Brussels, 04/04/2002 (Agence Europe) - The European Commission has decided to approve the dual-use exemption under the UK's Climate Change Levy covering energy products that are used primarily for a non-fuel purpose, such as the use of coke as a chemical reductant in steel production.
The Commission had already approved several measures under the Climate Change Levy in March 2001, that came into force the following month, including exemptions for the use of electricity generated from renewable resources and for companies entering into Climate Change Agreements (to help them cut CO2 emissions). The system lays down four categories of exemptions to enable companies to make the investment needed to convert their plant. In March 2001, the Commission opened the formal investigation procedure because of doubts about the effects of one of the exemptions, the dual use exemption, on competition (see EUROPE of 2/3 April 2001, p.14), to decide whether the scheme constituted state aid. After taking into account the observations submitted by third parties, and on the basis of the revised notification submitted by the United Kingdom authorities, addressing some of the consequences of the dual use exemption, the Commission's doubts have been allayed. The Commission feared that it would discriminate between different producers within a sector and that the dual use exemption discriminated against less environmentally damaging production processes (such as recycling processes). During the course of the investigation procedure, the United Kingdom authorities undertook to exempt from the Climate Change Levy energy used in less environmentally damaging production processes, that compete directly with a production process enjoying an exemption for non-fuel use or dual-use. The Commission is satisfied that the extended exemption will remove the competitive distortions that would otherwise be caused by the dual-use exemption; and will no longer impose extra burdens on the less environmentally damaging production processes and considers the exemption to be compatible with state aid.