EU to Subsidize Up to 70 Percent of Extra Fuel Costs for Key Industries Amid Iran War

Businesses affected by soaring fuel prices triggered by the Iran war will be able to apply for subsidies, the European Union announced on April 29.

Agriculture, fisheries, and transport companies can be compensated for up to 70 percent of their extra costs due to the price hikes in fuels and fertilizers. They can receive up to 50,000 euros ($58,000) under rules that will be in place until Dec. 31, according to the European Commission, which acts as the 27-nation bloc’s competition regulator.

The jump in oil prices following the closure of the Strait of Hormuz during the Iran war has affected businesses worldwide.

To combat this, the EU has introduced the Middle East Temporary State Aid Framework (METSAF), which it described as a “targeted and temporary framework to address the effects of the crisis on some of the most exposed sectors of the economy: agriculture, fishery, transport, and energy-intensive industries.”

EU competition chief Teresa Ribera said that attaining a “clean economy” will buffer the bloc from “the energy crises of the future.”

“The energy transition remains the most effective strategy for Europe’s autonomy, growth, and resilience,” Ribera said in an April 29 statement.

“Nevertheless, the recent spikes in energy prices require an immediate response. The METSAF allows for easily applicable solutions that will sustain the continuous development of core EU sectors such as agriculture, fishery, and transport, by cushioning the effects of the crisis.”

Energy-heavy businesses already eligible for aid under another state aid scheme will also now be able to be compensated for up to 70 percent of their power bill under the plans.

The announcement was made after EU leaders met in Cyprus on April 23 and April 24 for a summit to navigate the energy crisis.

Following that meeting, European Commission President Ursula von der Leyen concluded that the long-term strategy of the bloc should be to reduce its dependency on fossil fuels to avoid future shocks.

“Since the start of the Middle East conflict, our bill for fossil fuel imports increased by 25 billion [euros]. Without a single molecule more of energy,” she wrote in an X post on April 24. “We need to reduce our overdependency on fossil fuels. Boost clean energy like renewables and nuclear. And electrify Europe. This is the key to security and stability.”

Before the Strait of Hormuz was blocked by Iran, Europe was already facing higher energy costs as a result of cutting itself off from Russian gas and oil to support Ukraine in its war against Moscow.

One of the main issues facing the continent is jet fuel availability; the Dutch government, on April 20, estimated that the EU could supply enough kerosene ​to the bloc’s economy to last about five months.

This crisis means that Europe’s smaller airports are facing an “existential threat,” the Airports Council International (ACI) Europe stated on April 28.

The European branch of the global trade representative of the world’s airport authorities issued the warning during their annual conference, which was held at Turin Airport in Turin, Italy.

Olivier Jankovec, director general of ACI Europe, said that the “current levels of jet fuel prices and the prospect of a new cost-of-living crisis mean that many regional airports across our continent are likely to face both a supply and demand shock.”

“For them, this is nothing short of an existential threat,” Jankovec said.

The group called for a series of measures to be imposed by the EU and member states to help the continent’s smaller airports cope.