Specific rules regarding aid involved in the exclusion of small installations and hospitals from the EU ETS

 

The rules described here apply only to the specific aid measures provided for in the context of implementation of the ETS Directive (2003/87/EC).

 

The key legal instrument addressing the aid involved in the exclusion of small installations and hospitals from the EU ETS is European Commission Communication on Guidelines on Certain State Aid Measures in the Context of the Greenhouse Gas Emission Allowance Trading Scheme Post 2012 C(2012) 3230 final {SWD(2012) 130 final} {SWD(2012) 131 final} of 22 May 2012 (Guidelines) – see box.

 

General Requirements

 

State aid may be declared compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty on the Functioning of the European Union (Treaty) if it leads to increased environmental protection (reduction of greenhouse gas emissions) without adversely affecting trading conditions to an extent contrary to the common interest.

In assessing the compatibility of an aid measure, the European Commission is obliged to balance the positive impact of the aid measure in reaching an objective in the common interest against its potentially negative side effects, such as distortion of trade and competition.

 

Member State must demonstrate that the aid amount to the beneficiary is limited to the minimum necessary.

 

The aid ceilings set out must not be exceeded regardless of whether the support is financed entirely from State resources or is partly financed by the Union.

 

Aid deemed to be compatible under the Guidelines may not be combined with other State aid within the meaning of Article 107(1) of the Treaty or with other forms of financing from the Union if such overlapping results in aid intensity higher than that laid down below. However, where the expenditure eligible for aid for measures covered by Guidelines is eligible in whole or in part for aid for other purposes, the common portion will be subject to the most favourable aid ceiling under the applicable rules.

 

Period of Application

 

The European Commission will apply the Guidelines from 6 July 2012. The rules in question will be applicable until 31 December 2020 (if not amended before that date).

 

The Commission will apply Guidelines to all notified aid measures in respect of which it is called upon to take a decision after 5 June 2012, even where the projects were notified prior to their publication. Duration of aid schemes must not be longer than the duration of Guidelines.

The Commission will apply the rules set out in the Commission Notice on the determination of the applicable rules for the assessment of unlawful State aid to all unlawful aid.

 

Specific rules regarding aid involved in the exclusion of small installations and hospitals from the EU ETS

 

Under Article 27 of the ETS Directive (2003/87/EC), Member States may exclude small installations and hospitals from the EU ETS, as long as they are subject to measures that achieve equivalent reduction of greenhouse gas emissions.

Member States may propose measures applying to small installations and hospitals that will achieve a contribution to emission reductions equivalent to those achieved by the EU ETS. That possibility of excluding them from the EU ETS is intended to offer the maximum gain, in terms of reducing administrative costs for each tonne of CO2 equivalent excluded from the ETS.

 

The exclusion of small installations and hospitals from the EU ETS may involve State aid. Member States have a wide margin of discretion in deciding whether to exclude small installations from the EU ETS and, if so, which type of installation to exclude and which type of measures to require. Therefore, it cannot be excluded that the measures imposed by Member States may amount to an economic advantage in the favour of small installations or hospitals excluded from the EU ETS that is likely to distort or threaten to distort competition and affect trade in the internal market.

 

Aid involved in the exclusion of small installations or hospitals exempted from the EU ETS as from 1 January 2013 will be considered compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty provided the small installations or hospitals are subject to measures that achieve equivalent greenhouse gas emissions reduction within the meaning of Article 27 of the ETS Directive (2003/87/EC) and provided that the Member State complies with the conditions laid down in the said Article.

 

The incentive effect requirement is presumed to be met if all the above conditions are fulfilled.

 

Under the post-2020 EU low carbon framework the EU Member States will continue to be able to exclude small emitters from the EU ETS, including small and medium-sized enterprises with low emissions, as long as they are subject to equivalent measures (see: Questions and answers on the proposal to revise the EU emissions trading system (EU ETS), Brussels, 15 July 2015, p. 2).

 

Practical instances of national measures

 

Practical instances of national measures aiming at achieving equivalent greenhouse gas emissions reduction within the meaning of the above provisions can be found in article EU ETS alternatives – possibilities offered by the UK opt-out scheme.

 

 

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Last Updated on Friday, 17 July 2015 10:17
 

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