EU State aid: Guidelines on State aid for environmental

protection and energy 2014-2020

- “making of” -

NHO Seminar

Oslo, 5 November 2014

Guido Lobrano, Senior Legal Adviser

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• What is BUSINESSEUROPE?

• State aid policy

• Energy and Environment aid Guidelines (EEAG)

• Conclusions

Summary

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BUSINESSEUROPE: 41 members in 35 countries

Serbia

Belgium Cyprus Czech

Republic

Denmark

Finland France Germany Germany Greece

Iceland Ireland Italy Luxembourg Malta

Norway Poland Portugal Portugal

Spain Sweden Switzerland Switzerland The

Netherlands Turkey

Estonia Hungary

Lithuania

Rep.

San Marino Romania

Croatia

Slovenia

Slovakia

Turkey

Latvia

Austria Bulgaria Denmark

United Kigdom

Iceland

Montenegro

Members and structure

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Advisory and Support Group (ASG)

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What issues does BUSINESSEUROPE deal with?

INDUSTRIAL

AFFAIRS ECONOMICS

SOCIAL

AFFAIRS

INTERNAL

MARKET

ENTREPRENEURSHIP

& SMEs

LEGAL

AFFAIRS

INTERNATIONAL

AFFAIRS

EU State aid policy

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State aid overview

State aid = an advantage in any form whatsoever

conferred on a selective basis to undertakings by

national public authorities

(subsidies granted to individuals or general policy measures open to all enterprises are not covered by Art. 107 EC they are not State aid )

GENERAL PROHIBITION of STATE AID

Exceptions = aid is/can be considered compatible, if instrumental for achieving a specific policy objective

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State aid control – overview

Policy objectives

Allowing MS to fund certain economic activities

Correcting imbalances and market failures where needed

Monitor, assess and fairly grant

State aid

Effect (potential)

on competition and trade

Transfer of State

resources (incl. local authorities,

SOEs)

Economic advantage (otherwise

not receivable)

Selectivity (no general measure, discretion)

Features of State aid

Different forms (effect of measure!)

What makes a measure compatible?

• aimed at an objective of common interest;

• aid can bring about an improvement that market cannot deliver itself (e.g.

remedying a market failure or addressing equity or cohesion concern);

• appropriate instrument to address objective of common interest;

• must incentivise the business to engage in additional activity that it would

not carry out without aid, or would carry out in different manner or location;

• amount must be limited to the minimum needed to induce the additional

investment or activity;

• negative effects on competition and trade sufficiently limited;

• relevant acts and pertinent information about aid awards must be

transparent (public).

NO state aid granted without Commission agreement

General Block Exemption Regulation (GBER)

Notification

Guidelines

EEAG

State aid enforcement

The Environment and Energy Aid

Guidelines

(EEAG)

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Renewable energy (RES)

Energy infrastructure

Generation adequacy

Exemptions from taxes and levies

Main issues covered by EEAG

Main industry concerns

National CO2 reduction programmes

• Costs for Eur. Business

• Competition distortions

Cumulative impact of EU and national

measures

Legal uncertainty – e.g. links with

tax rules

Key business demands

• clarify State aid rules for energy

• ensure European global competitiveness

• minimise competition distortions within Europe

• offset CO2-reduction cost for energy intensive sectors

• increase efficiency in renewables promotion

• coordination of national schemes

Main changes compared to 2008 guidelines

more market friendly support for energy from renewable sources (RES)

energy infrastructure (cross border + less developed regions)

criteria to assess generation adequacy measures

Allow reductions in charges for financing RES support measures for energy intensive users

Specific critical aspects

Tax reductions – inconsistency

Aid intensities – cumulative impact

Market exposure – deployed vs. less deployed technology

Capacity mechanisms

Renewable Energy Source (RES) charges

charges on energy suppliers

pass on costs to energy

consumers

burden on energy-intensive

sectors

Non-competitive EU

industries!

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RES - Market fragmentation

Support to electricity from RES in Europe in € mn and per unit of energy consumed

RES support criteria

1) electro-intensity:

How much costs are

affected by increase

in electricity prices

2) trade intensity:

Total trade with third

countries relative to

size of EU market

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Reductions in RES charges to certain sectors

Combined criteria:

RES - eligible beneficiaries

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sectors

having:

Trade intensity above

4%

10%

80%

Electro-intensity above

20%

10%

7%

Transitional rules for existing schemes

Entry into force 1 July

2014

Adjustment plan by 1 July 2016

Alignment with EEAG by

1 January 2019

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Thank You!

g.lobrano@businesseurope.eu

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