The European Commission has approved, under EU state aid rules, a €150 million Greek measure, funded by the Recovery and Resilience Mechanism, to support the construction of a CO2 storage facility in Prinos. The measure contributes to the achievement of Greece’s climate targets and the EU’s strategic objectives under the European Green Deal.

The measure notified by Greece will be fully financed by the CEF, following a positive assessment of Greece’s recovery and resilience plan by the Commission, and its approval by the Council.

The beneficiary of the measure is EnEarth Ltd, a Greek subsidiary of Energean plc, an exploration and production company focused on resource development in the Mediterranean and North Sea.

The aid will partly finance the cost of constructing the onshore and offshore infrastructure for the CO2 storage facility. The mechanism will be developed in two phases, but only the first will be funded under the current measure. In the first phase, EnEarth will develop a large-scale pipeline to transport, from the onshore collection site to the offshore storage site, up to 1 million tonnes of carbon dioxide per year emitted by industrial actors. This development phase will precede the future expansion of the facility to 2.5 million tonnes of carbon dioxide per year, which is planned as part of the second phase.

The aid will take the form of a direct grant, which will be disbursed in three tranches until 2026. The facility is expected to start the development phase in 2027 and become fully operational in 2030. The grant, amounting to €150 million, will cover about 90% of the financing gap. If the project proves to be very successful, generating additional net revenues, the beneficiary will return to Greece part of the aid received (claw-back mechanism).

Commission’s assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which allows Member States to support the development of certain economic activities under certain conditions, and the 2022 Guidelines on State aid in the climate, environment and energy sectors.

The Commission found the following: The measure facilitates the development of economic activity and, 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 strategy for the industrial management of carbon.

The measure is necessary and appropriate for the achievement of both the EU climate targets and Greece’s national climate targets.

The measure is proportionate as the aid is limited to the minimum necessary to trigger the investment. In addition, safeguards, including an automatic reimbursement mechanism, are in place to ensure that undue distortions of competition are limited.

The aid has an incentive effect, as the beneficiary would not have carried out the investments without the public support. The aid has positive effects which offset any possible distortion of competition and trade in the EU. On this basis, the Commission approved the Greek measure under EU State aid rules.