Slovakia will give its heavy industry up to €250 million to cover higher electricity prices after the EU concluded that the move would not breach competition rules.

The Slovakian government will use part of its ETS auction revenue to cover the cost of utilities passing on the costs of buying EUAs over 2014-2020, ENDS Europe reported.

As of last year only six countries had gained clearance to give this type of compensation: Belgium, Germany, Greece, Netherlands, Spain and the UK.

The addition of Slovakia further increases the potential for intra-EU trade distortions, something industry groups have warned about.

The European Commission’s proposal for post-2020 ETS reforms would again leave it to member states to decide whether to provide compensation for indirect ETS costs, but it strengthens wording from ‘may’ to ‘should’ provide this compensation.

Differences in electricity markets across the EU would make it difficult to decide on a single EU-wide approach to the compensation.

However, Slovakia, which will assume the six-month rotating EU presidency in July, has called for EU-wide rules on the compensation, ENDS reported.

By Ben Garside – ben@carbon-pulse.com