The first wave of EU state aid for war-related losses is here. The European Commission approved a 20 billion euros state aid scheme to relieve German companies suffering due to the war in Ukraine and related sanctions. The scheme concerns companies in all sectors, and the rail freight industry could benefit. Energy prices are also on the table, with support targeting this direction.

“With this up to 20 billion scheme, Germany will support companies across all sectors affected by the current crisis and the related sanctions”, said Margrethe Vestager, executive vice-president at the EU Commission. European companies suffer losses due to the sanctions, and the rail freight sector is no exception. Rail freight operators report an 80 per cent drop in Eurasian volumes and express concerns about the future.

Kristian Schmidt, director for land transport at the Commission, had announced the news during the RailFreight Summit Special Edition in Brussels. “With regard to the impact of the sanctions, the EU Commission has issued several decisions allowing state aid and allowing member states to compensate the companies and undertakings that are suffering due to the sanction packages that have been adopted. The state aid isn’t specific to rail or transport but certainly covers transport and rail. So yes, there is a way to support companies that have experienced the negativity of the sanctions”, he said in early April.

The state aid in Germany will take place in the form of direct grants, tax or payment advantages, repayable advances, guarantees, loans, equity, and hybrid financing. After Germany, more Member States will follow with tailored financial support schemes.

Compensation for high energy prices

Apart from financial losses due to the EU sanctions on Russia, rail freight operators could also benefit from another support measure. According to the EU Commission, state aid is part of the Temporary Crisis Framework that was approved in late March. The Framework also provisions financial compensation for companies suffering from the increasing gas and electricity prices, which also are a war byproduct.

“The Temporary Crisis Framework provides aid to compensate for high energy prices. The aid, which can be granted in any form, will partially compensate companies, in particular intensive energy users, for additional costs due to exceptional gas and electricity price increases. The overall aid per beneficiary cannot exceed 30 per cent of the eligible costs, up to a maximum of 2 million at any given point in time”, announced the EU Commission.

“When the company incurs operating losses, further aid may be necessary to ensure the continuation of economic activity. Therefore, for energy-intensive users, the aid intensities are higher and the Member States may grant aid exceeding these ceilings, up to 25 million, and for companies active in particularly affected sectors and sub-sectors, up to 50 million”, concluded the announcement.

Rail freight operators impacted by gas and electricity prices should look at these aid schemes since they could prove very helpful for their business. As sanctions and energy prices knock out the sector, it will now be possible to compensate, at least partially, for the damage and remain competitive.