Brussels, 23/05/2012 (Agence Europe) - As part of the current revision per sector of the state aid rules, the European Commission on Tuesday 22 May adopted guidelines which will authorise the member states to grant compensation to certain large consumers of electricity, such as producers of steel and aluminium, to cover a proportion of the increase in electricity costs to be brought about by changes to the EU's emissions quotas trading system (ETS) from 2013. This price increase, the Commission recognises, may tempt certain European businesses to relocate their activities, as their competitiveness could be jeopardised by the obligation to buy polluting rights from 2013. This has led to the adoption of these rules, which “ensure that national support measures are designed in a way that preserves the EU objective of 'decarbonising' the European economy and maintain a level playing field among competitors in the internal market.”
The sectors considered eligible to benefit from this compensation include producers of aluminium, copper, fertilisers, steel, paper, cotton, chemicals and certain plastics. The Commission feels that these sectors could be exposed to a major risk of “carbon leakage”, a concept defined as the increase in global greenhouse gas emissions due to relocation of production outside the EU decided upon as it is impossible for the companies in question to pass on the increased costs brought about by the ETS to their customers without suffering major losses of market share to competitors from third countries with less stringent environmental rules.
The rules adopted on Tuesday permit subsidies covering up to 85% of the increase borne by the most affected companies in each sector between 2013 and 2015, with this upper limit then dropping gradually to reach 75% in 2019-2020. In addition, competition aid of 15% of investment costs may be granted to build new high-yield electricity power stations, which will implement the capture and geological storage of CO2 under environmentally safe conditions (described as “CCS-ready”) by no later than 2020.
These new rules undertake to guarantee a balance between a number of objectives. They aim to reduce the impact of the cost of indirect CO2 emissions for the most vulnerable industrial activities, thereby fighting carbon leakage, which will damage the effectiveness of the ETS. In parallel, they have been designed to preserve the price signals created by the ETS in order to encourage a “decarbonisation” of the economy with an excellent cost-effectiveness ratio. They also aim to limit competition distortions in the single market by avoiding a subsidy race within the EU during this period of economic uncertainty and budgetary discipline.
The reform of the ETS approved in 2009 and taking effect from 2013 is likely to lead to a considerable increase in the electricity bills of EU companies. (OL/transl.fl)