Erhvervsudvalget 2020-21
ERU Alm.del Bilag 87
Offentligt
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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.
ERU, Alm.del - 2020-21 - Bilag 87: Orientering om regeringens bidrag til Europa-Kommissionens indkaldelse af bidrag til statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal), fra erhvervsministeren
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
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ERU, Alm.del - 2020-21 - Bilag 87: Orientering om regeringens bidrag til Europa-Kommissionens indkaldelse af bidrag til statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal), fra erhvervsministeren
“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.
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ERU, Alm.del - 2020-21 - Bilag 87: Orientering om regeringens bidrag til Europa-Kommissionens indkaldelse af bidrag til statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal), fra erhvervsministeren
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
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ERU, Alm.del - 2020-21 - Bilag 87: Orientering om regeringens bidrag til Europa-Kommissionens indkaldelse af bidrag til statsstøtte- og konkurrencereglernes bidrag til at opnå målene i EU’s grønne pagt (Green Deal), fra erhvervsministeren
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.
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