State aid: Commission approves €16.8 billion Danish guarantee scheme to support energy companies in the context of Russia’s war against Ukraine

The European Commission has approved a €16.8 billion (DKK 125 billion) Danish guarantee scheme to support companies in the context of Russia’s war against Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022, and amended on 20 July 2022 and on 28 October 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), recognising that the EU economy is experiencing a serious disturbance.

The Danish liquidity support measures

Denmark notified to the Commission, under the Temporary Crisis Framework, a €16.8 billion (DKK 125 billion) guarantee scheme to provide liquidity support to energy companies in the context of Russia’s war against Ukraine.

The measure, managed by the Denmark’s Export Credit Agency (EKF), will be open to electricity producers and gas shippers active in the Danish electricity and gas markets.

Under the scheme, the guarantees relate to new loans and guarantees to cover the energy companies’ liquidity needs for posting collateral to central clearing houses (CCPs) and their maximum duration is 5 years.

The maximum guarantee amount per company will cover the liquidity needs stemming from its activity on the energy markets for the 12 months following the granting of the aid. The liquidity needs will be estimated through self-certification by the energy companies.

The Commission found that the Danish guarantee scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, (i) public guarantees are provided on new loans and guarantees; (ii) the guarantee premiums respect the minimum levels set out in the Temporary Crisis Framework; (iii) the maximum loan amount per beneficiary respects the conditions set out in the Temporary Crisis Framework; (iv) the duration of the guarantee is limited to a maximum of 5 years and the guarantee does not exceed 80% of the loan principal; and (v) the guarantee loans will be granted by 31 December 2023 at the latest.

The Commission therefore concluded that the Danish guarantee scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework.

On this basis, the Commission approved the aid measure under EU State aid rules.