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EU seeks input on emissions trading state aid guidelines

The European Commission has initiated a public consultation on draft revisions to the EU state aid guidelines on emissions trading, which are set to expire at the end of 2020.


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The European Commission has initiated a public consultation on draft revisions to the EU state aid guidelines on emissions trading, which are set to expire at the end of 2020.

In a January 14 release, the commission said that in line with the recently published European Green Deal — which calls for EU climate neutrality by 2050 — the guidelines call for further restrictions on member states’ compensation toward companies’ indirect costs incurred as a result of carbon pricing under the EU emission trading system (ETS).

Specifically, the guidelines suggest that fewer sectors should be eligible for compensation after 2021, that the compensation rate should be decreased from 85 percent to 75 percent while excluding inefficient technologies, and that compensation should be limited to companies that can show they have undertaken decarbonization measures. Comments on the guidelines will be accepted through March 10.

The ETS, which has been in effect since 2005, works on the cap-and-trade principle : A cap is placed on the amount of greenhouse gas emissions each company is permitted, and within that limit, companies buy and trade emission allowances. The allowances must cover all of a company’s emissions for the year or heavy fines will be imposed. Under certain conditions, the ETS directive allows member states to compensate companies’ indirect costs, such as higher expenditures on electricity.

“The revision of the EU emissions trading system state aid guidelines is an important element of the European Green Deal, aiming at limiting global greenhouse gas emissions,” EU Competition Commissioner Margrethe Vestager said in a forward to the consultation published January 14. She said the guidelines “focus state support on sectors most at risk of carbon leakage.”

“The European Green Deal is our new growth strategy. It will help us cut emissions while creating jobs,” commission President Ursula von der Leyen said in the release.

The European Green Deal, announced by the commission in December 2019, proposes the revision of the energy taxation directive and the “greening” of national budgets, among other measures, to move the EU toward a more resource-efficient economy. Earlier this month, Norway’s Equinor ASA announced its own goal of cutting greenhouse gas emissions to near zero by 2050.

By Annagabriella COLON

Cet article est extrait de notre service d'actualité Taxnotes

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