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European Commission Press Releases

State aid: Commission approves €5 billion Polish support for cogenerated electricity and surcharge reductions for large energy consumers; opens in-depth investigation into reductions in capacity mechanism surcharge

Vlad Poptamas

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Photo source: bloomberg.com
Reading Time: 3 minutes

 

The European Commission has approved under EU State aid rules (1) a Polish scheme to support high-efficiency cogeneration and (2) reduced surcharges to finance the scheme for energy-intensive users. It also (3) opened an investigation into reduced surcharges to finance Poland’s capacity mechanism.

Commissioner Margrethe Vestager, in charge of competition policy, said: The Polish support scheme approved today will provide an important contribution to EU environmental and climate goals without unduly distorting competition. We have also approved Polish plans to preserve the competitiveness of energy-intensive companies in Poland by reducing their contributions to the financing of the electricity cogeneration support. But we still need to assess if the reductions for certain users on the surcharge that finances the Polish capacity mechanism are in line with our State aid rules”.

(1)  Support for high-efficiency cogeneration

The scheme will support combined heat and power (“CHP”) installations connected to district heating networks in Poland. The scheme, with an annual budget of €500 million, will run until 31 December 2028. The support will be granted to new and refurbished highly efficient CHP installations, as well as to existing gas-fired highly efficient CHP installations. It will be also open to generators in other Member States.

The highly efficient CHP installations benefitting from the scheme will receive support through a premiumon top of the market price (“cogeneration premium”). The level of the cogeneration premium will be set either in a competitive bidding process or, in exceptional and clearly defined cases, determined administratively at a level covering the difference between the generation costs and the market price of electricity. The cogeneration premium will be granted until the full depreciation of the installations it supports, for a maximum period of 15 years.

The Commission assessed the scheme under EU State aid rules, in particular the Commission’s 2014 Guidelines on State Aid for Environmental Protection and Energy. These rules allow support to cogeneration installations on condition that the costs of producing electricity exceed its market price, that the support is necessary to trigger investment and does not lead to overcompensation.

TheCommission concluded that the scheme will support the production of electricity from high-efficiency cogeneration and lead to a better integration of cogenerated power into the electricity market, in line with EU environmental and climate objectives, without unduly distorting competition in the Single Market.

The Polish cogeneration scheme approved today will contribute to energy efficiency and lower levels of CO2 emissions, in line with the EU environmental objectives and the EU climate change goals. Today’s decision complements the Commission’s Energy Union Strategy to deliver secure, sustainable and competitive energy in Europe.

(2)  Cogeneration surcharge reductions for energy-intensive users

The Polish cogeneration support scheme approved today is financed through a surcharge levied on final electricity consumers, based on their electricity consumption.

Poland has also notified to the Commission plans to lower the financial burden on certain energy-intensive users (“EIUs”), which would benefit from a reduced CHP surcharge.

EU State aid rules, in particular the 2014 Guidelines on State Aid for Environmental Protection and Energy, authorise reductions – up to a certain level – in contributions levied on energy-intensive companies active in certain sectors and exposed to international trade, in order to ensure their global competitiveness.

The Commission found that the proposed reductions in surcharges for energy-intensive users are in line with EU State aid rules. The measure will ensure the global competitiveness of energy-intensive industries, without unduly distorting competition in the Single Market.

(3)  In-depth investigation into capacity mechanism surcharge reductions for energy-intensive users

In February 2018, the Commission approved under EU State aid rules an electricity capacity mechanism in Poland. The Commission found that the measures will contribute to ensuring security of supply whilst preserving competition in the Single Market.

Poland now plans to introduce reductions for certain energy intensive users on a surcharge levied on electricity consumers to finance the Polish capacity mechanism and has notified this to the Commission.

The Commission has opened an in-depth investigation to further assess whether these proposed reductions are compatible with EU State aid rules. In particular, it will consider whether reductions from the capacity mechanism surcharge for certain customers are necessary to secure the financing of the capacity mechanism. The Commission will therefore assess whether such reductions indirectly contribute to the objective of security of electricity supply pursued by the capacity mechanism.

