EU greenlights reduction of surcharges for energy-intensive companies in Germany and Italy

The European Commission (EC) has approved reductions granted to energy-intensive businesses on surcharges to finance support for cogeneration and renewable energies in Italy, and surcharges to provide incentives for cogeneration only in Germany.

The EC stressed that both forms of reduction comply with the 2014 Guidelines on state aid for environmental protection and energy, which allow reductions to surcharges used to finance renewable support schemes for certain sectors and companies, up to a certain level.

“Cogeneration both produces electricity and puts to use the heat generated in the process – this efficiency can help us reach Europe’s energy and climate goals. Today’s decisions make sure that Member States can design sustainable financing to support cogeneration, same as for renewable energy. These promote green policies whilst preserving the competitiveness of companies that are heavily dependent on energy,” Commissioner Margrethe Vestager said.

The EC launched an investigation to decide if reductions to cogeneration surcharges for energy-intensive companies in Germany were in line with EU state aid rules in October 2014. The Commission explained its decision to approve the reductions after the German government agreed to limit the reductions to energy-intensive companies exposed to international trade and to a maximum of 85% of the surcharge.

As for the reduction of the surcharges for renewables and cogeneration in Italy, the EU highlighted that the Italian government has also accepted to limit to energy-intensive companies active in sectors exposed to international trade and limit to maximum 85% of the renewable and cogeneration surcharge. The EC had approved the Italian incentive scheme for renewable energies in April 2016, while the German Heat and Power Cogeneration Act 2016 containing the provisions to reduce the surcharges was approved by Brussels in October 2016.