The General Court of the EU has dismissed this Wednesday Naturgy’s appeal against the investigation opened by the European Commission on environmental investment incentives to coal plants in Spain approved in 2007. And, thus, it keeps open the investigation on the nature of these public aid.
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Naturgy (formerly Gas Natural) had asked the Luxembourg-based court to annul the European Commission decision on the environmental incentive for coal plants. The Community Executive had decided to initiate a formal investigation procedure because he feared that the aid was being used to fulfill EU environmental obligations that were imperative in any case.
In April 2015, the European Commission launched an investigation into state aid in 11 Member States, including Spain. Once the investigation was completed, the European Commission notified the Spanish authorities in April 2017 that it was going to open an investigation ex officio on the “environmental investment incentive” granted to coal plants operating in the Spanish electricity system.
In 2007, the Spanish authorities introduced a regime (“environmental incentive”) to support the installation of new sulfur oxide filters in existing coal plants. These filters had to reduce the sulfur oxide emissions from the plants below certain limits.
In return, the coal-fired plants were entitled to receive public aid related to the size of the plant for a period of ten years (ie 8,750 euros per megawatt per year). Between 2007 and 2017, 14 coal plants have benefited from this scheme and have received in total more than 440 million euros in public aid, and payments were expected to continue until 2020.
Spain did not notify this measure to the Commission for evaluation under EU state aid rules, raising concerns for Brussels that the emission limits imposed on beneficiaries of the scheme would simply comply with mandatory EU rules. in environmental matters then applicable to coal-fired power plants. The corresponding legal requirements were established in the EU legislation on limiting emissions into the atmosphere of certain pollutants from large combustion plants.
“If confirmed,” said the European Commission, “this would mean that the scheme would not have actually had any incentive effect from an environmental point of view. Furthermore, financial support could violate a long-established principle of state aid law. of the EU, and specifically that Member States cannot grant state aid to companies to comply with mandatory EU environmental standards. This would violate the “polluter pays” principle and would confer on power plants coal an unfair competitive advantage over other forms of electricity production and coal plants subject to EU law in other EU Member States. ”
The decision, challenged by Naturgy Energy Group, reflected that the measure constituted state aid. Specifically, the European Commission considered that it was financed with State funds and attributable to the State, that it seemed to give a selective advantage to its beneficiaries and that it could distort competition in the electricity market and affect trade between Member States. The European Commission also expressed doubts about the compatibility of this measure with the internal market.
The Community Executive invited interested parties to submit observations within one month from March 2, 2018, the date of publication of the contested decision.
Naturgy Energy Group and EDP Spain submitted their observations to the Commission services on April 16, 2018. And, subsequently, Naturgy appealed against the Commission’s decision in May 2018, first, alleging breach of the obligation reasons as regards the selective nature of the measure and, secondly, questioning its selective nature.
In its ruling issued this Wednesday, the General Court of the EU dismissed the appeal of Naturgy Energy Group.
The General Court indicates that “the European Commission did not breach its obligation to state reasons since, given the nature of the contested decision, Naturgy Energy Group was able to understand why the Commission had preliminary considered that said measure was selective” .
The General Court “considers that Naturgy Energy Group, supported by EDP España and Viesgo Producción, has not been able to demonstrate that the measure in question was limited to putting all significant investments made after 1998 on an equal footing, regardless of the technology used and the nature of the plants in question, nor that, consequently, by considering, provisionally, that the contested measure was selective, the Commission had committed a manifest error of assessment “.
Therefore, “it has not been shown that, by provisionally concluding, in the contested decision, that the measure in question was selective, the European Commission had committed a manifest error of assessment because the coal-fired power plants did not they were in a de facto and legal situation comparable to that of plants using other types of technology. ”