SPIEGEL: EU Commission May Take Strange Position on State Aid

As explained in this short article at Reuters, the German SPIEGEL magazine thinks there may be an EU probe into German renewable energy law coming up.

One of the points both the ruling CDU/FDP coalition and the opposition agreed upon was that right now there are too many exceptions for large consumers of electricity reducing their obligations of paying feed-in tariff surcharges. These surcharge reductions are a fairly complicated technical topic. Please refer to this earlier post for an overview of the law as it is now.

According to SPIEGEL, the EU Commission thinks these surcharge reductions may qualify as subsidies under Article 107 of the Treaty on the Functioning of the European Union. They may start a formal procedure on Wednesday of this week.

The European Court of Justice decided in the 2001 PreussenElektra case that the German feed-in tariff system is not a subsidy under the Treaty. I recall having blogged about press reports that the Commission might be inclined to challenge this last November.

This new report by SPIEGEL is not about asserting that the German feed-in tariff is, contrary to the opinion of the European Court of Justice in PreussenElektra, a subsidy under the Treaty after all.

It is about the assertion that the surcharge reductions are subsidies.

The problem with that is that subsidies need to be paid from State resources. There are no State resources involved in the German feed-in tariff system. Again, here is what the European Court of Justice said in PreussenElektra:

59 In this case, the obligation imposed on private electricity supply undertakings to purchase electricity produced from renewable energy sources at fixed minimum prices does not involve any direct or indirect transfer of State resources to undertakings which produce that type of electricity.

60 Therefore, the allocation of the financial burden arising from that obligation for those private electricity supply undertakings as between them and other private undertakings cannot constitute a direct or indirect transfer of State resources either.

61 In those circumstances, the fact that the purchase obligation is imposed by statute and confers an undeniable advantage on certain undertakings is not capable of conferring upon it the character of State aid within the meaning of Article 92(1) of the Treaty.

If the Commission actually tries to meddle in German renewable energy policy with this kind of assertion, I don’t think they have a case.

And they shouldn’t try to do that to begin with. German renewable energy policy is none of the Commission’s business. While the idea of an European Union does have some merit in many situations, this particular attempt of grabbing powers the Commission does not and should not have is not one of them.

Update: Now SPIEGEL says there won’t be a decision from the Commission on starting a formal procedure before the end of the summer break, which will last until end of August.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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