On the 27th November, the European Commission, and more precisely the EU Commissioner for Competition Margrethe Vestager, opened a new investigation on a possible State aid case. This case is especially focused on Spain and the potential violation to EU State aid rules when it comes to the country’s support to coal power plants, notably in terms of environmental matters. Indeed, the Commission raised some concerns about this particular State support, which it believes has been used to help those coal power plants to meet EU environmental standards, that were mandatory to conform with.

The issue actually dates back to 2007, when the Spanish authorities launched a new ‘environmental incentive’ initiative, in other words a program which was introduced to support the installation of sulphur oxide filters in Spanish coal power plants. The overall goal was to help reducing sulphur oxide emissions generated by these plants as they produced energy. However, Spain did not notify the EU Commission at the time, and the Commission now suspects this program was only introduced to help the 14 plants that benefited from the program to meet the EU environmental standards at the time.

The problem here lies in the fact that this goes against the EU State aid rules, which state that financial support may not be granted to companies that heavily pollute only to help them meet polluting emissions quotas fixed by the EU. This is based on the ‘polluter pays’ principle encompassed in the above-mentioned rules. Moreover, if the investigation confirms the Commission’s claims, it would mean that the polluting Spanish coal power plants profited from an unfair advantage, while other means of creating energy might not have benefited from the same financial aids, in Spain or in other EU Member States.

Commissioner Vestager commented on the newly opened in-depth investigation: « If you pollute, you pay – this is a long-standing principle in EU environmental law. EU State aid rules do not allow Member States to relieve companies of this responsibility using taxpayer money. We currently believe that this Spanish scheme did not incentivise coal power plants to reduce harmful sulphur oxide emissions – they were already under an obligation to do so under EU environmental law. Therefore, we are concerned that the support gave these coal power plants an unfair competitive advantage. We will now investigate this issue further”.

If the investigation reveals that Spain did in fact help these specific coal power plants to reduce their sulphur oxide emissions to conform with the EU environmental requirements, the Member State would probably be asked for reparations, as other countries credited of breaking EU State aid rules have had to do. For instance, two of the most famous State aid cases – which already involved the EU Commissioner for Competition Vestager – against Luxembourg and Ireland ended with the two countries having to financially compensate for the State aid rule violations.

Raphaël Moncada

For further information: 

Energy Live News: http://www.energylivenews.com/2017/11/28/eu-investigates-spains-support-for-coal-power-plants/

Eurasia Review: http://www.eurasiareview.com/28112017-eu-opens-investigation-into-spains-support-for-coal-power-plants/

Europa Press Release: http://europa.eu/rapid/press-release_IP-17-4965_en.htm