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New State aid Guidelines related to ETS-3

IFIEC Energy Forum Brussels, 9 June 2011. New State aid Guidelines related to ETS-3. Evi Papantoniou The views expressed are purely those of the writer and may not in any circumstances be regarded as stating an official position of the European Commission.

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New State aid Guidelines related to ETS-3

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  1. IFIEC Energy ForumBrussels, 9 June 2011 New State aid Guidelines related to ETS-3 Evi Papantoniou The views expressed are purely those of the writer and may not in any circumstances be regarded as stating an official position of the European Commission.

  2. IFIEC Energy ForumBrussels, 9 June 2011 New ETS Guidelines • ETS Directive forsees new aid measures: • Compensation for indirect emissions to prevent « carbon leakage » • Free allocation to power generators in EU-10 • investment aid to CCS-ready power plants • aid involved in exclusion of small emitters

  3. IFIEC Energy ForumBrussels, 9 June 2011 State aid for indirect emissions • Costs for indirect emissions (CO2 costs passed on in electricity prices) create risk of “carbon leakage” for certain sectors • Member States may compensate those sectors • Commission 2008 statement defined principles of compatibility of the aid: • targets sectors risk “carbon leakage” due to indirect emission costs • companies unable to pass on the additional from ETS-3 CO2 costs • aid should be proportionate to the pass on and • maintain incentive to improve efficiency or switch to cleaner electricity

  4. IFIEC Energy ForumBrussels, 9 June 2011 State aid for indirect emissions: consultation • Consultation of Member States and stakeholders: • March-May 2011 • Large interest: 140 submissions from • Member States • industry associations & companies • Environmental NGOs & Universities

  5. IFIEC Energy ForumBrussels, 9 June 2011 Consultation: aid for indirect emission costs • Eligible sectors • Maximalist: 2009 Carbon leakage list (164 sectors) • vs. minimalistic approach: only few sectors, in view of risk of competitive distortions between Member States • How to preserve ETS efficiency & not burden excessively other sectors? • Key criterion: ability to pass-through costs • Quantitative criteria/proxies • Qualitative criteria

  6. IFIEC Energy ForumBrussels, 9 June 2011 Consultation: aid for indirect emission costs • Efficiency Benchmarks • How to incentivise abatement? • Level of support • 100% vs aid reduction • How to continue incentive to abate & shift to green electricity? • CO2 emission factor • Marginal plant vs EU average • Complex vs transparent, simple method • How to preserve ETS efficiency?

  7. IFIEC Energy ForumBrussels, 9 June 2011 ETS Guidelines: next steps • Analyse results of 1st consultation • 2nd Consultation on draft Guidelines • Adoption of ETS Guidelines by the end of year

  8. IFIEC Energy ForumBrussels, 9 June 2011 • Thank you! • Questions? The views expressed are purely those of the writer and may not in any circumstances be regarded as stating an official position of the European Commission.

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