Guidance on the optional application of Article 10c beset with legal traps (I)
Monday, 04 April 2011 17:56


If somebody hoped so far that submitting national plan for investments, pursuant to Article 10c(5) of Directive 2003/87/EC, would in any way resolve the question of state aid, he should now, after publication of the guidelines, have no illusions about it.

 

The Communication from the Commission, Guidance document on the optional application of Article 10c of Directive 2003/87/EC (2011/C 99/03, OJ C 99, 31.3.2011, p. 9) is beset with dangers for Member States and for potential beneficiaries hoping to get free emission allowances.


1. “Additional investments” not
matching increasing electricity supply and demand, economical viability of investments


Let’s start for instance with principle 4 regarding national plan for investments. Such a
plan submitted by the Member State to the Commission pursuant to Article 10c(1) of Directive 2003/87/EC, according to the Commission view, should cover only investments:


1) which are
additional to investments Member States must undertake in order to comply with other objectives or legal requirements accruing from Union law, and


2) which are not required to match increasing electricity supply and demand.


Above-mentioned requirements may be a surprise for economic operators being lately under big pressure of building new capacities, in the face of increasing scarcity regarding electricity generation available for system operators in certain Member States. The said two principles established by the Commission may be construed that, for instance, investments for installations required by Union law to decrease NOx and SO2 emissions mustn’t be counted against the value of free emission allowances eligible on the basis of Article 10c of the Directive 2003/87.


Exclusions of the investments designed to match increasing electricity supply and demand, in turn, cast doubts, as from which date the “increase” should be counted – taking into account the recent economic crisis during which the demand for electricity has fallen. This criterion gained importance because it seems – in the light of the above-mentioned principle and interpreting it a contrario – that investment intended to preserve already existing in the system level of capacities (and satisfy current level of demand) may be counted towards the value of free emission allowances.


According to the principle 6 set by the Commission,
investments should be economically viable in absence of the free allocation of emission allowances under Article 10c of Directive 2003/87/EC, once transitional allocation of such allowances comes to an end, with the exception of specific pre-defined emerging technologies still at the demonstration stage and listed in Annex III to the Guidelines.


This condition (not foreseen expressis verbis in the Directive) appears as a field of potential bothersome disputes with the participation of the Commission. It is a common knowledge that the category of economic viability depends particularly on the adopted assumptions and according to the specific set of premises we can get differing results (see to that effect available analyses considering for instance CCS). Should the Commission decide to question economic viability of a specific investment, it would be probable that the procedure get stuck in endless deliberations over economic indices and factors having rather casual connection with free emission allowances.


Above-described principles are not, however, of a strict character. The investments identified in the national plan should be in line with them ‘to the extent possible’ only and any inconsistencies should be substantiated by the Member State in a detailed manner (having in mind, as always, the underlying principles of the Directive 2003/87, the Treaties and other relevant Union legislation). The notion: ‘to the extent possible’ is, however, another field of the Commission discretion allowing to bloc national investment plan. It seems that in principle everything is possible but question arises at what cost.



 

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