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Energy and environment

Energy and Climate Change > specific measures

This page contains non-exhaustive information on measures covered by the State aid Guidelines, as well as examples of State aid and antitrust cases in the environmental sector.

See also a more comprehensive list of cases by economic sector.

Electricity costs in the context of the EU Emissions Trading Scheme

The reform of the EU Emissions Trading Scheme (ETS) taking effect from 2013 onwards will make electricity bills for companies in the EU higher as a result of increased CO2 costs. Some intensive users of electricity will be particularly affected.

The Commission has established new criteria under which Member States can compensate part of the higher electricity costs to sectors at significant risk of carbon leakage, such as producers of aluminium, copper, fertilisers, steel, paper, cotton, chemicals and some plastics.

The rules ensure that national support measures are designed in a way that preserves the EU objective of decarbonising the European economy and maintains a level playing field among competitors in the internal market.

See also: EU policy against climate change

Renewables

Renewable energy sources are still expensive compared to conventional sources. The high cost of production of some renewables means producers can't charge competitive prices on the market, and so creates a market-access barrier for renewable energy.

Under the Environmental aid guidelines, Member States can grant investment and/or operating aid to cover the difference between the production costs and the market price of the energy. The Commission will check to make sure there is no overcompensation for renewables as compared to conventional energy sources.

Examples:

Several Member States have set up schemes to encourage production of energy from renewable sources.

  • Several Member States have set up schemes to encourage production of energy from renewable sources. The UK introduced Renewable obligation certificates (ROCs) for renewables. This is a market-based instrument where targets for production volumes are fixed in advance but where the price is set by market participants.
  • Other Member States have introduced feed-in tariffs to support renewable electricity production, where the price rather than the quantity of renewable energy is set. Under certain conditions, the funds created to manage feed-in tariffs may constitute State aid and the Commission assesses their compatibility (see for instance in Austria).
  • In Austria, the Commission declared a provision of the Green Electricity Act (├ľkostromgesetznovelle 2008), that exempted energy intensive businesses from contributing to buying green electricity, to be in breach of EU state aid rules (this provision would have resulted in imposing extra costs on enterprises not qualifying for the exemption).
  • As do some other Member States, Germany provides tax reductions for biofuels, which the Commission declared compatible (see another example).
  • Operating aid for biofuels (Poland): Member States should demonstrate that aid is necessary, taking into account all forms of support, e.g. supply obligations and tax reductions to the same beneficiaries.

See also: EU policy on renewable energy (Energy portal)

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Energy Saving

State aid may be appropriate when the investments resulting in energy savings are not compulsory and not profitable. Member States can also subsidise cogeneration (producing heat and electricity simultaneously), as long as production costs exceed the market price of conventionally generated electricity.

Examples: cases regarding aid compatible with the internal market

  • Support for an innovative steel production process which consumes less energy than alternative processes (Germany)
  • Support to build a cogeneration plant in line with high-efficiency requirements (Austria)
  • Aid scheme for the promotion of cogeneration (Romania)

See also: energy saving and cogeneration (Energy portal)

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District heating

District heating may be more energy-efficient than individual heating and also may improve urban air quality. It may also achieve additional environmental benefits through the use of waste heat for heating purposes, and through cogeneration of power and heat.

State aid to district heating generation installations may be necessary if such generation is more costly than individual heating. To ensure that aid to district heating results in better environmental protection, a further compatibility criterion is that generation installations should be highly efficient.

District heating distribution networks are not covered by the EAG, but aid to networks may still be declared compatible when Member States show that aid is necessary to improve environmental protection, for instance because without aid the networks would simply not be built, resulting in less environmentally-friendly heating solutions.

Examples:

  • Support for the extension of the district heating network in Paris (France) was declared compatible with the internal market because support was necessary to reach the profitability thresholds.
  • Other measures to favour district heating networks or production installations (Italy, Austria and Estonia)

See also: EU policy on energy efficiency (Environment portal)

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Environmental taxes

To have a significant effect on behaviour, environmental taxes must be set at the appropriate level. However, a general level of taxation that achieves tangible environmental benefits may prove unsustainable for some categories of taxpayers. This is why the EU Environmental Aid Guidelines allow tax relief for certain firms provided they are necessary for all beneficiaries and proportionate in size.

Examples:

  • Exemption for cement producers from the tax on nitrogen oxide (NOx). Denmark demonstrated that the tax would lead to a significant cost increase that the cement producer could not pass on to customers without significant sales loss.
  • Exemption for cement producers from waste tax (Denmark). The Commission had doubts about the necessity of the waste tax exemption (it did not result in a substantial cost increase) and about its proportionality (the beneficiaries did not commit to achieving environmental objectives with the same effect, nor pay a proportion of the national tax). The Commission opened a formal investigation and invited third parties' comments before taking a final decision.
  • Exemption for ceramic producers from energy tax on natural gas used for ceramic production (The Netherlands). The Commission declared the measure not compatible with the internal market, as it was not demonstrated that it was necessary or proportionate.

See also: energy taxation (Taxation and Customs Union portal

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Waste management

State aid

Firms should normally bear the costs of treating industrial waste in accordance with the "polluter pays" principle. However, the Environmental Guidelines provide for derogations subject to certain conditions:

  • Where national standards are more stringent than the applicable EU rules, or are introduced in the absence of EU rules,
  • Where undertakings manage or recycle waste from other undertakings. In this case, investment aid can only be granted provided:
    • there is a positive effect on the environment,
    • the "polluter pays" principle is not circumvented, and
    • the supported investment goes beyond the "state of the art" or uses conventional technologies in an innovative manner.

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Antitrust: Examples of cases

See also:

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