At this stage, the Commission is concerned that the proposed surcharge reductions may lead to:

  • inefficiently higher demand of electricity in periods of scarcity, if certain users are exempted from these costs;
  • higher needs for extra generation capacity to ensure security of supply in these periods will be also higher

The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation gives interested third parties the opportunity to comment on the measures under assessment. It does not prejudge the outcome of the investigation.

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European Commission Press Releases

European Defence Fund: Statement by Commissioner Bieńkowska on the European Parliament’s vote

Vlad Poptamas

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Photo source: euractiv.com
Reading Time: 1 minute

 

The European Parliament endorsed today the provisional agreement reached by the co-legislators on the future European Defence Fund (EDF) for the next budget period from 2021 to 2027. The European Commission proposed the European Defence Fund in June 2018. Elżbieta Bieńkowska, Commissioner for the Internal Market, Industry, Entrepreneurship and SMEs, said:

“I welcome today’s vote by the European Parliament. More defence cooperation in Europe is essential to address the growing global instabilities and cross-border threats to our security. It is clear that no country can do this alone. The endorsement of the European Defence Fund will allow us to significantly step up our defence cooperation and allow Europe to become a stronger security provider for our citizens.

The European Defence Fund marks a big step forward in European defence matters. It will strengthen European cooperation by encouraging joint investments and technological innovation in the defence sector. This will help to spend taxpayer money more efficiently and ensure Europe can benefit from the best interoperable defence technology and equipment. By promoting a strong and innovative defence industry, the Fund will strengthen EU’s strategic autonomy and technological leadership in defence.

The Fund will build on defence priorities agreed by Member States within the framework of the Common Foreign and Security Policy and ensure synergies with the Permanent European Structured Cooperation.

With today’s vote, a fully-fledged European Defence Fund is now on track to become a reality. I want to thank the European Parliament as well as all other EU institutions on taking fast and decisive action on this key political priority.”

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European Commission Press Releases

Capital Markets Union: European Parliament backs key measures to boost jobs and growth

Vlad Poptamas

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Photo source: euobserver.com
Reading Time: 3 minutes

 

The Commission welcomes the European Parliament’s final votes on legislation putting in place the building blocks of a Capital Markets Union (CMU).

This adoption of a substantial number of proposals constitutes another step forward in the completion of the CMU, one of the Juncker Commission’s top political priorities.

The Capital Markets Union project has been at the heart of this Commission’s ambition to boost growth in Europe, invest in innovation and promote the EU’s global competitiveness. With now 11 out of 13 proposals agreed, the CMU will become a true driver of investment in the Single Market, providing additional sources of financing to EU companies and opportunities for citizens to save for their future. The CMU channels investment to environmentally-friendly projects, thereby contributing to the EU’s sustainable and carbon-neutral agenda. A strong CMU is also necessary to complement the Banking Union in order to strengthen the Economic and Monetary Union and the international role of the euro.

Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, said: “The Capital Markets Union will enable companies to find more funding opportunities both domestically and across the Union and provide consumers with more choices to save for their future. Alternative market-based sources of financing are particularly important to finance innovation, entrepreneurship and start-ups, which are main engines of job creation. While the project will benefit all Member States, it will particularly strengthen the Economic and Monetary Union by promoting private risk-sharing.”

Jyrki Katainen, Vice-President responsible for Jobs, Growth, Investment and Competitiveness said:“The Commission has delivered on its commitment to put in place the building blocks of a Capital Markets Union by 2019. The CMU contributes directly to the Juncker Commission’s commitment to boost investment, jobs and growth by diversifying market-based finance for European companies. We have now laid the foundations for the CMU and efforts must continue into the next mandate so that businesses big and small, investors and savers can continue to reap the benefits.

Overall, all the adopted proposals will contribute to expanding the CMU’s objectives of innovative financing and creating more investment opportunities from the local to the European level. Each of them covers a specific scope of action:

Collective Investment Funds: By removing regulatory barriers for investment funds and diverging national rules, this proposal will increase competition and facilitate intra-EU distribution of investment funds, will giving investors more choice, better value and greater protection.

