Tuesday, December 18, 2012

Subsidies, State Aid and renewable energy

State support to renewable energy is widely prevalent in both the developed and developing worlds. It is a major tool to pursue the growth of clean technologies and environmental friendly policies. However they do raise critical issues in the context of subsidies rules under the Agreement on Subsidies and Countervailing Measures (ASCM). My paper on some of the support programs in the EU, US and Japan is found here.

German Energy Blog came up with this interesting post regarding state support in the context of the EU called "State Aid" to renewable energy.In an earlier ruling of the ECJ, the Court had held that FiT did not constitute State Aid.As quoted in the above blogpost:
"In an earlier ruling (ref. no. C-379/98) handed down in 2001 concerning the predecessor of the EEG, the Electricity Feed-in Act (StrEG), the Court of Justice of the European Union (CJEU), decided that “that a statutory provision of a Member State which, first, requires private electricity supply undertakings to purchase electricity produced in their area of supply from renewable energy sources at minimum prices higher than the real economic value of that type of electricity, and, second, distributes the financial burden resulting from that obligation between those electricity supply undertakings and upstream private electricity network operators, does not constitute State aid within the meaning of Article 92(1) of the EC Treaty” (now after amendment Art. 107 TFEU)."
Will the EU reconsider the concept of State Aid? Would State Aid to the renewable energy sector be cut? What implications does this have to the many programs in the EU supporting renewable energy? Would there be a review of all schemes in the light of the ASCM?


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