State aid: Commission adopts new rules on public support for environmental protection and energy
10 Apr 2014 02:53 PM
The
European Commission has adopted new rules on public support for projects in the
field of environmental protection and energy. The guidelines will support
Member States in reaching their 2020 climate targets, while addressing the
market distortions that may result from subsidies granted to renewable energy
sources. To this end, the guidelines promote a gradual move to market-based
support for renewable energy. They also provide criteria on how Member States
can relieve energy intensive companies that are particularly exposed to
international competition from charges levied for the support of renewables.
Furthermore, the guidelines include new provisions on aid to energy
infrastructure and generation capacity to strengthen the internal energy market
and ensure security of supply (see alsoMEMO/14/276).
Commission Vice President in charge of competition
policy Joaquín Almunia said: "It is time for renewables
tojoin the market. The new guidelines provide a
framework for designing more efficient public support measures that reflect
market conditions, in a gradual and pragmatic way. Europe should meet its
ambitious energy and climate targets at the least possible cost for taxpayers
and without undue distortions of competition in the Single Market. This will
contribute to making energy more affordable for European citizens and
companies."
The
remarkable growth of renewable energy over recent
years, partly induced by public support, has helped to make progress on
environmental objectives but has also caused serious market distortions and
increasing costs to consumers. The Commission has reflected this in the
new guidelines, which will be valid from 1 July 2014 until the end of
2020.
Key
features of the guidelines include:
-
Gradual introduction of market based
mechanisms: Some renewable energy technologies have reached a
stage of maturity that calls for their integration in the market. To
increase cost effectiveness and limit distortions, the new guidelines foresee
the gradual introduction of competitive bidding
processes for allocating public support, while offering Member
States flexibility to take account of national circumstances. A pilot phase in
2015 and 2016 will allow them to test competitive bidding procedures in a small
share of their new electricity capacity. The guidelines also foresee the
gradual replacement of feed-in tariffs by feed-in
premiums, which expose renewable energy sources to market signals.
Small installations will benefit from a special regime and can still be
supported with feed-in tariffs or equivalent forms of support. Furthermore, the
rules do not affect schemes already in place that were approved under the
existing rules.
-
Promoting competitiveness of European
industry: Charges levied for the funding of
renewable energy support make up an increasing proportion of the energy
bill for industry. This constitutes a very high burden for some energy
intensive companies, in particular those exposed to strong international
competition. The guidelines therefore allow reducing the burden for a limited
number of energy intensive sectors defined for the
whole EU. Member States will also be allowed to reduce the burden on highly
energy intensive companies in other sectors.
-
Supporting cross-border energy infrastructure to
further the Single European Energy Market: The new guidelines
include criteria for supporting energy infrastructure, focusing on projects
that improve cross-border energy flows and promote infrastructure in
Europe's less developed regions.
-
Another new feature is to permit aid to
secure adequate electricity generation when
there is a real risk of insufficient electricity generation capacity. This will
allow Member States to introduce so-called "capacity mechanisms", for
example to encourage producers to build new generation capacity or prevent them
from shutting down existing plants or to reward consumers to reduce electricity
consumption in peak hours.
At
the same time the Commission will also simplify procedures to implement certain
aid measures in the field of environmental protection and energy. It is
foreseen that several categories of environmental and energy aid measures will
be included in the upcoming revision of the General Block
Exemption Regulation(see IP/13/1281). This will make it easier and quicker for public
authorities to implement such measures since they do not need to obtain prior
approval by the Commission. Examples of these measures include certain forms of
aid to promote of renewable energies or district heating, to clean up
contaminated sites or to improve energy efficiency in
buildings.
The guidelines are available here: http://ec.europa.eu/competition/sectors/energy/legislation_en.html
Background
The
2008 State aid Guidelines on Environmental Protection (see MEMO/08/31) included assessment criteria for state
aid measures in 12 different areas, such as improving environmental performance
beyond or in the absence of compulsory EU standards, supporting waste
management activities, energy saving or remediation of contaminated
sites.
During the six years of their application, a large part
of expenditure assessed under the 2008 Guidelines has served to promote energy
from renewable energy sources. Increasingly over the last years, state aid has
also been granted for energy measures that fell outside the scope of the
Guidelines, such as energy infrastructure or security of supply, for which the
Guidelines did not include compatibility criteria. In the absence of specific
criteria, such aid was examined by the Commission under the more general
provisions on State aid established in Article 107 of the Treaty on the
Functioning of the European Union (TFEU).
The
adoption of the new guidelines was preceded by three public consultations of
Member States and stakeholders, starting in July 2012. In December 2013 the
Commission consulted the public on a draft (seeIP/13/1282). The adoption of the energy and environmental state aid
guidelines is part of the Commission's State Aid Modernisation agenda
(see IP/12/458).