European Supervisory Authorities (ESAs) review: This review will make the European system of financial supervision more effective and efficient. Among many objectives, the reform will also guarantee that supervision of money laundering risks in the financial sector is pro-active and fast. It will ensure that rules are evenly enforced throughout the EU and give the European Banking Authority (EBA) a coordination role in the areas of anti-money laundering and terrorist financing.

Investment firms review:This revised legislation will ensure more proportionate rules and better supervision for all investment firms on capital, liquidity and other risk management requirements, while ensuring a level-playing field between large and systemic financial institutions. It will also strengthen and clarify equivalence rules for the provision of investment services by third country firms.

Covered bonds: This legislation will foster the development of financial instruments issued by banks to fund the economy across the EU, thanks to a harmonised EU framework.

Small and medium-sized enterprises (SMEs) growth markets: The rules adopted will make it cheaper and simpler for SMEs to access public markets including through a category of trading venues dedicated to small issuers.

Disclosure requirements on sustainable investments: As part of the Action Plan on Sustainable Finance, these rules will strengthen and improve the disclosure of “green” information by manufacturers of financial products and financial advisors towards end-investors.

European market infrastructure regulation (EMIR) 2.2: This legislation will ensure a more robust and effective supervision of central counterparties (CCPs) offering services to the EU. Ultimately, this will contribute to preserving financial stability in the EU.

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European Commission Press Releases

EU Budget 2021-2027: Commission welcomes Parliament’s green light on InvestEU

Vlad Poptamas

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Photo source: ec.europa.eu
Reading Time: 2 minutes

 

The European Commission welcomes today’s vote in the European Parliament on InvestEU, the programme to boost investment in Europe in the next long-term EU budget. This vote brings InvestEU one step closer to its creation.

InvestEU will make EU funding for investment projects simpler to access and more effective. Building on the success of the Juncker Plan, it will bring together under one roof and with a single brand the European Fund for Strategic Investments and 13 other EU financial instruments currently supporting investment in the EU.

President Jean-Claude Juncker said: “The Investment Plan put Europe back in business and delivered on this Commission’s number one priority: creating jobs and growth. But we can do more and that’s what InvestEU is about. By making smart use of the EU’s budget, InvestEU will help Europe stay an attractive place for investors worldwide. Over the next decade, the programme will unlock at least €650 billion for Europe to invest in its future, its economy and its people.”

Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said: “The next generation of investment support in the EU is almost there. Soon, businesses and entrepreneurs will get easier access to EU funding to turn their ideas into concrete projects. It will help keep the EU at the forefront of innovation and climate action, while creating jobs and ensuring a growth model that is socially, environmentally and economically sustainable.”

InvestEU will keep the Juncker Plan’s innovative approach to investment, by using limited amounts of public resources with an EU budget guarantee to leverage substantial private and public funds. The €38 billion guarantee will target investments in four main areas: sustainable infrastructure; research, innovation and digitisation; small and medium businesses and social investment and skills. It should trigger at least €650 billion in additional investment in Europe.

Similarly to the Juncker Plan, the InvestEU Fund will be accompanied by the InvestEU Advisory Hub – tailored support to project promoters – and the InvestEU Portal – an easily accessible pipeline of mature projects for potential investors. Also like in the Juncker Plan, InvestEU will be a part of the Commission’s economic policy mix of investment, structural reforms and fiscal responsibility, to ensure Europe remains an attractive place for businesses to settle and thrive.

InvestEU is a partnership with the European Investment Bank Group (EIB), the EU Bank, and will be open to other implementing partners as well. The budgetary aspects of InvestEU are still subject to the overall agreement on the next long-term EU budget, which the Commission proposed in May 2018.

Latest figures from the European Investment Bank, the Commission’s strategic partner on the Juncker Plan, show that by April 2019, the European Fund for Strategic Investments (EFSI) had mobilised almost €393 billion of investments. Operations approved under EFSI so far represent a total financing volume of €72.8 billion in all 28 Member States. The EIB has approved 524 infrastructure projects supported by EFSI for €53.8 billion, while the European Investment Fund has approved 554 financing agreements for small and medium businesses worth €19 billion, which should benefit 945,000 companies.

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