EU is revising state aid guidelines for climate, energy, environment

The European Commission called for comments with regard to the proposed revision of the guidelines on state aid for environmental protection and energy. It intends to introduce competitive bidding for a range of technologies and allow governments to cover up to 100% of project funding gaps.

Citizens, firms, experts, state authorities and consumer and environmental organizations in the European Union can participate in a public consultation process for the upcoming Climate, Energy and Environmental State aid guidelines (CEEAG). The deadline for responses is August 2.

The document under preparation should replace the Energy and Environmental State aid guidelines or EEAG at the end of the year. The European Commission said it wants to cover new areas such as clean mobility and decarbonization and to align the rules with the European Green Deal.

Support is intended for renewable energy, energy efficiency in buildings, circularity, biodiversity and other projects. 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, but through competitive bidding procedures, to ensure state aid is minimal.

The guidelines aim at helping member states meet energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the single market, the commissioners said.

Renewables industry fears infiltration of nuclear power, gas

REScoop, a federation of green energy cooperatives, immediately said the new guidelines would double down on subjecting renewables to auctions and tenders while that they aren’t clear in the segment. Furthermore, community renewable projects were not specifically mentioned.

Energy communities would not only have to compete against larger commercial projects for support, but they could also potentially have to compete with other low-carbon technological approaches, REScoop warns

“The new draft guidelines propose to get rid of a dedicated category for supporting renewables, mixing it in with other so-called low-carbon technologies such as hydrogen and carbon capture, storage and utilization (CCSU). This means that as a default, energy communities would not only have to compete against larger commercial projects for support, but they could also potentially have to compete with other low-carbon technological approaches. It would also allow further support to fossil-fuelled technologies driving climate change, such as natural gas,” the statement adds.

The proposal is “incomplete and unfit for the green transition,” according to the European Renewable Energies Federation (EREF). “This in effect leaves the back door open for nuclear and fossil fuels, through the inclusion of hydrogen and carbon capture, storage and utilization, to continue to receive support from member states,” it stressed.

Project developers have to report costs per ton of CO2 emissions reduction

The European Commission said state aid is unlikely to be possible for “measures that involve support to the most polluting fossil fuels.” Still, natural gas would indeed be able to get an exception if the investment is compatible with the 2030 climate target and the 2050 climate neutrality target.

Member states would have to report the cost in terms of aid amount in euros per unit of greenhouse gas reduction achieved, in tons of carbon dioxide equivalent.

Governments may get the ability to combine support for energy efficiency in buildings with state aid for additional projects like renewables and charging points for electric cars

To achieve the emissions reduction target of at least 55% for 2030, the EU must reduce buildings’ greenhouse gas emissions by 60%. The document shows member states would be able to combine support for the improvement of the energy efficiency of buildings with aid for any investments that improve their energy or environmental performance, such as on-site infrastructure for the generation and storage of renewable energy, charging points for electric vehicles, and digitalization equipment.

The plan is also to give governments the right to compensate for the early closure of profitable coal, peat and oil shale activities, in particular for foregone profits and to cover exceptional social and environmental costs in the sector.