Press release: 21 December 2021

New EU State aid rules greenlight public money for climate-damaging projects – ClientEarth reaction

Environmental lawyers at ClientEarth say that the EU’s new State aid guidelines are “blatantly inconsistent” with the EU’s pathway to climate neutrality and a sustainable economy.

The European Commission has endorsed today the new State aid guidelines for climate, environmental protection and energy (CEEAG), which aim to ensure that taxpayers’ money is used to aid economic activities in line with the bloc’s climate and nature mandates under the European Green Deal.

However, the new guidelines allow for subsidies to gas – an intensely damaging fossil fuel, which is 80 times more harmful to the climate over a 20-year period than carbon dioxide.

ClientEarth State aid lawyer Stéphanie Nieuwbourg said: “Gas is not a ‘light’ fossil fuel – this is a dangerous misunderstanding. Allowing taxpayers’ money to be used to back these projects is blatantly inconsistent with the EU’s and Member States’ decade-long pledge to end subsidies for fossil fuels.

“In our fight against climate change, the way public money is allocated, especially over the next 10 years, could be make or break. Instead of designing guidelines that only drive financial aid towards clean and safe resources, the Commission has left the door wide open for public money to go to climate-harming gas projects.

“The only ‘safeguard’ that the Commission has put in place is to require Member States to justify how aid granted to gas activities is compatible with the climate targets, but any justification would be unacceptable – no gas project can mitigate climate change.”

The CEEAG have also finally taken a step towards enabling a citizen-led energy transition, by allowing renewable energy communities to receive dedicated financial support. This recognises the important role citizens can play in deploying renewable energy projects, and increases social acceptance of these initiatives, which are key to decarbonisation.

The guidelines also enable support to protect and restore nature, which is vital to addressing the biodiversity and climate change crises. But according to ClientEarth, a more comprehensive approach is needed – support to energy solutions with severe impacts on biodiversity, such as forest biomass or small-scale hydropower, should be contingent on assessment against nature protection objectives.

The CEEAG also expand the regime exempting industries from paying the full cost of the energy transition, such as “all levies financing decarbonisation and social policies”, that small businesses and citizens have to pay. In exchange for these exemptions, industries are supposed to become more energy efficient or invest in carbon-free energy supply – but at levels that are far from ambitious.

Nieuwbourg added: “The new guidelines go some way to support the crucial role communities have to play in the EU’s climate and energy transition, and highlight that protecting nature is part and parcel of that process. But the wide exemptions for certain industries will hardly support a cost-effective and just transition. They undermine the very aim of what the new guidelines originally set out to achieve.

“At a time when all businesses and citizens are seeing their energy bills soar, the new CEEAG fall far short of ensuring a fair transition for the most vulnerable consumers.”

The new State aid guidelines will be formally adopted in January 2022 and will apply to aid measures that will be granted from that date. It is expected that they will have no end-date.


Notes to editors:

ClientEarth and EEB recently wrote to the European Commission flagging their concerns around the Commission’s policy-making process and the choices Commission made around the policies on aid for energy intensive users. The letter was sent following newly obtained information about the impact assessment of the revision of the State aid guidelines.

Following the publication of the EU Green Deal Communication, Commissioner for Competition and Commission Executive Vice-President Vestager has repeatedly stated that State aid rules must do their part to support the Green Deal’s objectives.

In October 2021, the European Parliament voted on a resolution demanding that the Commission integrate environmental considerations and sustainable development across competition and State aid policies, in line with the EU’s Treaty principles.

It is expected that there will be no end-date for the new guidelines so as to give the Commission flexibility to maintain them as long as they remain relevant. The Commission may decide in a few years to examine if they are still effective, relevant and coherent with other policies.

About ClientEarth

ClientEarth is a non-profit organisation that uses the law to create systemic change that protects the Earth for – and with – its inhabitants. We are tackling climate change, protecting nature and stopping pollution, with partners and citizens around the globe. We hold industry and governments to account, and defend everyone’s right to a healthy world. From our offices in Europe, Asia and the USA we shape, implement and enforce the law, to build a future for our planet in which people and nature can thrive together.