PP 35/19EU ETS Indirect Compensation Consultation

This publication was reviewed in March 2019 and revalidated without modifications.

A consultation has been launched by the European Commission, structured around the following sections. The European Commission recently launched a consultation on the future Guidelines for State aid in the context of the amended EU Emissions Trading Scheme (ETS).

The ETS directive provides that a few sectors, particularly exposed to a significant risk of carbon leakage due to costs relating to greenhouse gas emissions that are passed on in electricity prices (indirect costs) may receive from Member States some financial compensations, in accordance with state aid rules.

EIGA has provided its comments as part of this consultation and as summarized in the attached Position Paper developed by the EIGA Regulatory Environment Council (REC).  This reinforces EIGA’s position that compensation for indirect emissions should be considered for all exposed sectors and sub sectors as determined by the Commission in December 2009, including highly electricity intensive (sub) sectors as oxygen and nitrogen; and that in case of financial compensation to a sector, there should be no distortion regarding state aid between in sourced and externalized production of intermediate products such as oxygen and nitrogen.

The principle of equality of treatment, already stated in Recital 23 of the ETS directive, should be explicitly included within the State Aid Guidelines for indirect emissions. This Position Paper should be used by EIGA Members and National Industrial Gas Associations to support this position in representations to Member States. The EIGA Position Paper may be circulated to members and non members.