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ETS: State aid compensation for high electricity costs - Cement not eligible

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On 22 May 2012, the European Commission adopted rules in relation to national support for industrial electricity costs within the context of the EU Emissions Trading Scheme (ETSi). The “Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post 2012” cover several special and temporary aid measures, including investment aid to highly efficient power plants (including Carbon Capture and Storage-ready power plants), aid involved in transitional free allowances for the modernisation of electricity generation, aid to small installations and, more importantly, aid to compensate increases in electricity prices resulting from the EU ETS ("indirect emission costs").

In the latter instance, a number of energy intensive industries are listed as eligible for compensation, including steel and non-ferrous metals. Nevertheless, based on the results of both the qualitative and quantative assessments, cement is not deemed eligible for compensation.

For those that are eligible, they will not receive full compensation. Compensation will be degressive (starting at 85% of eligible costs [2013-2015], 80% [2016-2018] and 75% [2019-2020]), and will be based on efficiency benchmarks. In addition, although the framework has been put in place by the Commission, it will be up to the Member States to decide on what compensation they will provide. For example, certain Member States, such has Germany, have already announced that they will provide State aid but not all Member States may decide to allocate such aids from national budgets. This may lead to market distortion and different CO2 costs for companies and between sectors depending on which Member State they operate in.

More information:

Commission press release

Guidelines

December 2011/January 2012 Eurobrief Editorial