Energy Community is obligated to follow EU’s CEEAG state aid guidelines

The European Union’s new Guidelines on State Aid for Climate, Environmental Protection and Energy – CEEAG are obligatory for the national enforcement authorities of Energy Community contracting parties and the organization’s secretariat. The document promotes decarbonization and serves as a point of reference for enforcement practice.

The Energy Community Secretariat published its policy guidelines on the applicability of the set of state aid regulations that came into force in the European Union last month. It said that following the EU’s Guidelines on State Aid for Climate, Environmental Protection and Energy – CEEAG is a legal obligation for the national enforcement authorities of Energy Community contracting parties as well as for itself under the Energy Community Treaty.

The document ensures equal conditions of competition and the uniform and homogeneous application of state aid provisions, according to the announcement. The European Commission rolled out CEEAG criteria for the assessment of the compatibility of state aid granted to facilitate the development of economic activities in a manner that improves environmental (including climate) protection, as well as activities in the energy sector.

Level playing field

CEEAG replaced the Energy and Environmental State Aid Guidelines (EEAG), which were also followed by the Energy Community Secretariat and contracting parties as a point of reference for enforcement practice.

Projects in areas such as renewable energy, energy efficiency, clean mobility, infrastructure, pollution reduction and biodiversity are eligible for state aid

The main objective of the Energy Community Treaty is to create undistorted energy markets without internal frontiers, the secretariat noted. It pointed out that measures that distort competition or impact trading conditions to an extent contrary to the common interest, for instance by favoring certain undertakings or certain energy resources, are prohibited.

However, certain economic activities are allowed if such aid does not adversely affect trading conditions to an extent contrary to the common interest.

The new guidelines take into account the European Green Deal and the EU’s determination to support a cost-effective and just transition to climate neutrality as well as to facilitate the phasing out of fossil fuels, while at the same time ensuring a level playing field in the internal market, the announcement adds.

CEEAG promotes decarbonization

When it adopted CEEAG, the European Union said member states are “not likely” to get approval for financial support to projects if they are not compatible with the decarbonization goals. The document has sections on renewables, energy efficiency measures, aid for clean mobility, infrastructure, circular economy, pollution reduction, protection and restoration of biodiversity as well as measures to ensure security of energy supply.

As with the EU’s green taxonomy, gas projects need to provide an option to add green hydrogen or biogas

Some of the most important guidelines regulate contracts for difference through auctions for renewable energy, but also for CO2 emissions.

The guidelines aim at facilitating the participation of renewable energy communities and small and medium-sized enterprises (SMEs). As with the EU’s green taxonomy, gas projects need to provide an option to add green hydrogen or biogas. CEEAG includes a section on aid for the closure of coal, peat and oil shale plants to facilitate decarbonization in the power sector.

EU member states are required to align their support schemes to the new rules as of 2024.