Ref. Ares(2022)1227114 - 18/02/2022
Draft Communication from the Commission Guidelines on State aid for climate, environmental
protection and energy 2022
AM 1 Protection of energy intensive industries (EIIs) against undue energy costs
4.11.3.2 Proportionality of the aid measure
4.11.3.2 Proportionality of the aid measure
359. The Commission wil consider the aid to be 359. The Commission wil consider the aid to be
proportionate if the beneficiaries pay at
proportionate if the beneficiaries pay at
least 25 % of the costs generated by the least 25 15 % of the costs generated by the
electricity levies which a Member State
electricity levies which a Member State
includes in its scheme.
includes in its scheme.
360. However, an own contribution of 25 % of the 360. However, an own contribution of 25 15 % of
eligible electricity levies might go
the eligible electricity levies might go beyond
beyond what undertakings which are particularly what undertakings which are particularly
exposed can bear. Therefore, the
exposed can bear. Therefore, the Member State
Member State may instead limit the additional may instead limit the additional costs resulting
costs resulting from the electricity levies
from the electricity levies to 1.5 0.5 % of the
to 1.5 % of the gross value added (GVA) of the gross value added (GVA) of the undertaking
undertaking concerned.
concerned.
Justification
These reductions and exemptions ensure the competitiveness of EIIs sectors - including the steel
industry - and contribute to the overal environmental objectives as they support environmental
ambition in the EU while avoiding carbon, investment, jobs leakage to third countries with less
environmental ambition. T
provisions. We urge the Commission to maintain state aid intensity at the level of 85% and the level
of protection to the most exposed undertakings at 0.5% GVA, as compared to the current period
(EEAG 2014-2020). Furthermore, affordable and competitive electricity prices are essential to
facilitate the transition to low carbon technologies, which require even larger amounts of
electricity.
AM 2 Protection of energy intensive industries (EIIs) against undue energy costs
4.11.2 Scope: Levies from which reductions can 4.11.2 Scope: Levies from which reductions can
be granted
be granted
354. Under this Section, Member States may 354. Under this Section, Member States may
grant reductions from levies on electricity grant reductions from levies on electricity
consumption which finance an energy policy consumption which finance an energy policy
objective. This includes levies financing support objective. This includes levies financing support
to renewable sources or to combined heat and to renewable sources or to combined heat and
power and levies financing social tariffs or power and levies financing social tariffs or
energy prices in isolated regions. This Section energy prices in isolated regions. This Section
does not cover levies which reflect part of the does not cover levies which reflect part of the
cost of providing electricity to the beneficiaries in cost of providing electricity to the beneficiaries
question. For example, exemptions from network in question. For example, exemptions from
charges or from charges financing capacity network charges or from charges financing
mechanisms are not covered by this Section. capacity mechanisms are not covered by this
Levies on the consumption of other forms of Section. Levies on the consumption of other
energy, in particular natural gas, are also not forms of energy, in particular natural gas, are
covered by this Section.
also not covered by this Section. Above
principles shal apply analogously to
environmental charges financing the support
of highly-efficient cogeneration, capacity
mechanism and other charges which directly
fund the implementation of the climate
objectives set out in the European Green Deal.
Justification
Under the existing EEAG (section 3.7), Energy Intensive Users (EIUs) exposed to international
competition are entitled to aid in the form of reductions in or exemptions from environmental taxes
and in the form of reductions in funding support for electricity from renewable sources. Without
such reductions and exemptions EEIs would be placed at such a competitive disadvantage that it
would not be feasible to introduce the support for renewables at al . Such reductions and
exemptions need not only to be maintained, but must be strengthened.
This becomes increasingly important in relation to the contribution of EIUs to the overal EU climate
change policy targets, while avoiding carbon, investment, jobs leakage to third countries with less
environmental ambition. Rising shares of renewables wil most likely be accompanied with
increased generation adequacy measures in the form of capacity mechanisms. In analogy to the
situation with contributions to renewables, financing such costs could easily undermine the
competitiveness of EIIs exposed to international competition, such as steel. Furthermore, EEIs offer
solutions in these fields as they contribute to the stability of the grid thanks to their specific
from an undue extent of these and similar
regulatory costs, taking into account their overal contributions to taxes and levies. We thus cal on
the Commission to lift the proposed restrictions in the draft CEEAG (paragraph 354).
