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Neelie Kroes

European Commissioner for Competition Policy

Guidelines on state aid for the environment

Introductory remarks at joint press conference on Climate Action and Renewable Energy Package
Brussels, 23rd January 2008

Ladies and gentlemen,

The new Environmental Aid Guidelines are an important part of the Energy and Climate Change package to provide the right incentives for Member States and for industry to increase their efforts for the environment. They deliver on yet another commitment of the State Aid Action Plan.

The new Environmental Aid Guidelines will enter into force immediately after their publication in the Official Journal, probably next month. They strike the right balance between generous support mechanisms for well targeted aid supporting the environment, and the preservation of competition.

First of all, by preserving effective competition, the Guidelines support the market-based instruments (like emission trading) introduced by the package. Without effective competition, it should be clear that the targets will not be delivered. If polluters don’t pay enough and can avoid making sufficient environmental investments because they receive State aid, it will not only distort competition but also frustrate the very objective of meeting the Union's ambitious targets for the environment.

Secondly, the Environmental Aid Guidelines provide a series of measures that complement and support the achievement of greater environmental protection. There may be situations where the polluter pays principle (PPP) can not be properly implemented by Member States. In such situations, State aid can be an option to respond to the market failures that the costs of pollution are not properly accounted for by industry. State aid may enable individual undertakings to change their behaviour and adopt more environmentally friendly processes or invest in greener technologies.

State aid may also enable Member States to adopt regulation or standards that go beyond Community standards by reducing unbearable constraints on some companies. This can support the move towards the Community’s environmental targets.

In particular, the Guidelines guarantee that Member States may support the production of renewable energy and energy efficient cogeneration by granting operating aid that covers the full difference between production costs and market price. In addition, the Guidelines provide legal certainty as to emissions trading schemes and open the possibility to consider State aid for Carbon Capture and Storage as compatible.

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