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Workshop III: Energy and Environmental aid Diana BARGLAZAN DG Competition, European Commission 1 Slide 2 How to Assess Whether Support for an Infrastructure Project Involves State Aid Notion of aid Infrastructure assessment grids Energy infrastructure Environmental infrastructure Q&A Slide 3 New General Block Exemption Regulation (GBER) Adopted in May 2014 In force since 1 July 2014 Thresholds for notification and evaluation Environmental section mirroring the Energy and Environmental Aid Guidelines (EEAG) Slide 4 New GBER What is new? Higher notification thresholds Simplified calculation of eligible costs Regional bonus: maximum aid intensity: x%; +10% for medium sized undertakings; +20% for small undertakings; +15% for Article 107(3)(a) assisted areas; +5% for Article 107(3)(c) assisted areas. Transparency Evaluation Slide 5 GBER general requirements Scope Definitions Transparent aid Incentive effect Cumulation Publication and information Monitoring Reporting Slide 6 Environmental and energy aid under GBER Aid to increase environmental protection compared to standards (Articles 36 and 37). Energy efficiency (Articles 38 and 39 (buildings)) - EXTENDED High efficient cogeneration (Article 40) Renewable energy (Articles 41 43) - EXTENDED Environmental taxes (Article 44) Remediation of contaminated sites (Article 45) - NEW Energy efficient district heating and cooling (Article 46) - NEW Recycling and re-utilisation (Article 47) - NEW Energy Infrastructure (Article 48) - NEW Environmental studies (Article 49) Slide 7 Common assessment principles Contribution to common objective Need for State intervention Appropriateness (of the aid and the instrument) Incentive effect Proportionality Avoidance of undue negative effects Transparency Slide 8 Article 36 Investment aid to go beyond standards or increase the level of environmental protection in the absence of Union standards Not for investments necessary to comply with Union standards already adopted Eligible costs: extra investment costs necessary to go beyond the applicable Union standards or to increase the level of environmental protection in the absence of Union standards Maximum aid intensities: 40% - 75% of the eligible costs Slide 9 Article 37 Investment aid for early adaptation to future Union standards For investment implemented and finalised at least one year before the date of entry into force of the standard concerned Eligible costs: the extra investment costs necessary to go beyond the applicable Union standards Maximum aid intensities: 20 % for small undertakings, 15 % for medium-sized undertakings and 10 % for large undertakings (>3years) 15 % for small undertakings, 10 % for medium-sized undertakings and 5 % for large undertakings (> 1 year) plus regional bonus Slide 10 Article 38 Investment aid for energy efficiency measures Not for investments necessary to comply with Union standards already adopted Eligible costs: the extra investment costs necessary to achieve a higher level of energy efficiency Maximum aid intensities: 30% - 65% of the eligible costs Slide 11 Article 39 Investment aid for energy efficiency projects in buildings Form of aid: financial instruments (loans or guarantees) Eligible costs: the overall costs of the energy efficiency project Aid provided via financial intermediaries of energy efficiency funds Maximum amount of the loan or amount guaranteed: EUR 10 million Slide 12 Article 40 Investment aid for high efficiency cogeneration Available for newly installed or refurbished installations Eligible costs: the extra investment costs for the equipment needed for the installation to operate as a high-efficiency cogeneration installation, compared to conventional electricity or heating installations of the same capacity or the extra investment cost to upgrade to a higher efficiency when an existing installation already meets the high- efficiency threshold. Maximum aid intensities: 45% - 80% of the eligible costs. Slide 13 Article 41 Investment aid for energy from renewable sources Available for new installations only. No aid granted or paid out after the installation started operations and aid shall be independent from the output. Not for: food-based biofuels; biofuels covered by a supply obligation; hydropower installations that do not comply with Directive 2000/60/EC of the European Parliament Slide 14 Article 41 Investment aid for energy from renewable sources Eligible costs: the extra investment costs necessary to promote the production of energy from renewable sources. Maximum aid intensities: 45% - 80% of the eligible costs For certain small installations where a less environmentally friendly investment cannot be established the total investment costs can constitute the eligible costs. In this case, maximum aid intensities: 30% - 65% of the eligible costs The aid intensity may reach 100 % of the eligible costs, if the aid is granted in a competitive bidding process. Slide 15 Article 42 Operating aid for electricity from renewable sources Aid granted in a competitive bidding