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State aid: latest Scoreboard shows Member States giving more aid for environmental protection

European Commission - IP/08/771   21/05/2008

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IP/08/771

Brussels, 21st May 2008

State aid: latest Scoreboard shows Member States giving more aid for environmental protection

The European Commission's latest State Aid Scoreboard shows that Member States have increasingly used the possibilities offered by EU state aid rules to support environmental protection projects. State aid expenditure for the environment has increased significantly in the EU over the last seven years, partly due to a rise in reductions or exemptions from environmental taxes. This increase is in line with the Commission's efforts to encourage Member States to better target their aid. With new guidelines adopted in January offering greater possibilities to award environmental aid (see IP/08/80 and MEMO/08/31), the Commission expects an increase in the number of environmental measures notified by Member States.

Competition Commissioner Neelie Kroes said "It is encouraging that Member States are focussing their aid on environmental measures. This trend should be reinforced by the new Environmental Aid Guidelines."

Aid for environmental protection

This Scoreboard focuses on Member States' use of state aid for environmental purposes. Over the period of validity of the previous environmental aid guidelines (2001-2007), the Commission took around 350 decisions. In the vast majority of cases (98%), the Commission found the aid to be compatible. In many of these cases, competition concerns are resolved during the initial examination so that the Commission can approve the project without an in-depth investigation.

Although the number of new environmental aid measures remained stable for most Member States since 2001, total expenditure for environmental purposes doubled between 2001 and 2006 from €7 to €14 billion. In relative terms, environmental aid increased by 50% as a proportion of GDP.

This average hides significant disparities between Member States. The largest aid grantors in 2004 - 2006 were Sweden (0.77% of GDP), Denmark (0.35%) and Germany (0.32 %), followed by Austria, The Netherlands and Finland each of which granted aid above the EU average. Environmental aid expenditure in the UK stood at half the EU-27 average, while all other Member States granted aid amounting to less than one quarter of the EU-27 average in terms of GDP (see table).

Any analysis of state aid expenditure for environmental purposes has to take account of the fact that a large proportion of aid (an estimated 53%) consists of exemptions from environmental taxes, usually benefiting energy intensive industries including sometimes big polluters that had to be accepted to allow the introduction of certain measures, going beyond the minima imposed by EU Directives. Such aid is considered to bring indirect benefits to the environment.

Recovery of illegal and incompatible aid

The Scoreboard also notes that there has been a marked improvement in the recovery of unlawful and incompatible aid. At the end of 2007, there were 49 pending recovery decisions compared to 93 at the end of 2004 and 60 at the end of 2006. The total amount of aid to be recovered on the basis of decisions adopted between 2000 and 2007 is at least € 9 billion, out of which some €7 billion had been effectively recovered at the end of 2007 together with a further €2.4 billion of interest.
By comparison, the Commission imposed around €7 billion in cartel fines between 2003 and 2007. (See http://ec.europa.eu/comm/competition/cartels/statistics/statistics.pdf).

Cutting red tape

The Commission improved internal procedures to speed up state aid inquiries. The average length for the preliminary examination of notified cases has been reduced to 5.2 months (from 6.4 months). The Commission today concludes the preliminary examination of a state aid case on average within 1.8 months following the receipt of the complete notification. However, in about 80% of the cases the original notification is not complete and the Commission has to request additional information. This extends the average duration by more than three months. Further reductions would therefore require a commitment from Member States to improve the quality and the completeness of information submitted to the Commission.

In 2007, Member States were able to introduce more than 1100 aid measures without prior notification to the Commission. These measures were covered by one of the Regulations exempting certain categories of aid from the notification obligation, provided they fulfil certain conditions. This compares with 410 such measures in 2006 and is in line with the Commission's commitment to facilitate the granting of unproblematic aid through block exemptions and focus its scrutiny on the most distortive types of aid.

By July 2008, the Commission plans to adopt a general block exemption Regulation consolidating in one text the five existing block exemptions for aid to SMEs, research and development (R&D) aid for SMEs, aid for employment, training aid and regional aid. The new Regulation would also allow exempting three additional types of aid: environmental aid, aid in the form of risk capital and R&D aid for large companies.

The Scoreboard also includes 2006 data for new Member States Bulgaria and Romania. The autumn 2008 Scoreboard will include expenditure figures for 2007 covering all Member States.

See also MEMO/08/321.

The Scoreboard is available on the Europa website:

http://ec.europa.eu/comm/competition/state_aid/studies_reports/studies_reports.html

Trend in the share of environmental aid, 2001-2006

[ Figures and graphics available in PDF and WORD PROCESSED ]
Note: Member States are ranked in descending order according to their level of environmental aid as a percentage of GDP Data for Romania and Bulgaria in the first column refer to the period 2002 - 2003. In Germany and Sweden, tax exemptions account for a large proportion of total environmental aid in each country. A CO2 tax reduction for industry and a tax exemption from the energy tax on electricity (C 42/2003 OJ L 165 of 25 June 2005, N 156/2004, OJ C 137 of 4 June 2005, N 588/2005, OJ C 72 of 24 March 2006) led to a remarkable rise in aid expenditure for Sweden from 2003 onwards. In Germany, expenditure has risen steadily following the approval in 2002 of a measure that prolonged several tax exemptions from the German energy taxation on electricity and mineral oils (N 449/2001, OJ C 137 of 8 June 2002).


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