EU / Portugal — SA.120081: EUR 100 Million Budget Increase to ETS Indirect Emission Cost Compensation Scheme

Mechanism

Portugal's underlying scheme — compensating energy-intensive installations for the indirect cost of EU ETS carbon pricing passed through in electricity tariffs — was first approved by the European Commission on 24 November 2022 under the ETS State aid Guidelines (Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2021). Eligible companies receive a partial annual refund of the previous year's indirect emission costs, running from costs incurred in 2021 through a final payment in 2031.

By September 2025 Portugal determined the original budget envelope was insufficient to sustain the guideline-compliant per-company compensation ratio, so it notified a EUR 100 million top-up. The Commission's review confirmed the amended scheme — now EUR 275 million total — still meets the ETS Guidelines' necessity, appropriateness and proportionality tests. This is a routine budget-continuity amendment rather than a new instrument: it keeps an existing carbon-leakage safety valve funded at guideline-compliant levels, distinct from Portugal's separate, much larger EUR 612 million State aid scheme for energy-intensive companies approved in April 2025 (SA. number not yet filed in this register) and from the EU's broader December 2025 amendment to the ETS State aid Guidelines themselves (which widened eligibility to more energy-intensive sectors).

Downstream implications

• Carbon-leakage backstop maintained, not expanded in scope. This is a same-scheme budget

top-up, not a new eligibility category or sector — it keeps Portugal's existing ETS indirect-cost compensation flowing to already-eligible energy-intensive installations (chemicals, steel, cement, paper/pulp, glass — the standard EU carbon-leakage list) through the 2030 compliance period.

• Part of a wider EU pattern. Germany (EUR 27.5bn), Poland (EUR 10bn), Romania (EUR 1.5bn)

and Czechia (EUR 1.4bn) have all received Commission approval for comparable indirect emission-cost compensation schemes since 2022 — Portugal's EUR 275m sits at the small end of this national-scheme cohort, reflecting its smaller energy-intensive industrial base.

• ETF exposure limited and indirect. EWP (Portugal-adjacent European equities) is the

closest available proxy; the scheme itself is a cost-offset mechanism rather than a capex-driving subsidy, so downstream equity impact is muted relative to CISAF-style manufacturing-capacity grants filed elsewhere in this register.

Open questions

• Exact list of beneficiary installations and per-company compensation amounts — not yet

published in the non-confidential SA.120081 decision text at filing time.

• Whether Portugal will need a further top-up before the scheme's 2030 sunset given the

December 2025 ETS State aid Guidelines amendment widening carbon-leakage eligibility EU-wide.