State aid rules regarding carbon leakage sectors adopted - more flexibility for production planning
Friday, 25 May 2012 20:33

 

Unlike the previous versions of the Guidelines, in the final text the 40% threshold for the production increases and decreases in the definitions for baseline output and baseline electricity consumption, is not relevant.

In effect of the changes made in that regard, the installations will have greater flexibility in planning production without being restricted with stiff and cut-off 40% threshold.

 

 

Finally, after a long consultation process on 22 May 2012 the European Commission adopted Communication on Guidelines on Certain State Aid Measures in the Context of the Greenhouse Gas Emission Allowance Trading Scheme Post 2012 C(2012) 3230 final {SWD(2012) 130 final} {SWD(2012) 131 final}.

 

Certain risks involved in the said measure when it was at the draft stage were signaled in Risk assessment report - State aid rules regarding carbon leakage sectors.

 

Beneath the signalling of some differences noticed as compared to previous draft versions.

 

The definition for the baseline output

 

The final text of the Guidelines indicates that the Commission have taken into account some points of the industry input and removed from the said measure the most ostensible signs of the clerical discretion (being for instance arbitrary 40 % threshold for the production increases and decreases in the definitions for baseline output and baseline electricity consumption).

 

The said 40% threshold met critical contributions from stakeholders and have been replaced  in the final version of the Guidelines with a formula analogous to the one set out in the Article 23(2) regarding partial cessation of operations of an installation as addressed in the Benchmark Decision (Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to  Article 10a of Directive 2003/87/EC).

 

Here are shown the differences in the definitions of the baseline output in the previous draft Guidelines (1) and in the final Guidelines (2) - the relevant passage underlined:

 

(1) ‘baseline output’, in tonnes per year, means the average production at the installation over the reference period 2005-2011 (baseline output) for installations operating every year from 2005 to 2011. If the installation did not operate for at least one year from 2005 to 2011, then the baseline output will be defined as yearly production until there are four years of operation on record, and afterwards it will be the average of the last three years of this period. The aid will be increased by 40 % if average production during the aid granting period increases to more than 40 % of baseline output. The aid will be reduced by 40 % if average production during the aid granting period decreases to less than 40 % of baseline output.

 

(2) ‘baseline output’, in tonnes per year, means the average production at the installation over the reference period 2005-2011 (baseline output) for installations operating every year from 2005 to 2011. A given calendar year (e.g. 2009) may be excluded from that 7-year reference period. If the installation did not operate for at least one year from 2005 to 2011, then the baseline output will be defined as yearly production until there are four years of operation on record, and afterwards it will be the average of the preceding three years of that period. If, over the aid granting period, production capacity at an installation is significantly extended within the meaning of these Guidelines, the baseline output can be increased in proportion to that capacity extension. If an installation reduces its production level in a given calendar year by 50% to 75% compared to the baseline output, the installation will only receive half of the aid amount corresponding to the baseline output. If an installation reduces its production level in a given calendar year by 75% to 90% compared to the baseline output, the installation will only receive 25% of the aid amount corresponding to the baseline output. If an installation reduces its production level in a given calendar year by 90% or more compared to the baseline output, the installation will receive no aid.

 



 

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