process, on the basis of clear, transparent and non-discriminatory criteria, which shall be open to all generators producing electricity from renewable energy sources on a non-discriminatory basis. The bidding process may be limited to specific technologies No competitive bidding process required for installations below: 1MW (e.g. solar and biomass) 6MW or 6 generation Units (only wind) Slide 16 Article 42 Operating aid for electricity from renewable sources Integrating RES into the market: Sell electricity directly on the market (aid as premium on top of the market price) Balancing responsibilities (if liquid intra-day market) Aid shall not be granted when prices are negative Exemption from these requirements for installations below: 500 kW (e.g. solar and biomass) 3MW or 3 generation Units (only wind) Aid only until the plant has been fully depreciated Any investment aid previously received must be deducted Slide 17 Article 43 Operating aid for energy from renewable sources produced in small scale installations Small scale installations - below: 500 kW (e.g. solar and biomass) 3MW or 3 generation Units (only wind) 50 000 t/year for biofuels Not for: food-based biofuels; biofuels covered by a supply obligation; Slide 18 Article 43 Operating aid for energy from renewable sources produced in small scale installations The aid per unit of energy shall not exceed the difference between the total levelized costs of producing energy from renewable sources and the market price of the form of energy concerned. The levelized costs shall be updated regularly and at least every year. Maximum rate of return: the relevant swap rate plus a premium of 100 basis points. Aid only until the installation has been fully depreciated. Investment aid must be deducted. Slide 19 Article 44 Aid in the form of reductions in environmental taxes The beneficiaries shall be selected on the basis of transparent and objective criteria The beneficiaries shall pay at least the respective minimum level of taxation set by Directive 2003/96/EC. Form: a reduction of the applicable environmental tax rate or fixed compensation amount or a combination of these mechanisms. Not for biofuels subject to a supply or blending obligation. Slide 20 Article 45 Investment aid for remediation of contaminated sites The investment shall lead to the repair of the environmental damage, including damage to the quality of the soil or of surface water or groundwater. If the person liable for the environmental damage is identified, that person must finance the remediation (polluter pays principle), and no aid may be granted. Eligible costs: the difference between the expenditure incurred in remediating the site and the evaluation of the increase in value of the land resulting from remediation. Maximum aid intensity: 100 % of the eligible costs. Slide 21 Article 46 Investment aid for energy efficient district heating and cooling Aid for the construction of the production plants in energy efficient district heating or cooling projects: Eligible costs for the production plant: the extra costs needed for the construction, expansion and refurbishment of one or more generation units to operate as an energy efficient district heating and cooling system compared to a conventional production plant. The investment shall be an integral part of the energy efficient district heating and cooling system. Maximum aid intensities: 45% - 80% of the eligible costs Slide 22 Aid to the construction of the network: The eligible costs for the distribution network = the investment costs. The aid amount for the distribution network shall not exceed the difference between the eligible costs and the operating profit. The operating profit shall be deducted from the eligible costs ex ante or through a claw-back mechanism. Article 46 Investment aid for energy efficient district heating and cooling Slide 23 For the recycling and re-utilisation of waste generated by other undertakings. Not for waste recovery operations other than recycling The investment must go beyond the state of the art. Eligible costs: the extra investment costs necessary to realise an investment leading to better or more efficient recycling or re-use activities compared to a conventional process of re-use and recycling activities with the same capacity that would be constructed in the absence the aid. Maximum aid intensity: 35 % - 70% of the eligible costs Article 47 Investment aid for waste recycling and re-utilisation Slide 24 Definition of energy infrastructure Aid for the construction or upgrade of energy infrastructure in assisted areas For energy infrastructure subject to full tariff and access regulation according to internal energy market legislation. Not for electricity and gas storage projects, not for oil infrastructure Eligible costs are the investment costs. The aid amount shall not exceed the difference between the eligible costs and the operating profit. The operating profit shall be deducted from the eligible costs ex ante or through a claw-back mechanism. Article 48 Investment aid for energy infrastructure Slide 