Greece set to breach EU law with controversial new energy subsidy scheme

Media release

07 June 2019

Greece’s Parliament has voted through a new capacity mechanism that defiantly ignores EU rules. The last-minute bill, pushed through by the government yesterday and adopted by Parliament today, indicates that Greece will not seek EU-level approval for the scheme as is required by law. This comes as a surprise given that Greece has been in close discussions with the Commission about the scheme for several months.

Lawyers believe the reason for the rushed move is that the Greek government wants to exploit a loophole in the Clean Energy Package that would allow funds to be poured into new lignite plant Ptolemaida V, guaranteeing its survival – if capacity contracts are awarded before the end of the year. Subjecting the mechanism to Commission scrutiny may hold up these plans.

ClientEarth energy lawyer Eleni Diamantopoulou said: “State aid rules require any capacity mechanism to be approved by the Commission – but Greece’s draft contains no such condition. This sets Greece up to violate EU laws and the government should not be so naïve as to expect there will be no repercussions.

“Likewise, by rushing the adoption of the capacity mechanism without having made public the outcome of the recent – and very swift – public consultation on this matter, the Greek authorities are blatantly ignoring stakeholder voices – including market participants.

“Greece’s decision to introduce the capacity scheme now will lock lignite in the country’s energy mix for years to come, closing the door to the clean energy transition. The cost of the missed opportunity to drive the country to a sustainable energy future will be high and burdensome for Greek citizens.”

Capacity mechanisms have been a hot topic in the EU since demand response firm Tempus Energy won a case in the General Court of the EU over the Commission’s hasty approval of the UK’s capacity market.

If Greece implements the capacity mechanism without complying with State aid rules, the Commission may order the suspension of the scheme and recovery of any payments already made.

ENDS

Notes to editors

ClientEarth has written a critique of the design of Greece’s desired capacity mechanism and submitted observations to the Commission.

The environmental law non-profit has also taken multiple cases in Greece over non-compliant industrial permits and the lack of access to challenging these permits.

About ClientEarth:

ClientEarth is a charity that uses the power of the law to protect people and the planet. We are international lawyers finding practical solutions for the world’s biggest environmental challenges. We are fighting climate change, protecting oceans and wildlife, making forest governance stronger, greening energy, making business more responsible and pushing for government transparency. We believe the law is a tool for positive change. From our offices in London, Brussels, Warsaw, Berlin, New York City and Beijing, we work on laws throughout their lifetime, from the earliest stages to implementation. And when those laws are broken, we go to court to enforce them.

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