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Brussels, 8 March 2011

State aid: Commission prohibits Austrian subsidies for energy intensive businesses

The European Commission has found a provision of the revised Austrian Green Electricity Act (Ökostromgesetznovelle 2008), partially exempting energy intensive businesses from contributing to the funding of green electricity, to be in breach of EU state aid rules. After an in-depth investigation, opened in 2009 (see IP/09/1177), the Commission concluded that the new provision would have resulted in imposing extra costs on enterprises not qualifying for the exemption.

Commission Vice-President Joaquín Almunia in charge of competition policy said:"The Commission supports green electricity and has approved large parts of the new Austrian Green Electricity Act. However, the planned exemption would merely pay normal operating costs of certain companies and impose a higher burden on others without providing any environmental benefit. It may even harm the environment by lowering the incentives for energy saving."

The Commission has rejected a specific provision of the revised Green Electricity Act of Austria (Ökostromgesetznovelle 2008) that would have provided for a partial exemption of energy intensive businesses to buy green electricity, which is more expensive than normal "grey" electricity. Companies whose incremental costs from the consumption of green electricity exceed 0.5 % of their net production value could have applied to the State controlled Austrian energy regulator for derogation from the obligation to purchase green electricity. If the derogation was granted, energy intensive businesses could have been partly exempted from their share of extra costs for green electricity. Instead, the remaining enterprises and private households would have had to buy an additional amount of the more expensive green electricity. If the measure had been authorised, smaller electricity consumers would have had to pay higher energy bills to compensate for the subsidies granted to a number of large energy consumers.

Such aid merely covers the normal operating costs of a company and may considerably distort competition for tradable goods in the internal market. Moreover, it does not trigger any environmental benefits and can therefore not be found compatible under the EU environmental aid guidelines. At the same time, the Commission decision addresses the concerns of a complainant, regarding in particular the unbalanced burden sharing between large energy consumers on the one side and SME and private households on the other side which would have resulted from the implementation of the Austrian measure.

The non-confidential version of the decision will be made available under the case number C 24/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

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