European Commission Will Revise Competition Rules to Allow More Subsidies for Renewable Energy Projects

published: 2021-06-25 16:00 | editor: | category: News

On June 7, the European Commission began the public consultation process for the proposed changes to the Energy and Environmental State Aide Guidelines (EEAG).

To help EU member states establish more ambitious targets for the installation of renewable generation systems, the EU competition regulators are loosening some restrictions pertaining to subsidies for renewable energy projects. In fact, one of the most important changes that will be made to the EEAG is to allow member states to subsidize the entire cost of developing a renewable energy project.

According to the official press release that announces the proposed changes, the revised guidelines will be renamed as the Climate, Energy and Environment State Aide Guidelines (CEEAG). The revised guidelines are expected to be approved by the European Parliament by the end of this year.

In a statement within the press release, Margrethe Vestager, Executive Vice President of the European Commission, said that even though the private sector accounts for a substantial portion of investments in energy transition, the public sector has to take responsibility in accelerating the whole process. Vestager is also in charge of developing and implementing EU competition policies.

The EU executive told Reuters and other news agencies that the proposed changes to the guidelines will expand the scope of government support to include areas such as green transportation, energy efficiency of buildings, circular economy, and biodiversity. For instance, there is a possibility that initiatives related to green transportation could be fully subsidized as well in the future. The ultimate goal behind the revisions is to align the regulations of the single market with the objectives of the European Green Deal that was launched in 2019.

On the other hand, the EU executive insisted that EU member states will still have to confer with all interested parties if they intend to subsidize a particular renewable energy or decarbonization project. While the competition regulators are relaxing certain aspects of the competition laws, they want to make sure that all forms of government support are effective but limited.

Not everyone welcomes the proposed changes even though the new version of the guidelines is expected to bring about an even greater amount of public funding for renewable energy projects in the future. According to reporting by some European media outlets, local renewable energy cooperatives fear that the draft reforms will actually exclude them from participating in subsidy programs and give unfair advantages to big energy corporations, including those involved in the oil and gas sector. For instance, one of the proposed changes is to allow subsidies for natural gas projects as long as they are “compatible with” the climate goals set by the EU for 2030 and 2050.

The consultation process will last to August 2. Citizens and organizations within the bloc have until then to provide feedbacks, which the European Commission will take into account when formulating the final draft of the new guidelines.


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