FuelsEurope Response to the public Consultation on the draft Guidelines on Environmental and Energy State Aid for 2014-2020

Posted on 11/02/2014 in Position Paper

FuelsEurope welcomes the Commission’s intention to modernize EU State Aid rules and to award aid in a more cost effective way. We believe it is of the upmost importance to create a Single Market for energy and acknowledge that the Draft Guidelines on environmental and energy State Aid represent a step towards this goal. FuelsEurope supports a level playing field for all energy sources in the market. We welcome the principle of transparency of paragraph 109 as the undeniable element in guaranteeing clear and stable regulation and encouraging long-term investments.

However, we would like to express our concerns with regard to proposed aid rules for renewable energy sources: FuelsEurope believes that all energy sources should be integrated into the market under normal market conditions, without subsides (including system connection, balancing cost and exposure to price risk) as soon as possible. The guidelines foresee different State Aid rules being applied to renewables and other energy sources, which would maintain distortions of competition between various energy sources, especially if support is unduly granted to already mature technologies.

FuelsEurope calls for energy policies to be based on technology neutrality and a level playing field for all energy sources; accordingly, production subsides for all fuels should be phased out and the merits of different energy sources in terms of GHG emissions must be recognised via the carbon price. Until production subsidies are phased out, their negative impact should be alleviated, especially for energy intensive industries, in a way that does not distort the internal market.

NB: FuelsEurope stresses the need to be clear on the fact that tax relief shall not automatically be considered as subsides, particularly when associated with tax regimes and rates significantly in excess of those levied on other industries, as is often the case for fossil fuels (e.g. in the EU, the tax component of gasoline and diesel is between 40% and 61% of the end consumer price). The deduction of business expenditures for tax purposes is a fundamental part of a normal tax regime.

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