Draft Commission Communication sets out, inter alia, the long-awaited particulars for the regulatory State aid scheme for the construction of CCS-ready installations, and significantly modifies the definition of the notion ‘CCS-ready’ itself. The said modifications may be assessed as the ‘qualitative easing’ of the regulatory burden – in the face of relatively slow deployment of the new technology.
The modification of the definition of the ‘CCS-ready’ installation for the purposes of State aid scheme consists in that, pursuant to draft Commission Communication Guidelines on Certain State Aid Measures in the Context of the Greenhouse Gas Emission Allowance Trading Scheme Post 2012 (draft Commission Communication) it means that ‘an installation has demonstrated that suitable storage sites are available, that transport facilities are technically and economically feasible and that it is technically and economically feasible to retrofit for CO2 capture, as soon as sufficient market incentives in the form of a CO2 price threshold are reached.’
This article relates to: draft Communication from the Commission on Guidelines on Certain State Aid Measures in the Context of the Greenhouse Gas Emission Allowance Trading Scheme Post 2012 (draft Guidelines).
The draft Guidelines present conditions under which the aid granted in the period from 1 January 2013 to 31 December 2019 will be considered compatible with the internal market within the meaning of Article 107(3)(c) of the TFEU.
The application of State aid rules to free allocations of emission permits is also analysed in the following articles:
Risk assessment report - State aid rules regarding carbon leakage sectors
Notably noteworthy is the phrase: ‘as soon as sufficient market incentives in the form of a CO2 price threshold are reached’.
The phrase seem to show that the Commission recognizes the fact that the current price for CO2 allowances does not ensure sufficient incentives for the deployment of CCS technology.
So far also Recital 47 to the CCS Directive referred to the anticipated costs of CO2 allowances as a pivotal factor for assessing the economic feasibility of the CCS (see: ‘The economic feasibility of the transport and retrofitting should be assessed taking into account the anticipated costs of avoided CO2 for the particular local conditions in the case of retrofitting and the anticipated costs of CO2 allowances in the Community’) but in the currently published draft Commission Communication accents appear to be placed in different way.
In my opinion the pre-existing formulations meant that in the situation where projections were skeptical about satisfactory levels of CO2 allowances prices, the conclusions as regards ‘CO2-ready’ assessment should be negative. Taking into account, however, the propositions addressed in the draft Commission Communication, for the purposes of the State aid scheme there shouldn’t be so. It appears that under the draft Commission Communication in the described hypothetical situation the conclusion would amount to the statement that ‘the installation is CCS-ready under the presumption that the CO2 allowances price reach the level of EUR .....’.