The new CEEAG should al ow for reductions based on a flexible definition of environmental charges.
This would avoid long processes for individual notifications and would harmonize rules across
member states, leading ultimately to a more effective EU climate change policy. The lack of uniform
rules would otherwise hampers legal certainty and affects competition in the EU internal market.
The issue of legal certainty becomes particularly important in view of investment planning in
relation to the transition to low-carbon production processes.
AM 3 Exclusion of the industrial gases sector
4.11.3.1 Eligibility
4.11.3.1 Eligibility
357. The aid under this Section should be limited 357. The aid under this Section should be limited
to sectors that are at a significant competitive to sectors that are at a significant competitive
disadvantage and risk of relocation outside the disadvantage and risk of relocation outside the
Union because of the eligible levies. The risk of Union because of the eligible levies. The risk of
relocation depends on the electro-intensity of relocation depends on the electro-intensity of
the sector in question and its exposure to the sector in question and its exposure to
international trade. Accordingly, aid can only be international trade. Accordingly, aid can only be
granted if the undertaking belongs to a sector granted if the undertaking belongs to a sector
facing a trade intensity of at least 20 % at Union facing a trade intensity of at least 20 % at Union
level and an electro-intensity of at least 10 % at level and an electro-intensity of at least 10 % at
Union level. In addition, the Commission Union level. In addition, the Commission
considers that a similar risk exists in sectors that considers that a similar risk exists in sectors that
face an electro-intensity of at least 7% and face face an electro-intensity of at least 7% and face
a trade intensity of at least 80%. The sectors a trade intensity of at least 80% or in sectors
meeting these eligibility criteria are listed in that face a lower trade exposure but at least 4%
Annex I.
and have a much higher electro-intensity of at
least 20%. The sectors meeting these eligibility
criteria are listed in Annex I.
Justification
The eligibility criteria do not include the option of 4% trade intensity and 20% electro-intensity that
was present in the previous guidelines. Due to that, the list of eligible sectors excludes the industrial
gases (NACE code 2011) e.g. hydrogen and oxygen - from the scope of application of the
reductions. These are an integral part of the steel value chain today, and wil be even more crucial
for the transition to low carbon technologies in the nearest future.
AM 4 Conditionality criteria
365. The Member State must also commit to 365. The Member State must also commit to
monitoring that beneficiaries required to monitoring that beneficiaries required to
conduct an energy audit under Article 8(4) of conduct an energy audit under Article 8(4) of
Directive 2012/27/EU do one or more of the Directive 2012/27/EU do one or more of the
fol owing:
fol owing:
(a) implement recommendations of the
(a) implement recommendations of the
audit report, to the extent that the pay-
audit report, to the extent that the pay-
back time for the relevant investments
back time for the relevant investments
does not exceed 3 years and that the
does not exceed 3 years and that the
costs
of
their
investments
is
costs
of
their
investments
is
proportionate;
proportionate;
(b) reduce the carbon footprint of their
(b) reduce the carbon footprint of their
electricity consumption, so as to cover at
electricity consumption, so as to cover at
least 30 % of their electricity
least 30 % of their electricity
consumption from carbon-free sources;
consumption from carbon-free sources;
(c) invest a significant share of at least
(c) invest a significant share of at least
50 % of the aid amount in projects that
50 % of the aid amount in projects that
lead to substantial reductions of the
lead to substantial reductions of the
ons;
where applicable, the investment should
where applicable, the investment should
lead to reductions wel below the
lead to reductions wel below the
relevant benchmark used for free
relevant benchmark used for free
al ocation in the Union ETS.
al ocation in the Union ETS.
Justification
Compensation should not be made conditional. If now state aid is made conditional to additional
measures to be taken by a company, de facto it is not anymore a (partial) reimbursement of
incurred costs as it requires additional costs to the company. Moreover, related proposals do not
reflect the specificities of different industrial sectors and of companies and might lead to different
and disproportionate outcomes.
AM 5
356. The Commission considers that Member 356. The Commission considers that Member
States may grant reductions to levies under this States may grant reductions to levies under this
Section only where the overal cumulative level Section only where the overal cumulative level
of these levies (before any reductions) is at least of these levies (before any reductions) is at least
Justification
Compensation should not be made conditional to a minimum level of the levies. Due to the very
large energy consumption and the partial nature of exemptions, energy intensive industries such as
steel would have major competitive disadvantage compared to producers based in third countries
that do not have comparable climate legislation and related regulatory costs. Provisions on
minimum contribution levels already ensure that also energy intensive industries support the
funding of renewable schemes in al member states.
