March 26, 2021
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Antitrust partner James Webber wrote a chapter titled “State Aid and Sustainability” for Concurrences’ latest book Competition Law, Climate Change & Environmental Sustainability. In it, James reflects on European Union State aid rules as a means to deliver the European Green Deal, looking at how the current rules help and hinder the achievement of the Green Deal ambition – and what might be done to improve them.
The European Green Deal – the EU’s ambitious long-term environmental strategy – aims to reduce greenhouse gas emissions by 55% (compared with 1990) by 2030 and to make Europe the first climate-neutral continent by 2050. Achieving this target will require an overhaul of certain industries and a transition to clean energy, as the EU’s current energy profile accounts for 75% of the EU’s greenhouse emissions.
The European Commission has estimated that achieving the current 2030 climate and energy targets will require €260 billion of additional annual investment, about 1.5% of 2018 GDP. The private sector is unlikely to provide capital on this scale. EU Member States can also draw from the COVID recovery fund to finance Green Deal projects.
Yet, EU State aid, a system to control subsidy competition between Member States, is not fit to swiftly enable projects of this magnitude. A point not lost on the Commission which is consulting on how to fix it. For example, State aid approval tries to consider and trade off a large number of often competing policy and political goals. While understandable in an organization like the EU, this contributes to the often excessively burdensome review processes. The uncertainty, complexity and delay associated with the procedure – especially if the Court is involved – can undermine investment incentives. Third party rights – in particular of civil society organizations that are often critical to advances in environmental policy are very weak. Find out more about the issues and the way to fix them.