ANNOUNCEMENT 05 Dec 2017

In December 2017, the Spanish authorities notified the European Commission of their intention to increase the annual budget of the already established scheme to compensate certain energy-intensive industries' indirect EU ETS costs.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

SA.49751 ETS indirect costs scheme – budget increase: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_49751
European Commission, Letter to the Member State - working language, State aid SA.49751 (2017/N) — Spain Compensation for indirect EU ETS costs in Spain – Budget increase: https://ec.europa.eu/competition/state_aid/cases/272229/272229_1953681_103_2.pdf
Official Journal of the European Union, Authorisation for State aid pursuant to Articles 107 and 108 of the Treaty on the Functioning of the European Union, Cases where the Commission raises no objections, 2018/C 080/01, issued on 2 March 2018: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2018.080.01.0001.01.ENG&toc=OJ:C:2018:080:TOC
SA.36650 Compensation for indirect EU ETS costs: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_36650
Official Journal of the European Union, COMMUNICATION FROM THE COMMISSION, Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2012, issued on 5 June 2012: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2012.158.01.0004.01.ENG&toc=OJ:C:2012:158:TOC#ntr1-C_2012158EN.01001901-E0001
Official Journal of the European Union, Communication from the Commission amending the Communication from the Commission Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2012, issued on 15 December 2012: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2012.387.01.0005.01.ENG&toc=OJ:C:2012:387:TOC

Inception date: 01 Jan 2017 | Removal date: 31 Dec 2017

Tax or social insurance relief

On 5 December 2017, the Spanish authorities notified the European Commission of their intention of increasing the existing budget for the years 2017 to 2020 of the aid scheme to compensate certain energy-intensive industries' indirect EU ETS costs. The budget is increased from a total 2016-2020 budget of EUR 106 million (approx. USD 125.8 million) to a total 2017-2020 budget of EUR 444 million (approx. USD 527 million). More specifically, the budget is increased to EUR 90 million per year for the years 2017 to 2020 as well as to "extend the budget of the scheme to EUR 84 million for 2017, i.e. for the compensation of the costs incurred in 2016". In other words, as the budget in 2016 was only EUR 6 million, an additional EUR 84 million is transferred to the budget of 2017. 

Under the scheme, the Spanish authorities will grant aid to compensate a percentage of certain companies' ETS costs also known as indirect emission costs. The aid intensity (i.e. the compensation level of the eligible costs) will remain at 80% between 2016 and 2018 and 75% for the years 2019 and 2020. 

The beneficiaries of the scheme are limited to companies operating in sectors "deemed ex-ante to be exposed to a significant risk of carbon leakage due to indirect emission costs" are eligible. The list of sectors and subsectors is disclosed in the Guidelines' Annex II. Such sectors include the iron and steel, minerals, chemicals, textiles, paper and plastics industries. Notably, the state aid is granted under the rules laid out in the European Commission's "Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2012". 

The budget increase is valid for the period 2017 to 2020. Notably, the scheme was originally introduced in January 2013 with a total budget of EUR 5 million (approx USD 5.7 million) over a period of three years. 

The Commission approved the state aid amendments on 15 December 2017, concluding that: "The Commission has accordingly decided to consider the aid to be compatible with the internal market in application of the Commission’s Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post2012, pursuant to Article 107 (3) c) of the Treaty on the Functioning of the European Union.

The Guidelines issued by the European Commission outline the purpose of such state aid as follows: "Under Article 10a(6) of the ETS Directive, Member States may grant State aid in favour of sectors or subsectors deemed to be exposed to a significant risk of carbon leakage due to costs relating to greenhouse gas emissions passed on in electricity prices ... , in order to compensate for those costs in accordance with State aid rules. For the purposes of these Guidelines, ‘carbon leakage’ describes the prospect of an increase in global greenhouse gas emissions when companies shift production outside the Union because they cannot pass on the cost increases induced by the EU ETS to their customers without significant loss of market share."

In February 2019, the Spanish authorities notified the European Commission of its intention to retrospectively increase the budget for the years 2018 to 2020. The Commission approved this amendment in March 2019, see related state act. 

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