25 Aid for studies, including energy audits, directly linked to environmental investments No aid to large undertakings for energy audits carried out under Article 8(4) of the Directive 2012/27/EU, unless the energy audit is carried out in addition to the mandatory energy audit under that Directive. Eligible costs: the costs of the studies Maximum aid intensity: 50 % - 85% of the eligible costs Article 49 Aid for environmental studies Slide 26 Notification thresholds EUR 15 mil. for investment aid for environmental protection; EUR 20 mil. for district heating or cooling distribution network; EUR 10 mil. for investment aid for energy efficiency projects (Article 39); EUR 20 mil. for remediation of contaminated sites; EUR 15 mil. for operating aid for the production of electricity from renewable sources and operating aid for the promotion of energy from renewable sources in small scale installations; EUR 150 mil. for operating aid to renewables if aid granted based on a competitive bidding process; EUR 50 mil. for investment aid for energy infrastructure Slide 27 2014 Energy and Environmental Aid Guidelines (EEAG) Adopted in April 2014 In force since 1 July 2014 Context (State Aid modernisation - SAM) Changes as compared to the previous guidelines Slide 28 State Aid Modernisation Give more freedom and flexibility to member States: increase the use of block exempted measures Make the rules clearer and simpler Harmonize more the rules applicable to different categories of aid Highlight the common elements Ensure consistency with other Commission initiatives The funding gap approach vs extra-costs approach Limit the detailed assessment to large projects, that can have a significant impact on competition Slide 29 EEAG: what has really changed? 1.Operational aid to Renewable energy sources 2.New categories of aid: Reductions on RES charges for energy-intensive users Energy infrastructure Generation adequacy 3.Higher notification thresholds 4.Common assessment principles 5. Simplification more exempted measures; calculation of eligible costs Slide 30 Scope of Guidelines: aid categories 2008 Guidelines Environmental aid 2014 Guidelines Environmental and energy aid Cogeneration & district heating Waste management Energy saving Reductions/exemptions from environmental taxes Environmental studies Early adaptation to/going beyond EU standards, or for higher environmental protection in their absence (incl. new transport vehicles). Relocation of undertakings Remediation of contaminated sites Renewable energy sources Tradable permit schemes and cooling and resource efficiency + New categories Reductions in funding support for electricity from renewable sources Energy infrastructure Generation adequacy Slide 31 Thresholds for individual notification Category (individual aid)Notification threshold: Investment aid15 million Operating aid for RES250 MW Operating aid for cogeneration300 MW Operating aid for biofuels150 000 t/year New - Energy infrastructure50 million New - Carbon capture and storage 50 million New - Generation adequacy15 m/project/undertaking No individual notification for competitive bidding processes Slide 32 Common assessment principles Contribution to common objective Need for State intervention Appropriateness (of the aid and the instrument) Incentive effect Proportionality Avoidance of undue negative effects Transparency Slide 33 Specific rules for certain aid categories Scope of the EEAG (point 18) 1)aid for going beyond Union standards or increasing the level of environmental protection in the absence of Union standards (including aid for the acquisition of new transport vehicles); 2)aid for early adaptation to future Union standards; 3)aid for environmental studies; 4)aid for the remediation of contaminated sites; 5)aid for energy from renewable sources; 6)aid for energy efficiency measures, including cogeneration and district heating and district cooling; 7)aid for resource efficiency and, in particular, for waste management; 8)aid for CO2 capture, transport and storage including individual elements of the Carbon Capture Storage (CCS) chain; 9)aid in the form of reductions in or exemptions from environmental taxes; 10)aid in the form of reductions in funding support for electricity from renewable sources; 11)aid for energy infrastructure; 12)aid for generation adequacy measures; 13)aid in the form of tradable permits; 14)aid for the relocation of undertakings. Slide 34 Specific rules for certain aid categories Sections of the EEAG 3.3.Aid to energy from renewable sources 3.4.Energy efficiency measures, including cogeneration and district heating and district cooling 3.5.Aid for resource efficiency and in particular aid to waste management 3.6.Aid to Carbon Capture and Storage (CCS) 3.7.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 3.8.Aid to energy infrastructure 3.9.Aid for generation adequacy 3.10.Aid in the form of tradable permit schemes 3.11.Aid for the relocation of undertakings Slide 35 THANK YOU FOR YOUR ATTENTION! QUESTIONS? Contact: diana.barglazan@ec.europa.eudiana.barglazan@ec.europa.eu