition to the FMS, we provide forms that are mandatory to use. All relevant documents are available to download under "Guidelines and further assistance".
The application has to be filled out completely and submitted to us by June 30 of the respective application year (for example, by 30/06/2023 for the accounting year 2022).
In order to submit the application forms correctly, it is mandatory to use the electronic application and communication formats we provide (see section F).
To stay up to date, please subscribe to our newsletter, which will keep you informed about all new developments regarding the BECV application process and the German national emissions trading in general.
Current information on applying for file numbers for the Carbon Leakage compensation procedure
Applicants submitting an application for the compensation procedure according to BECV for the first time must send an application for a file number for this procedure to the DEHSt. Applicants who have already submitted an application for the compensation procedure according to BECV for the accounting year 2021 already have a file number which must be used again for the following accounting years.
We would like to point out that even if you do not yet have the file number, your compensation application must be submitted by the deadline of 30/06/2023. Thus, the application needs to be forwarded by you to your auditor‘s office even without a file number and then be submitted to the DEHSt. The deadline for submitting the carbon leakage applications, according to § 13 (1) BECV, is an exclusion deadline.
File numbers requested until 23/06/2023 will be received by you in time before 30/06/2023. Please indicate the file number then in the VPS message to the DEHSt with which you submit your application.
File numbers cannot be requested after 23/06/20233 because they are not expected to be available in time before the application deadline. In this case, a carbon leakage file number will be assigned to you after the receipt of your application.
How does the state aid procedure proceed?
Guidelines and further information (available in German only)
Electronic communication
As of now the updated form management system (FMS) for the application for the accounting year 2022 is available via the link below.
The server-based web application form management system (FMS) must be used for recording your application data within the framework of carbon leakage offsetting.
The FMS helps applicants and auditors to submit data sets that are as complete and free of errors as possible by providing instructions for completion and input validation.
You must first set up a user account in the FMS recording software to be able to submit an application for carbon leakage compensation. The link to the FMS recording software and the FMS manual can be found at the end of this text section.
All applications must be submitted via the Virtual Post Office (VPS) using a qualified electronic signature. Please refer to our page ‘Electronic communication’. We recommend that all new applicants in particular apply for a qualified signature card as soon as possible. Obtaining and activating a QES signature card can take up to three months under certain circumstances. Please plan to apply for the signature card as early as possible.
User of our virtual post office (VPS) are obliged to regularly check the inbox for incoming messages. Even though it does not remove your obligation to check your VPS inbox regularly, we still recommend that you set up an automated e-mail notification of incoming messages in your VPS inbox under the Options & E-mail notification menu item. We would also like to point out that electronic administrative decisions of us, according to § 41 subparagraph 2 of the German Administrative Procedures Act, are considered announced on the third day after they have been sent.
29/06/2023
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.
06/04/2023
1. Round 2021 to 2025
2. Round 2023 to 2025
Evaluations and reports
Carbon leakage evaluation reports
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. DEHSt 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.
Reports on the consultation process
Pursuant to section 26 (2) of the BEHG carbon leakage ordinance (BECV), the German Emissions Trading Authority at the German Environment Agency (DEHSt), as the competent authority, shall conduct an annual consultation as a building block for the evaluation of the BECV from 2022 onwards.
02/07/2024