AM 6 Aid for the reduction and removal of greenhouse gas emissions
3.2.1.2.1 Appropriateness among alternative 3.2.1.2.1 Appropriateness among alternative policy
policy instruments
instruments
40. Different measures to remedy the same 40. Different measures to remedy the same market
market failure may counteract each other. failure may counteract each other. This is might be
This is the case where an efficient, market- the case where an efficient, market-based
based mechanism has been put in place to mechanism has been with existing policies and
specifical y counter the problem of measures put in place to specifical y counter the
externalities, as for instance
An additional support measure to address the ETS. An additional support measure to address the
same market failure risks undermining the same market failure might risks undermining the
efficiency of the market-based mechanism. efficiency of the market-based mechanism.
Therefore, when an aid scheme aims at Therefore, when an aid scheme aims at addressing
addressing residual market failures, the aid residual market failures, the aid scheme must be
scheme must be designed in such a way as to designed in such a way as to not undermine the
not undermine the efficiency of the market- existing degree of efficiency of the market-based
based mechanism.
mechanism.
Justification
The lack of a global-level playing field compared to third countries needs to be taken into account,
in particular where production is not subject to similar CO2 costs constraint as production in the EU.
It should be recognised that for sectors particularly exposed to international competition, existing
carbon pricing policy measures do not tackle effectively the problem of externalities. It is necessary
that state aid rules for example via Carbon Contracts for Difference - al ow the ful abatement
costs of the new low-carbon processes to be covered.
AM 7 Aid for the reduction and removal of greenhouse gas emissions
4.1.3.1 Necessity of the aid
4.1.3.1 Necessity of the aid
78. Points 33, 34, 35 and 36 do not apply to 78. Points 33, 34, 35 and 36 do not apply to
measures for the reduction of greenhouse gas measures for the reduction of greenhouse gas
emissions. The Member State must identify emissions. The Member State must identify the
the policy measures already in place to reduce policy measures already in place to reduce
greenhouse gas emissions. However, while greenhouse gas emissions. However, while the
carbon pricing policies and
measures internalise some of the costs of measures , such as the ETS, internalise some of the
greenhouse gas emissions, they may not yet costs of greenhouse gas emissions, they may not yet
ful y internalise those costs.
ful y internalise those costs or fail to do so for
sectors
most
exposed
to
international
competition.
Justification
It is necessary that state aid rules for example via Carbon Contracts for Difference - al ow the ful
abatement costs of the new low-carbon processes to be covered. The lack of a global-level playing
field compared to third countries needs to be taken into account, in particular where production is
not subject to similar CO2 costs constraint as production in the EU. For materials - such as steel -
where the pass-through of unilateral regulatory costs is not possible due to fierce international
competition, the aid level necessitates to cover the ful abatement costs in the EU, i.e. the
be calculated between production costs of low carbon technologies and
production costs of conventional ones, without discounting the avoided ETS-related costs. This is
the only way to ensure that the actual realisation of respective projects wil be guaranteed.
Compensation limited to the amount of the difference to the CO2 price in the European emissions
trading system would be insufficient since a significant part of the extra costs would not be
compensated and a competitive disadvantage compared with competitors from outside Europe
would persist.
AM 8 Aid for the reduction and removal of greenhouse gas emissions
4.1.4 Avoidance of undue negative effects
4.1.4 Avoidance of undue negative effects on
on competition and trade and balancing
competition and trade and balancing
103. Aid for decarbonisation can take a 103. Aid for decarbonisation can take a variety of
variety of forms including up front grants and forms including up front grants and contracts for
contracts for ongoing aid payments such as ongoing aid payments such as contracts for
contracts for difference61. Aid which covers difference61. Aid which covers costs mostly linked to
costs mostly linked to operation rather than operation rather than investment should only be
investment should only be used where the used where the Member State clearly demonstrates
Member State clearly demonstrates that this that this results in more environmental y friendly
results in more environmental y friendly operating decisions.
operating decisions.
