ANNOUNCED AS TEMPORARYNo
Tax or social insurance relief
Norway will become one of the first countries in Europe to introduce a scheme aimed at compensating its energy-intensive manufacturing industry for higher electricity prices, the government announced on September 11, 2012.
Norway's industry has complained that the introduction of a European Union-wide quota system in 2005 contributed to higher electricity prices in Norway compared with countries not subject to climate regulation. The CO2 quota system was introduced to fight climate change and is an important pillar in the bloc's climate policy.
The proposal will help to keep Norway's traditional manufacturing industry afloat and discourage companies from relocating production to countries with less strict climate regulation.
Prime Minister Jens Stoltenberg told at a news conference that Norway would likely be the first country to implement a system such as this for CO2 compensation. Germany is moving ahead with a similar scheme.
At the time of the original announcement, it was claimed that about 80 companies in Norway are affected. Mr. Stoltenberg said the proposal should help ease cost pressure on Norway's traditional industry and public sector.
The scheme covers 15 sectors, including producers of aluminium, iron alloys, chemicals and paper, and will take effect from July 1, 2013, until the end of 2020. It will only include long-term power contracts signed after the EU Emission Trading Scheme was established.
The EFTA Surveillance Authority reviewed this scheme and cleared it. However, in their report (mentioned in the sources below), the Surveillance Authority noted in paragraphs 36 and 37:
"According to established case law, a measure distorts or threatens to distort competition in a way that affects trade between Contracting Parties if it strengthens the position of aid recipients compared with other companies24 and the recipients are active in a sector in which trade between Contracting Parties takes place.25 In the case at hand, the aid will strengthen the position of energy-intensive companies in the eligible sectors as compared to companies in related sectors. Moreover, potential beneficiary undertakings are active in sectors which are deemed to be subject to minimum levels of external trade.
In that light, the Notified Scheme distorts or threatens to distort competition in a way that affects trade between Contracting Parties within the meaning of Article 61(1) EEA. "
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