The European Commission is inviting comments on a proposal for revised State aid guidelines for assessing public support projects in the field of energy and the environment. This revision is part of a broader initiative to modernise EU State aid rules. The Commission proposes to extend the scope of the existing guidelines beyond the environmental field into the energy area and to clarify and simplify the assessment of state aid measures. Comments can be submitted until 14 February 2014.

Commission Vice President in charge of competition policy Joaquín Almunia said: “Well-designed public support measures can make a key contribution to achieving the EU’s energy and climate objectives for 2020 and strengthening cross-border energy flows, thus ensuring that European companies and consumers have access to more affordable energy. Our proposal of a new EU framework for state aid aims at supporting Member States’ efforts towards these goals while avoiding any waste of taxpayers’ money and distortions of competition in the EU internal market. I am looking forward to receiving feedback from stakeholders on this draft, so that the Commission can adopt revised guidelines in the first semester of 2014.”

The proposed guidelines would facilitate the decarbonisation of energy supply and the integration of the EU internal energy market. With an increasing penetration and decreasing costs of renewable energy, state aid should gradually move to a more market friendly support of renewable energy in the form of market premiums or certificate schemes. The former provides producers with a supplement on top of the wholesale price, the latter establishes a market for tradable certificates between producers and suppliers of renewable energy. This should allow renewable energy to integrate and play its role in the electricity market and new forms of renewable energy to develop.

In recent years, the financing of renewable support measures has led in many Member States to an increase of electricity costs which affects the competitiveness of energy intensive users and risks leading to carbon leakage due to the relocation of production outside the EU. The draft Guidelines would therefore allow the burden for energy intensive users to be reduced, while putting in place safeguards to limit the distortions of competition that such selective support is bound to trigger and to avoid subsidy races between Member States.

Since a modern infrastructure is crucial for an integrated energy market and for achieving the EU’s climate and energy targets, the Guidelines include for the first time rules for assessing infrastructure support. Accordingly, aid to infrastructure should be focused on projects improving cross-border energy flows and promoting infrastructure in Europe’s less developed regions.

The draft guidelines also include rules on state aid to secure generation adequacy. Indeed, some EU countries plan to introduce so-called “capacity mechanisms” to encourage producers to build new generation capacity or prevent them from shutting down existing plants. Such support would be allowed only if additional energy infrastructure or alternative measures – such as a more responsive demand side or electricity storage – cannot address concerns about a sufficient flexible generation capacity. However, such aid should not unduly favour national generation or particular technologies, in order to limit the risks of strong distortions of competition and environmental harm.

The new rules would also contribute to the modernisation of state aid control by providing a simpler and more consistent framework for the assessment of state aid measures.

The Commission proposes to exempt certain categories of aid from prior scrutiny under the state aid rules by including them in the General Block Exemption Regulation. This would include for example public support to clean up or remediate contaminated sites, aid to promote district heating and public loans to improve the energy efficiency in buildings. Exempted measures may cover up to 40% of the public expenditure in the energy and environmental field and will therefore significantly simplify the granting by Member State and local authorities of support measures with a limited potential for distorting competition.

Here you can find the full text of the draft guidelines (pdf)