EUU, Alm.del - 2020-21 - Bilag 89: Notat samt høringssvar vedr. statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal)

Europaudvalget 2020-21
EUU Alm.del Bilag 89
Offentligt

NOTE

5. november 2020

Danish Government response to the call for contributions on Compe-

tition contributing to the European Green Deal

The Danish Government appreciates the opportunity to comment on the

EU Commission’s call for contributions on Competition contributing to the

European Green Deal.

The climate challenges are global and the Danish Government finds that

both the member states and the EU are obliged to actively work for achiev-

ing the targets of the Paris agreement. The Danish government supports the

Green Deal and the objective of climate neutrality in the EU by 2050.

To reach this goal there is a need to explore all instruments in the regulatory

toolbox. Thus, the Danish government supports the general objective of

this call to explore how state aid and competition policy can contribute to

reaching the goals of the European Green Deal.

In general, we see a benefit in reviewing the state aid guidelines, in order

to take into account the new technological developments. However, this

must not mean a general relaxation of the rules. As for competition, we

find that other instruments are more well-placed to achieve the goals of the

European Green Deal. The Danish Government acknowledges that there is

a need to look into how we can apply the competition rules in a manner

that supports the goals of the Green Deal. We believe the green transition

should support job creation, welfare, global trade and competitiveness.

Competition drives innovation and the development of new technologies.

By ensuring competition, the prices of new green technologies will de-

crease rapidly and green investments will be more affordable to our socie-

ties. We believe that by strengthening the demand for sustainable and green

solutions, market forces including effective competition to deliver these

solutions, will give a sizeable contribution to solve our challenges. Like-

wise, it will ensure that the EU can become a global leader within new

green technologies, thereby ensuring its long-term competitiveness.

We should thus avoid stretching the interpretation of the EU-antitrust rules

too far, as this will risk harming the transition to climate neutrality by mak-

ing it less cost-effective.

EUU, Alm.del - 2020-21 - Bilag 89: Notat samt høringssvar vedr. statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal)

State aid

The current state aid rulebook, including the Guidelines on State aid for

Environmental protection and Energy (EEAG) and the General Block Ex-

emption Regulation (GBER) and the Communication on Important Pro-

jects of Common European Interest (IPCEI), has played an important role

in relation to fulfil and meet EU’s energy and climate targets. Therefore, a

key priority should be to maintain its supporting role, also in the context of

the European Green Deal and the objective to decarbonize the EU energy

systems as a mean to combat climate change and to promote a more sus-

tainable economy and society as a whole.

This requires that the state aid rulebook, especially EEAG, GBER, and IP-

CEI should be revised, and reflect the road towards climate neutrality by

2050,

the adoption of EU’s energy and climate targets for 2030 –

and that

targets that are even more ambitious than the present, are expected to be

adopted in the near future. However, an update or review towards contrib-

uting to the green transition must not mean a general relaxation of the state

aid rules and their enforcement. The requirement to bring about a material

improvement that the market cannot deliver itself, i.e. a market failure,

must be maintained.

In general, we believe that IPCEIs should continue to be a possible way to

pursue other objectives beyond climate and environmental objectives.

However, IPCEIs related to industrial projects within strategic value chains

should to a greater extent be oriented towards contributing to one of the

EU’s climate objectives. The 2014 communication already states that pro-

jects must contribute in a concrete, clear and identifiable manner to one or

more EU objectives, including but not limited to sustainable growth and

the 2030 framework for climate and energy policies. We suggest attaching

higher significance to this criterion for projects to contribute to a climate

neutral economy in the EU by 2050 at the latest,

in the Commissions’ as-

sessment of strategic value chain IPCEIs, by giving it precedence over

other EU objectives, i.e. exalting the criterion. In addition, the focus of

IPCEIs related to industrial projects within strategic value chain should

continue to on enabling research, development and enabling breakthrough

innovation.

With the adoption of the current 2030 targets, “new elements” are intro-

duced in the revised sector legislation implementing the targets, and the

“modernisation” of this sector legislation, e.g. the Renewable Energy Di-

rective, raises questions whether the EEAG and GBER are still satisfacto-

rily aligned with the rules on e.g. renewable energy. Examples on new el-

ements that lack some kind of clarity are e.g. the “sustainable criteria” and

EUU, Alm.del - 2020-21 - Bilag 89: Notat samt høringssvar vedr. statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal)

“biofuels” (the current scope of the EEAG does

not accommodate e.g. re-

newable liquid and gaseous transport fuels of non-biological origin and re-

cycled carbon fuels).

Besides aligning the legislation it is

–

perhaps even more

–

important to

ensure that the state aid rulebook, especially EEAG and the supplementing

articles in the GBER, is revised in order to make the rules as future proof

as possible. The speed at which renewable energy technologies develop

underlines the need to try to future proof and include further technologies,

as the time factor is important in relation to the development of new

schemes. A non-exhausted list of new technologies and measures that

should be addressed

–

and where market failures could be detected

–

are

e.g.:



The development of renewable hydrogen and the potential of electricity

conversion through Power-to-X technologies. Power-to-X could

–

as a

bridge technology that links the electricity market and markets for gas

and liquid fuels

–

be a major game changer for decarbonising sectors

that are difficult to electrify.