61 A contract for difference entitles the
61 A contract for difference entitles
beneficiary to a payment equal to the
the beneficiary to a payment equal to
a reference price such as a market price,
price and a reference price such as
per unit of output. They have been used for
a market price, per unit of output.
They have been used for electricity
electricity generation measures in recent
generation measures in recent years
years but could also involve a reference
but could also involve a reference
price linked to the ETS or any global y
price linked to the ETS i.
applied carbon price for sectors most
contracts for difference. Contracts for
exposed to international competition i.e.
difference may also involve paybacks
from beneficiaries to taxpayers or
for difference may also involve paybacks
consumers for periods in which the
from beneficiaries to taxpayers or
reference price exceeds the strike
consumers for periods in which the
price.
reference price exceeds the strike price.
Justification
It is necessary that state aid rules for example via Carbon Contracts for Difference - al ow the ful
abatement costs of the new low-carbon processes to be covered. The lack of a global-level playing
field compared to third countries needs to be taken into account, in particular where production is
not subject to similar CO2 costs constraint as production in the EU. For materials - such as steel -
where the pass-through of unilateral regulatory costs is not possible due to fierce international
competition, the aid level necessitates to cover the ful abatement costs in the EU, i.e. the
be calculated between production costs of low carbon technologies and
production costs of conventional ones, without discounting the avoided ETS-related costs. This is
the only way to ensure that the actual realisation of respective projects wil be guaranteed.
Compensation limited to the amount of the difference to the CO2 price in the European emissions
trading system would be insufficient since a significant part of the extra costs would not be
compensated and a competitive disadvantage compared with competitors from outside Europe
would persist.
AM 9
dismantling of CO2 intensive installations
4.1.2 Scope and supported activities
75a new
This section also covers aid for dismantling CO2
intensive installations in relation to measures for
the reduction or avoidance of emissions
resulting from industrial processes
Justification
Conversion to low carbon production processes in the EU wil often occur in existing facilities
(brownfield). Current state aid rules under the EEAG do not envisage aid for dismantling of CO2
intensive production, while 100% aid intensity is possible for the remediation of contaminated sites.
Granting of aid for dismantling CO2 intensive instal ations after transformation to low carbon
production should be al owed under the revised state aid rules.
AM 10
the use of electricity made from renewable energy sources in energy-intensive
production processes
4.1.2 Scope and supported activities
75a new
To create incentives for the conversion of energy-
intensive production process in industry to
electricity from carbon-free energy sources, aid
may be granted for the use of electricity in the
context of long-term power purchase agreements
pertaining to electricity from renewable energy
sources, even if the latter originates from plants
that have been ful y depreciated. The aid per
energy unit shal not exceed the difference
between the total production costs of the
electricity provided under the long-term power
purchase agreement and the relevant market
price for electricity.
Justification
The costs associated with the active use of electricity from renewable energy sources, which can be
ensured via long-term power purchase agreements, for instance generated by wind farms, are often
higher than the costs at which electricity can be purchased on the market. With a view to the
necessity of keeping electricity prices low in international competition, incentives to use renewable
energy sources, and hence to contribute to the goal of climate neutrality, can be created through
compensation of the cost difference via state support measures. It should be thus possible to
support the use of electricity made from renewable energy sources in energy-intensive production
processes, such as electric arc steelmaking, by compensating the extra costs involved through public
aid.
AM 11
Proposed amendment
A chapter on the notion of aid could be included in
the CEEAG, e.g., before the second chapter (Scope
and definitions):
In some very recent judgments, the Union Courts
have clarified the scope of the State aid rules, in
particular when it comes to exemptions for energy
intensive undertakings. Only such measure and/or
schemes are subject to State aid control, which
fulfill all criteria as set out in Article 107 (1) TFEU.
According to Article 107 (1) TFEU, any aid granted
by a Member State or through State resources in
any form whatsoever which distorts or threatens
to distort competition by favouring certain
undertakings or the production of certain goods
shall, insofar as it affects trade between Member
States, be incompatible with the internal market.
It fol ows that in order for a measure to qualify as
State aid, the fol owing cumulative conditions
have to be met: (a) the measure has to be granted
out of State resources and is imputable to the
State, (b) it has to confer an economic advantage
to undertakings, (c) the advantage has to be
selective and (d) distort or threaten to distort
competition, (e) the measure has to affect trade
between Member States.
