EU – Cement not eligible for state aid compensation for high power costs

Based on the results of qualitative and quantitative assessment, the European Commission has decreed that the EU’s cement industry is not eligible for national support for industrial electricity costs under the EU Emissions Trading Scheme (ETS).

“The European Commission has adopted a framework under which Member states may compensate some electro-intensive users, such as steel and aluminium producers, for part of the higher electricity costs expected to result from a change to the EU Emissions Trading Scheme (ETS) as from 2013. The rules ensure that national support measures are designed in a way that preserves the EU objective of decarbonising the European economy and maintains a level playing field among competitors in the internal market. The sectors deemed eligible for compensation include producers of aluminium, copper, fertilisers, steel, paper, cotton, chemicals and some plastics,” said the Commission in a press statement.

In its “Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post 2012” the European Commission details several special and temporary aid measures, including investment aid to highly-efficient power plants, aid involved in transitional free allowances for power generation modernisation and aid to compensate increases in electricity prices resulting from the ETS. A number of energy-intensive industries will receive a certain degree of compensation, which will be degressive and based on efficiency benchmarks. Final levels of compensation will be decided by the member states.

The European cement producers’ association CEMBUREAU had argued that the cement industry should qualify for State Aid under a qualitative assessment. “In such case, the GVA [gross value added] impact required to qualify may go down to two per cent. The problem is trade intensity. Here CEMBUREAU argues that some flexibility is also required, as on the GVA percentage, when it is clear that it is impossible to pass-through the extra cost to customers and that freight costs to the EU will not prevent imports. These points, which are required for a qualitative assessment, have been developed by BCG showing that, while electricity prices in Europe grew by an average of 30 per cent from 2005-09, cement prices barely increased and even decreased in real terms over the same period if the inflation is taken into account,” said CEMBUREAU in an earlier statement.