New rules on public support for projects in the field of environmental protection and energy have been adopted by the European Commission. The new guidelines aim at helping EU member states to design state aid measures that contribute to reaching their 2020 climate targets, while addressing the market distortions that may result from subsidies granted to renewable energy  sources. The adoption of the new guidelines is part of the Commission's State  Aid Modernisation agenda, an initiative launched in May 2012.

In recent years, renewable energy sources have been heavily supported with fixed tariffs. Although fixed tariffs have encouraged massive growth of renewables throughout the EU and helped to make progress on environmental objectives, it  has caused serious marker distortions. In this context, the new guidelines  are expected to pave the way for more efficient public support measures that reflect market conditions. The guidelines will be in force until the end of 2020.

The key pillars of the new guidelines include:

1) Capacity mechanisms
   The new guidelines allow EU member states to introduce an aid to secure adequate electricity generation when there is a real risk of insufficient electricity generation capacity (so-called "capacity mechanisms").  

2) Aid to energy infrastructure
   The new guidelines include criteria for supporting cross-border energy infrastructure aimed to improve cross-border energy flows. The Commission believes that a modern energy infrastructure is essential for the EU to achieve its climate and energy goals as well as for EU’s internal energy  market to function properly.

3) Promotion of EU competitiveness
   Since charges levied for the funding of renewable energy may constitute a very high burden for some energy intensive companies, the new guidelines allow to reduce the burden for a number of energy intensive sectors and/or for highly energy intensive companies in other sectors.

4) Gradual introduction of market based mechanisms
   In order to increase cost effectives of renewable electricity generation (in recent years, renewables installations have generated electricity irrespective of the actual demand) as well as maturity of some renewable energy technologies and their substantial share of the market, the new guidelines aim to expose renewable energy sources to market signals. In particular, feed-in tariffs will be progressively replaces by competitive bidding processes for allocating public support in order to better integrate renewables into the internal electricity market.

Commission Vice President in charge of competition policy Joaquín Almunia  said: "It is time for renewables to join the market. The new guidelines provide a framework for designing more efficient public support measures that reflect market conditions, in a gradual and pragmatic way. Europe should meet its ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market. This will contribute to making energy more affordable for European citizens and companies."

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