The European Commission has approved, under EU State aid rules, the modification of a Dutch scheme to reduce greenhouse gas emissions. The scheme will further contribute to achieving the Netherlands' energy and climate targets and the EU's strategic objectives relating to the European Green Deal.
The Dutch measure
The Netherlands notified the Commission of its plans to modify its Stimulering Duurzame Energieproductie ('SDE++') scheme approved by the Commission in December 2020 (SA.53525) and amended in December 2021 (SA.100461). The modified scheme will run until 31 December 2025.
The SDE++ support scheme, with an overall budget of €30 billion, will contribute to the Netherlands' efforts to reduce its greenhouse gas emissions by 55 % by 2030 and to achieve climate neutrality by 2050, compared to 1990 levels.
The scheme supports a wide range of projects with different technological approaches, including projects based on renewable electricity and heat, low carbon and renewable gas, including hydrogen, and transport fuels.
The Netherlands made several amendments to the existing scheme. In particular, these amendments will guarantee a certain budget for supporting projects in areas where decarbonisation is currently relatively expensive but that offer promising green potential. A minimum budget of €750 million will be allocated in 2023 to projects in each of the following areas:
- low-temperature heat, including geothermal, heat pumps and solar thermal;
- high-temperature heat, including mainly electrification options for industry via heat pumps and electric boilers; and
- molecules, which includes hydrogen production via electrolysis, production of biomethane, and advanced renewable transport fuels.
In addition, the scheme is amended to cover also (i) air water heat pumps for heating buildings, and (ii) the possible future electrification of offshore platforms.
Beneficiaries will be selected through annual competitive, transparent and non-discriminatory bidding processes. They will be selected based on the lowest subsidy required per unit of greenhouse gas emissions reduced.
The beneficiaries will receive support via a variable premium contract of a duration ranging between 12 and 15 years. The payments that the beneficiaries receive will be adjusted based on the evolution of the relevant market prices (for example of electricity, gas orcarbon) over the lifetime of the support contract. Given the wide range of costs and therefore subsidy needs among the beneficiaries, price caps apply per technology to limit the risk that cheaper technologies are overcompensated. These caps prevent the cheapest technologies for reducing emissions, such as onshore wind and solar, receiving the same subsidy as much more expensive technologies like hydrogen production.
The Commission's assessment
The Commission assessed the modification of the Dutch scheme under EU State aid rules, in particular the 2022 Guidelines on State aid for climate, environmental protection and energy ('CEEAG').
The Commission found that:
- The scheme is necessary and appropriate to support the reduction of greenhouse gas emissions and thereby contribute to the EU and national climate targets.
- The scheme has an "incentive effect" as potential beneficiaries would not carry out the activities without the public support.
- The scheme has a limited impact on competition and trade within the EU. In particular, the aid is proportionate and any negative effect on competition and trade in the EU will be limited in view of: (i) the design of the competitive bidding processes; (ii) bidding limits for cheaper technologies; and (iii) the wide range of eligible beneficiaries. These elements will ensure that the aid amount is kept to the minimum.
On this basis, the Commission approved the Dutch scheme under EU State aid rules.
Background
The Commission's 2022 CEEAG provide guidance on how the Commission assesses the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) of the Treaty on the Functioning of the European Union ('TFEU').
The guidelines, applicable since January 2022, create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the European Green Deal objectives in a targeted and cost-effective manner. The rules involve an alignment with the important EU's objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas and will cater for the increased importance of climate protection. They include sections on energy efficiency measures, aid for clean mobility, infrastructure, circular economy, pollution reduction, protection and restoration of biodiversity, as well as measures to ensure security of energy supply, subject to certain conditions.
The 2022 CEEAG allow Member States to support the production of electricity from renewable energy sources and other activities for reducing greenhouse gas emissions, subject to certain conditions. These rules aim to help Member States meet the EU's ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.
The Renewable Energy Directive of 2018 established an EU-wide binding renewable energy target of at least 32 % by 2030. With the European Green Deal Communication in 2019, the Commission reinforced its climate ambitions, setting an objective of net zero emissions of greenhouse gases in 2050. The European Climate Law in force since July 2021, which enshrines the 2050 climate neutrality objective and introduces the intermediate target of reducing net greenhouse gas emissions by at least 55 % by 2030, sets the ground for the 'Fit for 55' legislative proposals presented by the Commission on 14 July 2021. Among these proposals, the Commission has presented amendments of the Renewable Energy Directive and the Energy Efficiency Directive with more ambitious binding annual targets to increase the production of energy from renewable sources and reduce energy use at EU level.
The non-confidential versions of today's decision will be made available under the case number SA.104448 in the State Aid Register on the DG Competition website. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
