European Commission launched an in-depth investigation into the Spanish environmental incentive for coal power plants. According to Brussels, the money was used to help Spanish companies “conform with already mandatory environmental requirements”.
Spain is under scrutiny. The European Commission has decided to take a closer look into public aids the Spanish government has granted to its coal power plants. Some doubts have emerged on whether these aids were actually compatible with European Union rules. In 2007, the Spanish government put together a system of “environmental incentives” aiming at promoting the use of new sulphur oxide filters in the county’s coal energy plant network. These filters were designed to reduce gas emissions in the coal-powered stations, so they would meet UE standards.
The Spanish government created scheme (‘environmental incentive’) to support the installation of those filters – 8 750 euros were paid for every megawatt produced every year, for a duration of ten years. As a whole, 14 coal power plants benefitted from the scheme and received in total more than €440 million in public support. Payments are set to continue until 2020. For the EU competition enforcer, this public aid only incited companies to follow regulations that were already compulsory. Therefore, they can not be considered as having a “positive inciting effect” when it comes to adopting a more environmentally friendly activity.
Moreover, in EU rules, a country can not grant public money to a company for it to catch up with communal environmental regulations. As it is, the emission threshold for coal power plants were set by the 2001 European directive on air emissions – that is, 6 years before the Spanish aid program was launched. According to Commissioner in charge of competition policy, Margrethe Vestager, this aid could very well be “an unfair competitive advantage towards other forms of power generation and towards coal power plants in other EU countries”. “If confirmed, this means that the scheme did not actually have any environmental incentive effect, but it is a violation of the long-standing polluter-pays EU principle”, she says.
The Commission will now investigate further whether its initial concerns are justified. It has the power to order governments to recover illegal state subsidies.
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