Nordenergi responded 20 November to the EU Commission/DG COMP on the upcoming revision of Energy and Environmental guidelines (EEAG) in state-aid rules, which is planned to take place in 2021.

Nordenergi believes a revision of Energy and Environmental Guidelines in the State aid rules should focus on:

1. 1. Create conditions for a well-functioning electricity market.
   2. Introduce a better linking to EU ETS and the Green deal agenda.
   3. Limit direct state aid to renewables and potential support measures should be market-based to not distort market signals.
   4. EEAG should not link to the EU taxonomy since it lacks enough clarity but to relevant sectoral EU legislation.

Nordenergi supports a well- functioning and competitive internal energy market for the EU. The Nordic power market is one integrated market with a common price-setting mechanism and has to be regarded as such for different regulation purposes. We believe in the promotion of a predictable and better investment framework for all market actors. The revision of Guidelines on State aid for Environmental protection and Energy (EEAG) should be made in line with the Green Deal agenda to support higher climate goals for 2030 and further on.

The Green Deal is also part of Europe’s growth strategy. Making it the backbone of the recovery plan is not only necessary in a climate perspective, but also from an economic point of view – in order to create growth and work opportunities that are sustainable in the long run. Support schemes should be designed to conform to general market incentives. This implies time-limited schemes that are phased out as technologies mature.

We believe the EU ETS should be strengthened and function as the main instrument to meet a higher climate goal for 2030. Despite the positive developments, there are huge inefficiencies still in EU climate policy. Existing state aid rules do not fully recognise the EU ETS and state aid as an overlapping policy with the EU ETS. Therefore, the EU should urge the member states to avoid overlapping policy instruments in the EU ETS sectors.

Regarding biomass, the EU should have a level playing field in focus and harmonised rules for subsidies, where the market would define, where biomass is used and gained the biggest emission reductions and added value. It is considered that biomass will play an important role as a transition technology in the transformation of electricity systems due to its potential for cost-effective utilisation of existing assets as well as in new installations. The EEAG should be in line with the revised Renewables Directive 2018/2001 from 2018 and not limit the use of forest and crop residues for electricity and heat production regarding energy tax exemptions.

Please read our full response to the Commission here

 Erik Thornström,

Chair for Nordenergi Working Group Taxes and Levies