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European Commission Adopts Revised EU Emission Trading System State Aid Guidelines

Metal News - Published on Tue, 22 Sep 2020

Image Source: EU Emission Trading System
In line with the European Green Deal and the EU's objective to become the first climate neutral economy by 2050, the Commission adopted today revised EU Emission Trading System State aid Guidelines in the context of the system for greenhouse gas emission allowance trading post-2021. They will enter into force on 1 January 2021 with the start of the new ETS trading period, and replace the previous Guidelines adopted in 2012. EU State aid control has an important role to play in enabling Europe to fulfil its Green Deal objectives. In order to reap the full benefits of limited public funds, it is crucial that State aid rules continue to do their part. This means ensuring that public money does not crowd out private spending and maintaining a level playing field in the Single Market, while minimising costs for taxpayers.

The ETS Guidelines aim at reducing the risk of “carbon leakage”, where companies move production to countries outside the EU with less ambitious climate policies, leading to less economic activity in the EU and no reduction in greenhouse gas emissions globally. In particular, they enable Member States to compensate companies in at-risk sectors for part of the higher electricity prices resulting from the carbon price signals created by the EU ETS, so-called indirect emission costs. At the same time, overcompensation of companies would risk running counter to the price signals created by the EU ETS to promote a cost-effective decarbonisation of the economy and create undue distortions of competition in the Single Market.

Against this background, the revised ETS Guidelines will:

Target aid only at sectors at risk of carbon leakage due to high indirect emission costs and their strong exposure to international trade. Based on an objective methodology, 10 sectors and 20 sub-sectors are eligible (compared to 13 * sectors and 7 sub-sectors under the previous Guidelines)

Set a stable compensation rate of 75% in the new period (reduced from 85% at the beginning of the previous ETS trading period), and exclude compensation for non-efficient technologies, to maintain the companies' incentives for energy efficiency

Make compensation conditional upon additional decarbonisation efforts by the companies concerned, such as complying with the recommendations of their energy efficiency audit

The Guidelines also take into account the specificities of small and medium-sized enterprises, in line with the SME Strategy for a sustainable and digital Europe, by exempting them from the new conditionality requirement in order to limit their administrative burden.

SlNACE codeDescription
1.14.11Manufacture of leather clothes
2.24.42Aluminium production
3.20.13Manufacture of other inorganic basic chemicals
4.24.43Lead, zinc and tin production
5.17.11Manufacture of pulp
6.17.12Manufacture of paper and paperboard
7.24.10Manufacture of basic iron and steel and ferro-alloys
8.19.20Manufacture of refined petroleum products
9.24.44Copper production
10.24.45Other non-ferrous metal production
11.The following subsectors within the plastics sector (20.16):
1120.16.40.15Polyethylene in primary forms
12.All product categories in the casting of iron sector (24.51)
13.The following subsectors within the glass fibre sector (23.14):
1323.14.12.10 fibre mats Glass fibre voiles
14.The following subsectors within the industrial gases sector (20.11):
1420.11.11.50 Inorganic oxygen compounds of non-metals

Source :

Posted By : Yogender Pancholi on Tue, 22 Sep 2020
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