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‘ “CO2 emission factor”, in tCO2/MWh, means the weighted average of the CO2 intensity of electricity produced from fossil fuels in different geographic areas. The weight reflects the production mix of the fossil fuels in the given geographic area. The CO2 factor is the result of the division of the CO2 equivalent emission data of the energy industry divided by the gross electricity generation based on fossil fuels in TWh. For the purposes of these Guidelines (*1), the areas are defined as geographic zones (a) which consist of submarkets coupled through power exchanges; or (b) within which no declared congestion exists and, in both cases, hourly day-ahead power exchange prices within the zones showing price divergence in euro (using daily ECB exchange rates) of maximum 1 % in a significant number of all hours in a year. Such regional differentiation reflects the significance of fossil fuel plants for the final price set on the wholesale market and their role as marginal plants in the merit order. The mere fact that electricity is traded between two Member States does not automatically mean that they constitute a supranational region. Given the lack of relevant data at sub-national level, the geographic areas comprise the entire territory of one or more Member States. On this basis, the following geographic areas can be identified: Spain and Portugal; Lithuania, Latvia and Estonia; Germany and Luxembourg; Bulgaria and Romania; and all other Member States separately. The corresponding maximum regional CO2 factors, which apply as maximal values when the notifying Member State has not established an assessment of the market-based CO2 factor pursuant to point (11), are listed in Annex III. A Member State may ask the Commission to calculate the CO2 emission factor based on data available in 2026 and may notify the resulting CO2 emission factor as an amendment to its scheme. This updated CO2 emission factor can apply to costs incurred as from 2026. This updated CO2 emission factor has no effect on the CO2 emission factor of other Member States as listed in Annex III. In order to ensure equal treatment of sources of electricity and avoid possible abuses, the same CO2 emission factor applies to all sources of electricity supply (auto generation, electricity supply contracts or grid supply) and to all aid beneficiaries in the Member State concerned. If the maximum regional CO2 emission factor listed in Annex III is at least 15 % lower than the maximum regional CO2 emission factor previously listed in that Annex or the approved market-based factor before 1 January 2026, Member States concerned may notify a transitional period to move from the previously applicable maximum regional CO2 emission factor to the updated maximum regional CO2 emission factor under these Guidelines for year t, starting in 2026, in equal annual steps of reduction. The updated maximum regional CO2 emission factor listed in Annex III shall apply for year t = 2030 at the latest;

(*1)  These Guidelines do not qualify as legislative instruments and therefore do not have to be incorporated into the EEA Agreement by the EEA Joint Committee. The EFTA Surveillance Authority is responsible for setting the relevant rules applicable for EFTA States, including the methodology for setting the CO2 factors.’ "

(18)

‘To limit the risk of competition distortion within the internal market, the aid must be limited to sectors that are exposed to a genuine risk of carbon leakage due to significant indirect costs that are actually incurred as a consequence of greenhouse gas emission costs being passed on in electricity prices. For the purpose of these Guidelines, a genuine risk of carbon leakage is considered to exist if the beneficiary is active in a sector listed in Annex I. A sector or subsector that is not listed in Annex I but meets the criteria to be included in that Annex (*2), may also be considered eligible provided that Member States demonstrate this with data that is representative of the sector or subsector at Union level, verified by an independent expert and based on a time period of at least the three most recent years for which data is available. If Member States intend to extend their respective schemes to include any new sector or subsector, they must notify any such amendment to the Commission. Member States may provide in their schemes a commitment to include in the future all additional sectors or subsectors whose eligibility has been demonstrated by another Member State and approved by the Commission, and to inform the Commission of any such inclusions.

(*2)  These criteria are a trade intensity above 20 % and an indirect emission intensity above 0,32 kg CO2/EUR, resulting in an indirect carbon leakage indicator above 0,064. The methodology is described in further detail in Commission staff working document SWD(2020) 190 final.’ "

(19)

‘The aid is proportionate and has a sufficiently limited negative effect on competition and trade if it does not exceed 80 % of the indirect emission costs incurred for the sectors listed in Table 1 of Annex I and 75 % for the sectors listed in Table 2 of Annex I or any further sectors considered eligible pursuant to the procedure set out in point (21). The electricity consumption efficiency benchmark ensures that support to inefficient production processes remains limited and maintains the incentive for dissemination of most energy-efficient technologies.’

(20)

‘Given that for some sectors the aid intensity of 80 % for the sectors listed in Table 1 of Annex I and 75 % for the sectors listed in Table 2 of Annex I or any further sectors considered eligible pursuant to the procedure set out in point (21) might not be sufficient to ensure that there is adequate protection against the risk of carbon leakage, when needed, Member States may limit the amount of the indirect costs to be paid at undertaking level to 1,5 % of the gross value added of the undertaking concerned in year t. The gross value added of the undertaking must be calculated as turnover, plus capitalised production, plus other operating income, plus or minus changes in stocks, minus purchases of goods and services (which shall not include personnel costs), minus other taxes on products that are linked to turnover but not deductible, minus duties and taxes linked to production. Alternatively, it can be calculated from gross operating surplus by adding personnel costs. Income and expenditure classified as financial or extraordinary in company accounts is excluded from value added. Value added at factor costs is calculated at gross level, as value adjustments (such as depreciation) are not subtracted (*3).

(*3)  Code 12 15 0 within the legal framework set out by Regulation (EC) No 295/2008 of the European Parliament and of the Council of 11 March 2008 concerning structural business statistics (OJ L 97, 9.4.2008, p. 13).’ "

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‘From 1 January 2026 to 31 December 2030, updated CO2 emission factors and geographic areas will be applied. In 2026, the Commission will supplement these Guidelines with electricity consumption efficiency benchmarks covering the sectors added to the amended sector eligibility list in Annex I and the adjustment to address overlaps for the manufacturing of fertilisers and nitrogen compounds and mining of iron ores sectors between aid under these Guidelines and the obligation to surrender certificates under Regulation (EU) 2023/956 of the European Parliament and of the Council (*4) for indirect emissions (*5). Consequently, Member States are required to amend, where necessary, their respective schemes in order to bring them in line with these Guidelines as amended.

(*4)  Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (OJ L 130, 16.5.2023, p. 52, ELI: http://data.europa.eu/eli/reg/2023/956/oj)."

(*5)  This is the case when such products are listed in Annex I to that Regulation, but not in Annex II to that same Regulation.’ "

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‘The Commission proposes the following appropriate measures to Member States under Article 108(1) of the Treaty on the Functioning of the European Union:

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