Brussels, 23/01/2008 (Agence Europe) - On Wednesday 23 January, the European Commission published new guidelines for state aid granted with the aim of protecting the environment. These guidelines replace previous ones dating from 2001 and will apply until December 2014. The full text complements the energy and climate package endorsed the same day by the college of European Commissioners.
Legislative context. The European Council decided in March 2007 to set a target of 20% reduction of greenhouse gases emissions and a binding target of a 20% share of renewable energy in the total EU Energy consumption by 2020. To reach these targets, the package introduces market mechanisms, which should secure that polluters pay for their pollution and that more environmentally friendly technologies are supported. These measures, however, which limit CO2 emissions and encourage the generation of clean energy, bring with them the risk of market distortion.
The new state aid guidelines aim to avoid such distortion as much as possible, for example where a company is subsidised for introducing something it would have introduced itself, or another scenario where a company being squeezed out of a market because of new environmental requirements that are more demanding than those of its competitors. Another aim of the new aid guidelines is to allow member states to set up a tighter regime than the minimum standards provided for by Community regulation without causing its economy to falter. In short, the Commission is seeking to avoid relocation of industry, and, therefore, of jobs, something which some fear, particularly in the European Parliament Socialist group.
Changes planned. Competition Commissioner Neelie Kroes has indicated that the new guidelines will come into force on the first day after publication in the Official Journal of the European Communities. Compared with the 2001 framework which it replaces, the main changes brought are the following: 1) new provisions will be introduced, e.g. to reach these targets, the package is introducing market mechanisms, which should secure that polluters pay for their pollution and that more environmentally friendly technologies are supported; 2) aid intensities have increased considerably. For small enterprises the intensities have gone from 50%-60% to 70%-80%. Furthermore, where an investment to improve on Community Standards or improve the level of environmental protection in the absence of standards involves eco-innovation, a further 10% aid bonus may be granted. It will be possible to award 10% grants after a competitive procedure has been introduced. Unlike in the 2001 guidelines, there is no longer a bonus for aid to assisted regions or for renewable energy installations serving all needs in an entire community; 3) in terms of tax reductions, the guidelines maintain the possibility of long term derogations from environmental taxes without conditions as long as, after reduction, the companies concerned pay at least the Community minimum. The Commission stresses the importance of this, since often the beneficiaries of large tax reductions are the biggest polluters; 4) the guidelines are split into a standard assessment and a detailed assessment. A detailed assessment method for large aid amounts to individual enterprises has been introduced in order to allow for closer scrutiny of the individual cases which have the greatest potential to distort competition and trade. However, exemptions and reductions will only be assessed at the level of the scheme; 5) the future general block exemption, to be adopted by the Commission before the summer break, will include some types of environmental aid not exceeding a certain level. This exemption will mean member states will not be required to notify the Commission of some types of aid. It is also planned that, under the block exemption, a simplified method can be used to calculate the aid amount.
The UEAPME (the European Association of Craft, Small and Medium-sized Enterprises) welcomed the initiative, in particular the support it offers to SMEs for the various costs of services essential to small companies. Its Director for Economic and Fiscal Policy Gerhard Huemer pointed out that exemption procedures should also take account of the needs and limits peculiar to SMEs. British Conservative MEP Giles Chichester said he feared that the emphasis laid on procedural detail could mask “the objective of drastic emissions reduction that matters most”. (C.D.)