Other combination of technologies from different sectors, e.g. conver-

sion of electricity from solar and wind power to heating with heat

pumps.

Carbon capture, utilisation and storage (CCUS).

Repowering projects, as repowering of existing renewable energy pro-

jects are becoming relevant in the near future. In this context, it would

be relevant, among other things, to elaborate on the definition of the

start of the works.



As for the question of using the EU taxonomy on sustainable finance, we

support this idea. We find that this framework should be used wherever

possible, as it provides a common definitions of what constitutes a green

investment. By using this, businesses, Member States, and the Commission

could gain a better understanding of how a project will contribute to a cli-

mate-neutral EU and identify the most relevant contributions in this area,

considering both short-term and long-term impacts of the project. Using

the above-mentioned taxonomy could moreover help to streamline the ap-

plication process making it easier and more transparent for both investors

and member states as the term ‘green investment’

is predefined.

Anti-trust

–

need for more clarity on sustainable agreements

There is a fast growing demand for sustainable solutions and consequently

a growing demand for advice on how to assess such initiatives in relation

to the antitrust rules and a need to avoid fragmentation. Therefore, there

is a need for more clarity on how businesses can design sustainability

agreements without distorting competition.

EUU, Alm.del - 2020-21 - Bilag 89: Notat samt høringssvar vedr. statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal)

Clarification should primarily be given in the form of EU-general policy

guidelines such as the Commission’s Horizontal Guidelines or in similar

forms. This is necessary to ensure, that undertakings cooperating on green

initiatives and EU-competition authorities act based on the same interpre-

tation of the EU-antitrust rules.

It is important to explore if the benefits of a specific sustainability agree-

ment outweighs its costs, in terms of less competition and higher prices or

reduction of choice. At least in part, this assessment depends on how the

European Commission and National Competition Authorities assess the

sustainability improvements and weigh these against the possible reduc-

tion in competition.

For undertakings involved in a sustainability agreement especially the sec-

ond condition of Article 101(3), which states that the efficiencies must ben-

efit consumers, may be difficult to apply in practice because the condition

is linked to consumer welfare. In this respect, it is important that future

EU-guidelines etc. describe the ways parties to a sustainability agreement

can substantiate that consumers receive a fair share of the benefits or in

other words, that consumers of the product appreciate the benefits obtained

through the agreement and prefer to pay the extra price and/or accept the

reduction in choice

Merger control - an important tool to foster competition in green indus-

tries

The Danish Government notes that merger control is an important instru-

ment in the competition policy toolbox in order to ensure effective compe-

tition in the Single Market

–

also as regards competition in green industries

and between green technologies. Effective competition is fundamental for

creating jobs, growth and prosperity in the EU

–

i.e. competitiveness of the

industry in general.

The Danish Government finds that mergers should continue to be assessed

by competition authorities on a case-by-case basis taking into account the

facts and characteristics of the markets involved. Harmful mergers can af-

fect consumers in various ways depending on these specific characteristics.

A merger that significantly impedes effective competition can result in in-

creased prices, reduced output or quality, less choice, or diminished inno-

vation. It can also affect other parameters that consumers consider as im-

portant factors of competition. By way of example, a merger between two

companies that are both engaged in research and development of green

technologies can reduce short- and long-term innovation efforts resulting

in fewer or less effective green solutions. Similarly, a merger between

close competitors offering environmentally friendly products to consumers

EUU, Alm.del - 2020-21 - Bilag 89: Notat samt høringssvar vedr. statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal)

can remove a substantial competitive pressure leading to an increase in

price or a reduction in choice possibly resulting in adverse effects on de-

mand. Such possible theories of harm are investigated in every merger case

–

also in mergers involving environmentally friendly products and/or green

technologies.

In that way, effective merger enforcement can contribute to protecting the

environment and promoting sustainability objectives by assessing possible

risks of increased prices or reduced choice with respect to environmentally

friendly products as well as through investigations into innovation theories

of harm.

Need to explore the possibility of including environmental benefits in mer-

ger assessments

It is also worth noting that

–

as a part of the assessment of mergers

–

effi-

ciencies fulfilling the criteria of benefiting consumers, being merger spe-

cific, and being verifiable can offset possible competitive harm otherwise

arising from a merger. This includes efficiencies related to environmen-

tally friendly products or green technologies. The Danish Government

finds that it could be considered whether and how to include other substan-

tiated efficiencies and environmental benefits in the competitive assess-

ment e.g. in situations where it might be difficult to quantify the efficien-

cies in terms of cost savings. It would be beneficial to address these con-

siderations in common EU-guidelines in order to ensure alignment of EU

competition authorities when assessing how to take possible environmental

benefits into account. However, it is important that such assessment is

based on solid facts and objective criteria and that eventual costs of such

environmental benefits are weighed against the benefits.