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European Commission wants to loosen state aid rules for renewable energy projects

Monday, 07 June 2021

European Commission is considering changes in state aid laws to allow EU countries to subsidise up to 100% of renewable energy projects, the European Commission said today (7-June-2021), as the bloc seeks to meet ambitious green targets.

The proposed changes are part of the European Commission's revision of its climate, energy and environmental state aid guidelines (EEAG) which are expected to be adopted by the end of the year. Further, the European Commission has launched today a targeted public consultation inviting all interested parties to comment on the proposed revision.

The Energy and Environmental State aid guidelines enable Member States to support projects for environmental protection (including climate protection and green energy generation), as well as measures to ensure energy generation adequacy, subject to certain conditions. The Commission is proposing a number of changes to the current rules, namely:

  • Broadening the scope of the Guidelines to enable support in new areas (e.g. clean mobility, energy efficiency in buildings, circularity and biodiversity) and to all technologies that can deliver the Green Deal, including support for renewable energy. The revised rules would generally allow for aid amounts covering up to 100% of the funding gap and to introduce new aid instruments, such as Carbon Contracts for Difference.
  • Increasing flexibility and streamlining the existing rules, by introducing a simplified assessment of cross-cutting measures under a single section of the Guidelines and eliminating the requirement for individual notifications of large green projects within aid schemes previously approved by the Commission.
  • Introducing safeguards to ensure that the aid is effectively directed where it is necessary to improve climate and environmental protection, is limited to what is needed to achieve the environmental goals and does not distort competition or the integrity of the Single Market. For example, under some circumstances, Member States setting up a support scheme will have to consult stakeholders on its main features.
  • Aligning and ensuring coherence with the relevant EU legislation and policies in the environmental and energy fields, by, among others, phasing out subsidies for fossil fuels, in particular those that are most polluting, and for which a positive assessment by the Commission under State aid rules is unlikely in light of their important negative environmental effects. Measures involving new investments in natural gas will be covered by the Guidelines, only insofar as it is demonstrated that the investments are compatible with the Union's 2030 and 2050 climate targets.

The draft Guidelines and all other information about the public consultation, including more details about the proposed changes, are available online.

European Commission's Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Europe will need a considerable amount of sustainable investments. Although a significant share will come from the private sector, public support will play a role in ensuring that the green transition happens fast. So we want to make sure that our rules on State aid for climate, energy and environment are ready and fit for the green transition. The revised rules will enable Member States to fulfil the EU's ambitious environmental objectives of the European Green Deal while keeping possible competition distortions to a minimum. We now invite all interested parties to share their views.”

Source: European Commission