On Monday 25 April 2022, Luxembourg's Ministry of State, Ministry of Economy and Ministry of Finance announced that at its meeting on 22 April 2022, the Council of Government, under the chairmanship of Prime Minister Xavier Bettel, marked its agreement with the first two bills aimed at transposing, by legislative means, the package of solidarity measures (Solidaritéitspak) planned under the tripartite agreement of 31 March 2022.
Compensation for additional costs linked to the greenhouse gas emission allowance trading system
The first bill approved is part of the European Union's greenhouse gas quota trading system. The project establishes an aid scheme which makes it possible to cover part of the costs of indirect emissions incurred for the financial years 2021 to 2030 by companies exposed to a real risk of carbon leakage, thus making it possible to combat global warming at the level worldwide, while preserving the competitiveness of European industry.
The project is thus part of the Green Deal for Europe, which sets an objective of reducing greenhouse gas emissions by 55% by 2030, and of the new industrial strategy of the European Union, which aims to decarbonize all sectors of the economy, especially energy-intensive ones.
The aid scheme set up by the draft law makes it possible to grant aid in the form of a subsidy of up to 75% of the costs of emissions borne by these companies. In return for this aid, companies must implement measures to reduce their carbon footprint. From 1 January 2021 to 31 December 2030, an average annual budget of €50 million is planned for this aid scheme.
Aid scheme in the form of a guarantee
The Council also adopted the draft law aimed at setting up an aid scheme in the form of guarantees on bank loans to meet the liquidity needs of companies established in Luxembourg caused by the economic consequences of Russia's aggression. against Ukraine. These needs have emerged in particular following the rise in energy and raw material prices, but also following the breakdown of supply chains or the collapse of demand for certain products.
Under this bill, the State will be able to guarantee loans relating to the financing of current activities or business investments granted to them by credit institutions until 31 December 2022.
These loans may relate to an amount of 15% of the turnover of the last three years or even 50% of the energy costs of the previous twelve months of the companies, and must be spread over a maximum of six years.
Due to the succession, in a short period of time, of the crisis linked to COVID-19 and that linked to the Russian military aggression, companies in financial difficulty will also be able to benefit from the state guarantee provided that they do not are not subject to insolvency proceedings. A global envelope of €500 million is provided for this purpose. Before it can be implemented, this draft law will have to be approved by the European Commission.
