The Commission has launched a public consultation regarding new state aid guidelines in the context of the amended EU Emissions Trading Scheme (‘ETS’).
The background of this consultation lies with the European Union Greenhouse Gas Emission Trading Scheme (‘EU ETS’) which was established by Directive 2003/87/EC (ETS-directive) and has as its objective to reduce CO2 emissions in a cost effective way and avoid climate change. The ETS Directive was amended by Directive 2009/29/EC which regulates the third trading period 2013-2020 (ETS-3).
The ETS Directive foresees that Member States may adopt financial measures in favour of sectors determined to be exposed to a significant risk of carbon leakage due to costs relating to greenhouse gas emissions passed on in electricity prices (indirect CO2 costs). These financial measures must, however, respect the state aid rules and may not hinder the objectives of the EU ETS (i.e., save energy and stimulate a shift in demand from ‘grey’ to ‘green’ energy). According to the Commission the primary objective of State aid control in this context is thus to ensure that State aid measures will result in a higher overall level of environmental protection than would occur without the aid, and to ensure that the positive effects of the aid outweigh its negative effects in terms of distortions of competition in the internal market, while preventing overcompensation and ensuring a level playing field across the EU.
In order to prepare state aid guidelines in the context of the amended EU ETS, the Commission launched this public consultation to seek information on (i) the sectors that are eligible for aid for indirect emission cost in ETS-3 (energy intensive sectors which cannot pass through increased electricity cost), (ii) the level of support that is justified (only for costs due to the tighter obligations of ETS-3 and securing incentive to reduce electricity use/switch to ‘green’ electricity), (iii) how to calculate benchmarks of indirect emissions of CO2 per unit of production, and (iv) how to calculate the CO2 emission factor.