There is no doubt from the Austrian Chamber of Labour’s point of view: replacing fossil or nuclear energy as forms of energy production cannot be left to market forces. That is why already at the end of the 1990s, the European Union decided on a radical change of energy production by promoting renewable energies. Its relevant policy is mainly determined in the Guidelines in State Aid for environmental protection and energy. Concerning the upcoming revision, the European Commission has now launched a Consultation on the revised Climate, Energy and Environmental Aid Guidelines, in which the Chamber of Labour is making its contribution. 

Polluter pays principle with loopholes

The national support schemes for renewable energies are mainly based on two pillars: on the one hand, the purchase commitment for renewable energies for their producers and surcharges on grid charges, which have to be paid by electricity customers, on the other. Private households – compared with the industry – pay an increasing share of these costs. In many Member States, bulk electricity consumers receive rebates, which lead to massive competitive distortions between Member States up to job relocations and negative environmental disincentives. Blanket exemptions for major electricity consumers, which reach from the production of carpets via hosiery to soaps, mattresses, toys and brushes, do not fit into the EU climate strategy concept and a CO2-neutral economy either.
 

Hence, from AK’s point of view, all exemptions need to be revised in order to do justice to the polluter pays principles. They should only to be permitted within the scope of case-by-case reviews and only then if they support achieving environmental or social policy targets or if there are proven massive competitive disadvantages by energy-intensive industrial branches towards third countries.
 

Start-up investments instead of state aid drop

During the initial phase, operating aids in form of running, fixed subsidies may have been sensible and justified regarding the transformation to renewable energy sources. However, after almost 30 years, there is need for review and reorientation. Investment grants and competitive tendering must be the rule. Running, fixed grants must be avoided as they de-facto remove the market risk and minimise the incentive to contribute to safeguarding grid stability. Hence, with regard to future technologies, subsidies should paid in a targeted manner in form of start-up investments, in particular for renewable hydrogen, district heating, energy efficiency and social housing.
 

“Social bonus” instead of “green bonus“

In order to achieve a CO2-neutral economy, the European Commission suggests the introduction of a “green bonus”. From AK’s point of view, this is not expedient, as avoiding negative environmental consequences should be primarily solved on the basis of legal regulation and not by competition policy.
 

To ensure a just transition, a “social “bonus” in state aid law is needed. The creation and preservation of sustainable and high-quality jobs must be rewarded with greater aid intensity. In view of the high unemployment and according to a just transition, special attention should be paid to job opportunities for long-term unemployed and young people, but also for those employees, who have been negatively affected by opting out of fossil energy.
 

Further information:

AK EUROPA: EU Competition Policy supporting the Green Deal

Austrian Society for European Politics (ÖGfE): Promoting renewable energies – acid test for an environmentally friendly EU

European Commission: Public consultation on the revised Climate, Energy and Environmental Aid Guidelines