When news emerged this month that tech giant Apple was benefiting from illegal tax breaks to the tune of €13bn, lawyerly eyebrows were raised. Were other industries also profiting from unauthorised State aid? ClientEarth’s Energy Transition and Environment lawyer Sam Bright questioned whether fossil fuel companies would come under the spotlight.
In no time at all, our prediction was confirmed. EU antitrust commissioner Margrethe Vestager has expanded her ongoing investigation into tax rulings to include the French energy utility GDF Suez – now called Engie.
Tax rulings made since 2008 mean GDF Suez has been able to avoid paying taxes on a significant proportion of its profits in Luxembourg. Although it has made some investments in renewables, Engie continues to invest billions of Euros each year in its core gas business.
Sam said: “These tax breaks could amount to unapproved and therefore illegal State aid to a fossil fuel company – all the more unthinkable as EU countries, including Luxembourg, have committed to transition to a low-carbon economy.
“Luxembourg should be doing all it can to encourage investment in renewables. It should not be giving tax breaks or other subsidies to fossil fuel companies like Engie, especially when similar subsidies are not available to companies that invest primarily in clean energy.
“This problem is not unique to Luxembourg. All EU governments, and investors in fossil fuel companies, need to take note. The Irish government’s tax breaks to Apple amounted to €13bn – which the company may now have to repay. If fossil fuel companies like Engie are indeed receiving illegal financial support from EU governments, they risk facing large bills for unpaid taxes.
“We will be watching with great interest as Vestager’s investigation unfolds.”