EU carbon market state aid rules: moving in the right direction but not far enough

Carbon Market Watch argues that while the proposed EU state aid guidelines for indirect cost compensation under the EU ETS show improvement by reducing eligible sectors and requiring energy efficiency investments, they remain insufficient. The author contends that there is no evidence of carbon leakage to justify these subsidies, which cost nearly 1.2 billion Euros between 2017 and 2018, and argues that EU ETS auctioning revenues should be used entirely for carbon neutrality rather than being returned to industry.

• The proposed 2021-2030 state aid guidelines introduce improvements over the 2013-2020 rules by refining the payout formula to use real production levels instead of historic data and reducing the number of eligible sectors from 13 sectors and 7 sub-sectors to 8 sectors.
• New rules require companies to invest in renewable energy, energy efficiency, or emission reductions to receive aid, but they fail to include 'additionality' criteria to ensure these investments would not have occurred without the subsidies.
• The author asserts that the subsidies are unnecessary because there is no evidence that indirect costs lead to carbon leakage, and notes that nearly 1.2 billion Euros were paid to industry between 2017 and 2018 without climate co-benefits.
• The draft rules are criticized for allowing governments to return up to 25% of EU ETS auctioning revenues to industries and for allowing compensation for 'opportunity costs' to factories that produce their own electricity on site.
• The document calls for the phase-out of the 'transitional free allocation for the modernisation of the energy sector' (Article 10c derogation) for Central and Eastern European countries to prevent carbon lock-in by excluding fossil-fueled generation from funding.

APA

Stoefs, W. (2020). EU carbon market state aid rules: moving in the right direction but not far enough. Carbon Market Watch. https://carbonmarketwatch.org/2020/02/17/eu-carbon-market-state-aid-rules-moving-in-the-right-direction-but-not-far-enough/

Chicago

Stoefs, Wijnand. EU carbon market state aid rules: moving in the right direction but not far enough. Carbon Market Watch, 2020. https://carbonmarketwatch.org/2020/02/17/eu-carbon-market-state-aid-rules-moving-in-the-right-direction-but-not-far-enough/.

Wikipedia

{{cite press release |last1=Stoefs |first1=Wijnand |title=EU carbon market state aid rules: moving in the right direction but not far enough |publisher=Carbon Market Watch |date=17 February 2020 |url=https://carbonmarketwatch.org/2020/02/17/eu-carbon-market-state-aid-rules-moving-in-the-right-direction-but-not-far-enough/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{stoefs2020carbon, author = {Stoefs, Wijnand}, title = {{EU carbon market state aid rules: moving in the right direction but not far enough}}, publisher = {Carbon Market Watch}, year = {2020}, month = feb, url = {https://carbonmarketwatch.org/2020/02/17/eu-carbon-market-state-aid-rules-moving-in-the-right-direction-but-not-far-enough/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }