European Commission approves EUR 260 million grant for Air Liquide and BASF for a decarbonisation project in Antwerp

The European Commission has approved a grant of EUR 260 million proposed by the Flemish Region for Air Liquide Large Industry NV and BASF Antwerpen NV to support Kairos@C, a major carbon capture and storage project. This aid, declared compatible under the European Commission’s 2022 guidelines on State aid for climate action, environmental protection and energy (the Climate, Environment and Energy Aid Guidelines (“CEEAG”)), aims to contribute to Belgium’s climate objectives and the development of an integrated, cross-border carbon capture and storage (“CCS”) value chain, which is in line with the European Clean Industry Pact.

Background to the measure

The project forms part of a call for projects under the Innovation Fund, the European programme that supports the deployment of innovative low-carbon industrial technologies, which is financed by revenues from the auctioning of allowances under the European Union Emissions Trading System (EU ETS). During the first large-scale call for projects launched in 2020, which focused on the decarbonisation of the European economy, seven initiatives were selected and Kairos@C was named laureate. On that occasion, the project received a European grant of over EUR 365 million.

However, the substantial rise in project costs, linked in particular to inflation in recent years, has made additional financial support necessary to enable the project to be successfully completed.

Project description

Kairos@C aims to reduce greenhouse gas (“GHG”) emissions from existing facilities at the Air Liquide Large Industry NV and BASF Antwerpen NV plants in Antwerp, which produce hydrogen, ammonia and ethylene oxide. The aim is to transport the captured CO₂ to a permanent underground storage site in the North Sea, thereby contributing to the decarbonisation of the sector. It is estimated that this process will prevent the emission of approximately 20 million tonnes of net GHG emissions over 15 years, whilst facilitating the production of low-carbon hydrogen and ammonia.

The measure is funded by the Flemish Region in the form of a direct investment grant of EUR 30 million per beneficiary and aid in the form of 10 annual instalments of EUR 10 million for each beneficiary, which is conditional upon meeting minimum GHG emission reductions.

Compatibility with the internal market

The Commission assessed the measure’s compatibility under Article 107(3)(c) TFEU in the light of the CEEAG. As a reminder, the CEEAG set out the conditions under which the European Commission authorises aid aimed at supporting the transition to a clean industry, enabling Member States to target their interventions effectively to achieve the objectives of the Clean Industry Pact. 

On this basis, the Commission considered that:

• the aid facilitates the development of an economic activity, namely the capture, collection and storage of CO₂, as well as the decarbonisation of the chemical industry (in particular, the production of ammonia, ethylene oxide and hydrogen);
• the aid has a genuine incentive effect, as the investments in question would not be feasible without public intervention;
• the aid is necessary, appropriate and proportionate, given that it is strictly limited to the amounts essential for the implementation of the project and does not result in overcompensation;
• the safeguards provided are sufficient to limit distortions of competition:
  • no change in production capacity linked to the aid;
  • an obligation for beneficiaries to repay part of the aid to Belgium in the event of additional net revenue generated by the project;
  • a commitment to disseminate the technical know-how acquired;
• the positive effects of Kairos@C, in particular its contribution to energy transition and the development of a cross-border CCS infrastructure, clearly outweigh any potential distortions of competition and impacts on trade within the internal market.

The Commission has therefore declared the measure compatible with Article 107(3)(c) TFEU. 

This aid is the second individual Belgian measure approved by the European Commission on the basis of the CEEAG, following the EUR 280 million aid for ArcelorMittal’s RecHycle project in Ghent, authorised in 2023.  It therefore represents a major step towards the decarbonisation of the chemical industry in Belgium.