Finance & Leasing Association26 November 2021
Brussels finds itself at a bit of a crossroads post COP26 in Glasgow. This is an area where the EU could reasonably expect to use its combined power to drive ambitious global targets for lower emissions. The EU did pledge €100 million in finance for the Adaptation Fund – in addition to individual Member State contributions – which was established to support developing countries in reducing their greenhouse gas emissions and adapting to the impacts of climate change. However, it has come under criticism for allowing the US and China to set the pace.
Nevertheless, the EU appears to be steering greener behaviour at national level by linking the State Aid rules to the use of cleaner energy sources according to the Commission’s review of competition policy published last week. The EU’s Climate, Environmental Protection and Energy Aid Guidelines (CEEAG), expected to come into force in 2022, have, in their former incarnation (Energy and Environmental State Aid Guidelines), helped generate public investment in renewable energy where private finance was insufficient. The Commission states that is unlikely that projects involving “the most polluting ones [fuels] such as oil, coal and lignite”, will be subsidised. Nor will it promote financial support being given to polluting companies.
The CEEAG will also provide a carrot in the form of facilitating aid for the acquisition of zero/low carbon emission vehicles and for investments in the related recharging and refuelling infrastructures alongside enabling support for greener production processes. Whilst the UK Government has recognised the need for some state intervention, this is twinned with their philosophical stance that the free market must also drive behaviour. It will be interesting to gauge which of these approaches will be more successful in the longer term.
Published 26 Nov 2021
