CO2 emissions

Commission approves €30 billion Dutch scheme to support projects reducing greenhouse gas emissions

Published

7 months ago

December 15, 2020

The European Commission has approved, under EU state aid rules, a €30 billion Dutch scheme to support projects to reduce greenhouse gas emissions in the Netherlands. The scheme (Stimulering Duurzame Energieproductie, SDE++) will contribute to the EU environmental objectives without unduly distorting competition.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The €30 billion Dutch SDE++ scheme will support projects that will lead to substantial reductions in greenhouse emissions, in line with the objectives of the Green Deal. It will provide important support to environmentally-friendly projects, including renewable energy, use of waste heat, hydrogen production and carbon capture and storage, in line with EU rules. Importantly, the wide eligibility criteria and the selection of the beneficiaries through a competitive bidding process will enable the most cost effective projects to be supported, reducing costs for taxpayers and minimising possible distortions of competition.”

The Netherlands notified the Commission of their plans to introduce a new scheme, the SDE++ to support a range of projects aimed at reducing greenhouse gas emissions in the Netherlands. The SDE++, with an estimated total budget of around €30 billion, will run until 2025.

The scheme will be open to projects based on renewable electricity, gas and heat, the use of industrial waste heat and heat pumps, the electrification of industrial heat processes and electrification of hydrogen production, and carbon capture and storage (CCS) for industrial processes, including hydrogen production and waste incineration.

Beneficiaries will be selected, the support level set, and the aid allocated, through competitive bidding processes. The beneficiaries will receive support via a variable premium contract of the duration of up to 15 years. The payments beneficiaries receive will be adjusted based on the evolution of the relevant market price (for example, electricity, gas, carbon) over the lifetime of the support contract.

With respect specifically to electrification projects, that only demand low carbon electricity and do not increase demand for electricity from fossil fuels, the scheme ensures that these projects will only be supported for a limited number of running hours each year based on the number of hours in which the electricity supply in the Netherlands is expected to be met completely from low carbon sources. This will ensure that the support effectively leads to carbon emission reductions.

The Netherlands has also developed a detailed plan for the independent economic evaluation of the SDE++ covering in particular the way in which the competitive bidding process works and the efficiency of the scheme in achieving greenhouse gas emissions reductions. The results of the evaluation will be published.

The Commission assessed the scheme under EU state aid rules, in particular the 2014 Guidelines on State aid for environmental protection and energy.

The Commission found that the aid is necessary and has an incentive effect, as carbon prices do not fully internalise the costs of pollution and therefore the projects would not take place in the absence of the public support. Furthermore, the aid is proportionate and limited to the minimum necessary, as the level of aid will be set through competitive auctions. Finally, the Commission found that the positive effects of the measure, in particular the positive environmental effects, outweigh the negative effects of the measure in terms of distortions to competition, given the broad eligibility criteria and the existence of a competitive bidding process.

On this basis, the Commission concluded that the SDE++ is in line with EU state aid rules, as it supports projects which will reduce greenhouse gas emissions, in line with the European Green Deal, without unduly distorting competition.

Background

The Commission's 2014 Guidelines on State Aid for Environmental Protection and Energy allow member states to support projects like those supported under the SDE ++, subject to certain conditions. These rules aim to help Member States meet the EU's ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The Renewable Energy Directive established an EU-wide binding renewable energy target of 32% by 2030.

The Commission's New Industrial Strategy for Europe and more recently the EU Hydrogen Strategy, identify the importance of renewable and low carbon hydrogen as part of the Green Deal.

The non-confidential version of the decisions will be made available under the case numbers SA.53525 in the state aid register on the Commission's Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

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CO2 emissions

Climate Action: Data shows CO2 emissions from new cars strongly decreased in 2020, with electric vehicles tripling their market share as new targets are applied

Published

4 weeks ago

June 30, 2021

EU Reporter Correspondent

Provisional monitoring data, published on 29 June, shows that the average CO₂ emissions of new cars registered in the EU, Iceland, Norway and the UK in 2020 have decreased by 12% compared to 2019. This is by far the greatest annual decrease in emissions since CO2 standards started to apply in 2010. It coincides with the phase in of stricter CO2 emissions standards for cars as of January 1, 2020. For the period 2020-2024, the Regulation sets the EU fleet-wide CO₂ emission targets at 95 gCO2/km for newly registered cars and at 147g CO2/km for newly registered vans. The main reason for this sharp decrease of CO₂ emissions was the surge in the share of electric vehicle registrations, which tripled from 3.5% in 2019 to over 11% in 2020.

Despite the shrinking overall market for new cars due to the COVID-19 pandemic, the total number of electric cars registered in 2020 still increased, reaching for the first time over 1 million a year. The average CO2 emissions from new vans sold in the EU, Iceland, Norway and the United Kingdom in 2020 also slightly decreased. The provisional data shows that European legislation on CO2 emissions standards continues to be an effective tool for reducing CO2 emissions from cars and vans, and that the shift to electro-mobility is underway.

