Wednesday, January 26, 2022

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European Commission endorses new guidelines on State aid for climate, environmental protection and energy

The European Commission has endorsed the new Guidelines on State aid for climate, environmental protection and energy (CEEAG), which will be formally adopted in January 2022 and applicable from that moment.

The new rules involve an alignment with the important EU objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas and cater for the increased importance of climate protection. The new rules create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the European Green Deal objectives in a targeted and cost-effective manner.

“Europe will need a considerable amount of sustainable investments to support its green transition,” said Executive Vice-President Margrethe Vestager, in charge of competition policy. “Although a significant share will come from the private sector, public support will play a role in ensuring that the green transition happens fast. The new Guidelines endorsed today will increase everything we do to decarbonise our society. Among others, they will facilitate investments by Member States, including in renewables, to accelerate the achievement of our Green Deal, in a cost-effective way. This is a major step to ensuring that our State aid rules play their full role in supporting the European Green Deal.”

The State aid rules include sections to support the decarbonisation of the economy in a broad and flexible manner open to all technologies that can contribute to the European Green Deal, including renewables, energy efficiency measures, aid for clean mobility, infrastructure, circular economy, pollution reduction, protection and restoration of biodiversity as well as measures to ensure the security of energy supply.

In particular, the CEEAG broadens the categories of investments and technologies that Member States can support. The revised rules generally allow for aid amounts up to 100 per cent of the funding gap, especially where aid is granted following a competitive bidding process and introduce new aid instruments, such as Carbon Contracts for Difference to help Member States respond to the greening needs of industry.

It covers aid for numerous areas relevant for the Green Deal, including new or updated sections on aid for the prevention or reduction of pollution other than due to greenhouse gases, including noise pollution, aid for resource efficiency and circular economy, aid for biodiversity and for the remediation of environmental damage. Moreover, the CEEAG features dedicated sections for aid incentivising investments in flagship areas such as energy performance of buildings, and clean mobility, covering all transport modes.

It also introduces changes to the current rules on reductions on certain electricity levies for energy-intensive users. The rules aim at limiting the risk that, due to these levies, activities in certain sectors move to locations where environmental disciplines are absent or less ambitious than in the EU. In order to cater for the enhanced decarbonisation efforts required to meet the EU climate targets, the CEEAG cover the reductions in all levies financing decarbonisation and social policies. Furthermore, with a view to enable Member States to maintain a level playing field and based on objective indicators at the sector level, the CEEAG has streamlined the number of eligible sectors. The rules have also been reviewed to better sustain the progressive decarbonisation of these companies by, among others, linking levy reductions to commitments by the beneficiaries to reduce their carbon footprint.

Claire Couet, Policy Director of SolarPower Europe welcomed the State aid and its important role to play to accelerate investments into the most sustainable and efficient energy technologies, in particular solar energy.

“As more member states look to solar and storage to decrease exposure to volatile gas-driven electricity prices, hybrid solar tenders introduced in the new subsidy rules will enable the growth of these technologies,” she said.

“Under the new state aid rules, rooftop PV projects up to 1 megawatts (MW), as well as 100 per cent renewable energy community or SME-owned projects up to 6 MW, will not be burdened by competitive bidding processes,” added Naomi Chevillard, Senior Policy Advisor at SolarPower Europe. “This empowers more European citizens and businesses to invest in solar and accelerates the prosumer-led energy transition.” The new state aid rules encourage tenders specific to certain renewable applications, such as agri-solar and floating solar, ensuring Europe maintains its competitive global lead in innovative solar PV technologies.”

Photo: European Commission

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