The European Commission, in a press release on Monday, said that it had approved a Greek measure to support the construction of a carbon storage facility in Prinos with 150 million euros made available through the Recovery and Resilience Facility (RRF), under EU state aid rules. The measure contributes to achieving Greece's climate targets and the EU's strategic objectives under the European Green Deal, the Commission announcement said.
"The measure notified by Greece will be fully financed by the RRF, following the Commission's positive assessment of Greece's Recovery and Resilience Plan and its adoption by the Council.
The beneficiary of the measure is EnEarth Ltd, a Greek subsidiary of Energean plc, an exploration and production company focused on developing resources in the Mediterranean and North Sea," the press release said.
The aid will partially finance the construction costs of the onshore and offshore infrastructure for the creation of the carbon storage facility. The facility will be deployed in two phases, but only the first one will be financed under the current measure. Under the first phase, EnEarth will deploy a large-scale pipeline to transport, from the onshore collecting site to the offshore storage site, up to 1 million tonnes of CO2 per year emitted by industrial players. This ramp-up phase will precede the facility's future expansion up to 2.5 million tonnes of CO2 per year planned under the second phase.
The aid will take the form of a direct grant, which will be disbursed in three instalments until 2026. The facility is expected to start the ramp-up phase in 2027 and become fully operational in 2030. The grant, which amounts to 150 million euros, will cover around 90% of the funding gap. If the project turns out to be very successful, generating extra net revenues, the beneficiary will return to Greece part of the aid received (claw-back mechanism).
After assessing the measure, the Commission found that it facilitates the development of an economic activity, in particular carbon storage. At the same time, it supports the objectives of key EU policy initiatives, such as the European Green Deal and the EU Industrial Carbon Management Strategy.
It found the measure necessary and appropriate to meet the EU's and Greece's national climate targets, and "proportionate as the aid is limited to the minimum necessary to trigger the investment and has safeguards, including the claw-back mechanism, to ensure that undue distortions of competition are limited.
It also said the aid has an incentive effect, as the beneficiary would not carry out the investments without public support, abd "brings positive effects that outweigh any potential distortion of competition and trade in the EU."