Therefore, these Guidelines only cover measures
which fulfil all criteria provided for in Art. 107 (1)
TFEU. Particularly, measures which do not involve
State resources shal not constitute aid within the
meaning of Art. 107 (1) TFEU and therefore shal
not be covered by the State aid regime. This
applies, inter alia, when the respective funds are
not at the disposal of the state but control ed by
private parties. The ECJ recently applied these
criteria in a case where funds were generated by
surcharges paid by private parties in accordance
with national schemes.(1) These funds were
exclusively earmarked to finance the respective
scheme and the role of the State was limited to the
monitoring of the private parties involved. In this
case the ECJ explicitly held that these funds were
not at the disposal of the state and therefore no
State resources were involved. Given the lack of
State resources, the exemptions for energy
intensive undertakings did also not constitute
State aid, given that the system was entirely
financed by private players.
As a result, such measures do not constitute State
aid and do not fall under the scope of these
Guidelines. Member States do not face any
restrictions under State aid law when setting-up
such schemes.
(1) ECJ, C-405/16 P, Judgment of 28 March 2019,
ECLI:EU:C:2019:268 - Germany v Commission; see
also ECJ, C 556/19, Judgment of 21 October 2020,
ECLI:EU:C:2020:844, paras. 25 et seqq. Eco TLC;
GC, T-98/16 and others, Judgment of 19 March
2019, ECLI:EU:T:2019:167, paras. 133 et seqq.
Italy v Commission.
Justification
It is common for the Commission to provide guidance in its documents on what it is actual y
considered as state aid. The proposed amendment suggests to align the definition of state aid with
the most relevant case judgments: ECJ, C-405/16 P, Judgment of 28 March 2019,
ECLI:EU:C:2019:268 - Germany v Commission; see also ECJ, C 556/19, Judgment of 21 October 2020,
ECLI:EU:C:2020:844, paras. 25 et seqq. Eco TLC; GC, T-98/16 and others, Judgment of 19 March
2019, ECLI:EU:T:2019:167, paras. 133 et seqq. Italy v Commission.
AM 12 Targeted and distinct approach on harmonised and not-harmonised environmental
taxes
4.7.1.2 Scope and supported activity
4.7.1.2 Scope and supported activity
260. Granting a more favourable treatment to 260. Granting a more favourable treatment to
some undertakings may facilitate a higher some undertakings may facilitate a higher
general level of environmental taxes or general level of environmental taxes or
parafiscal levies. Accordingly, reductions in parafiscal levies. Accordingly, reductions in
environmental taxes or levies can at least environmental taxes or levies can at least
indirectly contribute to a higher level of indirectly contribute to a higher level of
environmental protection. However, the overal environmental protection. However, the overal
objective of the environmental tax or parafiscal objective of the environmental tax or parafiscal
levy to discourage environmental y harmful levy to discourage environmental y harmful
behaviour should not be undermined.
behaviour should not be undermined.
261. The Commission wil consider that tax or 261. The Commission wil consider that tax or
levy reductions do not undermine the general levy reductions do not undermine the general
objective pursued and contribute at least objective pursued and contribute at least
indirectly to an increased level of environmental indirectly to an increased level of environmental
protection, if a Member State demonstrates that protection, if a Member State demonstrates that
both of the fol owing conditions are fulfil ed:
both of the fol owing conditions are fulfil ed:
(a) the reductions are wel targeted at those (a) the reductions are wel targeted at those
undertakings most affected by a higher tax;
undertakings most affected by a higher tax;
(b) a tax rate, which is general y applicable, is (b) a tax rate, which is general y applicable, is
higher than would be the case without the higher than would be the case without the
reduction.
reduction.
262. For this purpose, the Commission wil assess 262. For this purpose, the Commission wil assess
the information provided by Member States. the information provided by Member States.
That information should include the sectors or That information should include the sectors or
categories of beneficiaries covered by the categories of beneficiaries covered by the
reductions and a description of the situation of reductions and a description of the situation of
the main beneficiaries in each sector concerned the main beneficiaries in each sector concerned
and an explanation of how the taxation may and an explanation of how the taxation may
contribute to environmental protection. The contribute to environmental protection. The
sectors eligible for the reductions should be sectors eligible for the reductions should be
properly described and a list of the largest properly described and a list of the largest
beneficiaries for each sector should be provided beneficiaries for each sector should be provided
(considering, in particular, turnover, market (considering, in particular, turnover, market
shares and size of the tax base).
shares and size of the tax base).