Vehicle manufacturers have three months to review the data and may notify the Commission if they believe there are any errors in the dataset. The final data, to be published at the end of October 2021, will be the basis for the Commission to determine manufacturers' compliance with their specific emission targets, and whether any fines are due for excess emissions. The revision of the current CO2 emissions standards to align them with the EU's higher new climate ambitions will be part of the Commission's Fit for 55 proposals, due for adoption on 14 July. For more information please see here.

CO2 emissions

Carbon leakage: Prevent firms from avoiding emissions rules

Published

5 months ago

March 10, 2021

EU Reporter Correspondent

The European Parliament is discussing a carbon levy on imported goods to stop companies moving outside the EU to avoid emissions standards, a practice known as carbon leakage. Society.

As European industry struggles to recover from the Covid-19 crisis and the economic pressure due to cheap imports from trading partners, the EU is trying to honour its climate commitments, whilst keeping jobs and production chains at home.

Discover how the EU’s recovery plan prioritizes creating a sustainable and climate-neutral Europe.

An EU carbon levy to prevent carbon leakage

EU efforts to reduce its carbon footprint under the European Green Deal and become sustainably resilient and climate neutral by 2050, could be undermined by less climate-ambitious countries. To mitigate this, the EU will propose a Carbon Border Adjustment Mechanism (CBAM), which would apply a carbon levy on imports of certain goods from outside the EU. MEPs will put forward proposals during March's first plenary session. How would a European carbon levy work?

If products come from countries with less ambitious rules than the EU, the levy is applied, ensuring imports are not cheaper than the equivalent EU product.

Given the risk of more polluting sectors relocating production to countries with looser greenhouse gas emission constraints, carbon pricing is seen as an essential complement to the existing EU carbon allowances system, the EU's emissions trading system (ETS). What is carbon leakage?

Carbon leakage is the shifting of greenhouse gas emitting industries outside the EU to avoid tighter standards. As this simply moves the problem elsewhere, MEPs want to avoid the problem through a Carbon Border Adjustment Mechanism (CBAM).

The Parliament's objective is to fight against climate change without endangering our businesses due to unfair international competition due to the lack of climate action in certain countries. We must protect the EU against climate dumping while ensuring that our companies also make the necessary efforts to play their part in the fight against climate change. Yannick Jadot Lead MEP

Existing carbon pricing measures in the EU

Under the current emissions trading system (ETS), which provides financial incentives to cut emissions, power plants and industries need to hold a permit for each tonne of CO2 they produce. The price of those permits is driven by demand and supply. Due to the last economic crisis, demand for permits has dropped and so has their price, which is so low that it discourages companies from investing in green technologies. In order to solve this issue, the EU will reform ETS.

What the Parliament is asking for

The new mechanism should align with World Trade Organisation rules and encourage the decarbonization of EU and non-EU industries. It will also become part of the EU's future industrial strategy.

By 2023, the Carbon Border Adjustment Mechanism should cover power and energy-intensive industrial sectors, which represent 94% of the EU's industrial emissions and still receive substantial free allocations, according to MEPs.

They said that it should be designed with the sole aim of pursuing climate objectives and a global level playing field, and not be used as a tool to increase protectionism.

MEPs also support the European Commission proposal to use the revenues generated by the mechanism as new own resources for the EU's budget, and ask the Commission to ensure full transparency about the use of those revenues.

The Commission is expected to present its proposal on the new mechanism in the second quarter of 2021.

Learn more about the EU's responses to climate change.

Find out more

Climate change

ECB sets up climate change centre

Published

6 months ago

January 25, 2021

EU Reporter Correspondent

The European Central Bank (ECB) has decided to set up a climate change centre to bring together the work on climate issues in different parts of the bank. This decision reflects the growing importance of climate change for the economy and the ECB’s policy, as well as the need for a more structured approach to strategic planning and co-ordination.The new unit, which will consist of around ten staff working with existing teams across the bank, will report to ECB President Christine Lagarde (pictured), who oversees the ECB’s work on climate change and sustainable finance.“Climate change affects all of our policy areas,” said Lagarde. “The climate change centre provides the structure we need to tackle the issue with the urgency and determination that it deserves.”The climate change centre will shape and steer the ECB’s climate agenda internally and externally, building on the expertise of all teams already working on climate-related topics. Its activities will be organised in workstreams, ranging from monetary policy to prudential functions, and supported by staff that have data and climate change expertise. The climate change centre will start its work in early 2021.

The new structure will be reviewed after three years, as the aim is to ultimately incorporate climate considerations into the routine business of the ECB.

The five work streams of the climate change centre focus on: 1) financial stability and prudential policy; 2) macroeconomic analysis and monetary policy; 3) financial market operations and risk; 4) EU policy and financial regulation; and 5) corporate sustainability.