State aid: Commission approves a €320 million scheme to support biomass energy installations close to forests at risk of fires in Portugal

The European Commission has approved, under EU State aid rules, a Portuguese scheme to support biomass energy installations located close to forest areas regarded as "critical", due to the risk of fires. The new installations will produce both electricity and combined heat and power (cogeneration). The measure aims to incentivise forest owners to clean the forests at risk by using the forest residues to produce biomass energy. This will help preventing future forest fires in Portugal. The aid will be provided in the form of a feed-in premium (a top-up payment over the market price) to the selected installations for every unit of electricity produced, as well as an environmental tariff premium (called PDIF) linked to the use of biomass from Portuguese forests in the “critical areas”. The scheme will run for 15 years and have a budget of around €320 million and will be funded via an increase in energy tariffs. The Commission concluded that the measure meets the requirements of the 2014 Guidelines on State Aid for Environmental Protection and Energy, as it will help Portugal increase the share of electricity produced from renewable sources to meet its climate targets, in line with the environmental objectives of the EU, without unduly distorting competition. The Commission also found that measure is in line with the 2014-2020 Agricultural Guidelines, applicable to the environmental component of the premium (the PDIF). More information will be available on the Commission competition website in the public case register under the case number SA.48881, once any confidentiality issues have been resolved.