4.7.1.3 Minimisation of distortions of 262a (new) When environmental taxes are
competition and trade
harmonised, the Commission can apply a
simplified approach to assess the necessity and
4.7.1.3.1 Necessity
proportionality of the aid. In the context of
Directive 2003/96/EC (78
263. The requirements set out in point 264 apply Commission can apply a simplified approach for
in addition to the requirements set out in Section tax reductions respecting the Union minimum
3.2.1.1.
tax level. For all other environmental taxes, an
in depth assessment of the necessity and
264. The Commission wil consider the aid to be proportionality of the aid is needed.
necessary if the fol owing cumulative conditions
are met:
(78)
Directive 2003/96/EC restructuring the
(a) the choice of beneficiaries is based on Community framework for the taxation of energy
objective and transparent criteria, and the aid is products and electricity (OJ L 283, 31.10.2003 p. 51)
granted in principle in the same way for al sets such minimum tax levels.
competitors in the same sector if they are in a
similar factual situation;
4.7.1.3 Minimisation of distortions of
(b) the environmental tax or parafiscal levy competition and trade
without the reduction leads to a substantial
increase in production costs calculated as a 4.7.1.3.1 Necessity
proportion of the gross value added for each
sector or category of individual beneficiaries;
Situation 1: Harmonised environmental taxes
(c) the substantial increase in production costs
could not be passed on to customers without 262b (new). The Commission wil consider aid in
leading to significant sales reductions.
the form of tax reductions necessary and
proportional provided (i) the beneficiaries pay
4.7.1.3.2 Appropriateness
at least the Union minimum tax level set by the
relevant applicable Directive; (ii) the choice of
265. The requirements set out in points 266 and beneficiaries is based on objective and
267 apply in addition to the requirements set out transparent criteria; and (i i) the aid is granted
in Section 3.2.1.2.
in principle in the same way for al competitors
in the same sector, if they are in a similar
266. The Commission wil authorise aid schemes factual situation.
for maximum periods of 10 years, after which a
Member State can re-notify the measure if it re- 262c (new). Member States can grant the aid
evaluates the appropriateness of the aid in the form of a reduction of the tax rate or as a
measures concerned.
fixed annual compensation amount (tax
refund), or as a combination of the two. The
267. Member States can grant the aid in the advantage of the tax refund approach is that
form of a reduction of the tax or levy rate or as a undertakings remain exposed to the price
fixed annual compensation amount (tax or levy signal, which the environmental tax gives.
refund), or as a combination of the two. The Where used, the amount of the tax refund
should be calculated on the basis of historical
advantage of the tax refund approach is that data, i.e. the level of production, and the
undertakings remain exposed to the price signal, consumption or pollution observed for the
which the environmental tax or levy gives. undertaking in a given base year. The level of
Where used, the amount of the tax refund should the tax refund must not go beyond the Union
be calculated on the basis of historical data, that minimum tax amount that would result for the
is to say the level of production, and the base year.
consumption or pol ution observed for the
undertaking in a given base year.
262d (new). If the beneficiaries pay less than
the Union minimum tax level set by the relevant
4.7.1.3.3 Proportionality
applicable Directive, the aid will be assessed on
the basis of the conditions for non-harmonised
268. Section 3.2.1.3 does not apply to aid in the environmental taxes as set out in paragraphs
form of reductions in environmental taxes and (263 to 270).
parafiscal levies.
Situation 2: Non-harmonised environmental
269. The Commission wil consider the aid to be taxes and specific situations of of harmonised
proportionate if at least one of the fol owing taxes
conditions is met:
(a) aid beneficiaries pay at least 20 % of the 263. The requirements set out in point 264 apply
national environmental tax or parafiscal levy;
in addition to the requirements set out in Section
(b) the tax or levy reduction does not exceed 100 3.2.1.1.
% of the national environmental tax or parafiscal
levy, and is conditional on the conclusion of 264.
For
al
other
non-harmonised
agreements between the Member State and the environmental taxes and in the case of
beneficiaries or associations of beneficiaries harmonised taxes below the Union minimum
whereby the beneficiaries or associations of levels of the ETD (see paragraph (262a (new))
beneficiaries commit themselves to achieve tThe Commission wil consider the aid to be
environmental protection objectives which have necessary if the fol owing cumulative conditions
the same effect as if beneficiaries or associations are met:
of beneficiaries paid at least 20 % of the national (a) the choice of beneficiaries is based on
tax or levy. Such agreements or commitments objective and transparent criteria, and the aid is
may relate, among other things, to a reduction granted in principle in the same way for al
in energy consumption, a reduction in emissions competitors in the same sector if they are in a
and other pol utants, or any other environmental similar factual situation;
measure.
(b) the environmental tax or parafiscal levy
without the reduction leads to a substantial
270. Such agreements must satisfy the fol owing increase in production costs calculated as a
cumulative conditions:
proportion of the gross value added for each
(a) the substance of the agreements is sector or category of individual beneficiaries;
negotiated by the Member State, specifies the (c) the substantial increase in production costs
targets and fixes a time schedule for reaching could not be passed on to customers without
the targets;
leading to significant sales reductions.
(b) the Member State ensures independent and
regular monitoring of the commitments in the 4.7.1.3.2 Appropriateness
agreements;
(c) the agreements are revised periodical y in the 265. The requirements set out in points 266 and
light of technological and other developments 267 apply in addition to the requirements set out
and provide for effective penalties in the event in Section 3.2.1.2.
that the commitments are not met.
266. The Commission wil authorise aid schemes
for maximum periods of 10 years, after which a
Member State can re-notify the measure if it re-
evaluates the appropriateness of the aid
measures concerned.
267. Member States can grant the aid in the
form of a reduction of the tax or levy rate or as a
fixed annual compensation amount (tax or levy
refund), or as a combination of the two. The
advantage of the tax refund approach is that
undertakings remain exposed to the price signal,
which the environmental tax or levy gives.
Where used, the amount of the tax refund should
be calculated on the basis of historical data, that
is to say the level of production, and the
consumption or pol ution observed for the
undertaking in a given base year.
4.7.1.3.3 Proportionality
268. Section 3.2.1.3 does not apply to aid in the
form of reductions in environmental taxes and
parafiscal levies.
269. The Commission wil consider the aid to be
proportionate if at least one of the fol owing
conditions is met:
(a) aid beneficiaries pay at least 20 % of the
national environmental tax or parafiscal levy;
(b) the tax or levy reduction does not exceed 100
% of the national environmental tax or parafiscal
levy, and is conditional on the conclusion of
agreements between the Member State and the
beneficiaries or associations of beneficiaries
whereby the beneficiaries or associations of
beneficiaries commit themselves to achieve
environmental protection objectives which have
the same effect as if beneficiaries or associations
of beneficiaries paid at least 20 % of the national
tax or levy. Such agreements or commitments
may relate, among other things, to a reduction
in energy consumption, a reduction in emissions
and other pol utants, or any other environmental
measure.
270. Such agreements must satisfy the fol owing
cumulative conditions:
(a) the substance of the agreements is
negotiated by the Member State, specifies the
targets and fixes a time schedule for reaching
the targets;
(b) the Member State ensures independent and
regular monitoring of the commitments in the
agreements;
(c) the agreements are revised periodical y in the
light of technological and other developments
and provide for effective penalties in the event
that the commitments are not met.
Justification
The draft CEEAG (section 4.7 Aid in the form of reductions in taxes or parafiscal levies) excludes the
targeted and distinct approach on harmonised and not-harmonised environmental taxes, which is
in place under the current EAAG 2014-2020. The Commission proposal would entail that certain
category of beneficiaries wil not be able to receive state aid related to harmonised environmental
taxes - when above the Union minimum tax level set by the relevant applicable Directive - via a
simplified approach to assess the necessity and proportionality of the aid. As a consequence, the
restrictive criteria to assess the proportionality of aid (paragraphs 269 and 270 of the draft CEEAG)
would apply to al beneficiaries and to al type of environmental taxes.
This proposal is against the principle of fair taxation, as it would pose a disproportionate burden on
the European steel industry, would lead to an increased risk of carbon leakage and could undermine
the intra EU level-playing field among EIIs companies and sectors.
We cal on the European Commission to reintroduce the differentiation between harmonised and
non-harmonised taxes and the related targeted approach (paragraphs 172-175 EEAG 2014-2020).