A competitive approach to achieving Green Deal goals

By Francine Cunningham, Pauline Van Sande

11-2020

With climate change near the top of the international political agenda, the European Commission President Ursula Von der Leyen has made the Green Deal plan, together with the transition to a truly Digital Europe, into a key policy goal for her administration. The Green Deal is the action plan to make the EU economy more sustainable, while transforming Europe into a more resource efficient and competitive economy.

Central to this goal is the ambition for the EU to be climate neutral by 2050. In order to reach this target, the Commission envisages all sectors of the economy making efforts to become more sustainable in their operations by boosting the efficient use of resources, investing in environmentally friendly technologies and moving to a cleaner, circular economy. Competition policy will also have its role to play.

In reference to the Green Deal, Commission Executive Vice-President, Margrethe Vestager, who has responsibility for competition, commented: “To succeed, everyone in Europe will have to play their part – every individual, every public authority. And that includes competition enforcers.”

EVP Vestager announced her intention in September to launch a discussion on how EU competition policy can best support the Green Deal. According to Mrs Vestager, competition policy cannot replace environmental laws or green investment, but the question is whether more can be done to apply competition rules in ways that better support the Green Deal.

In its approach to this subject, the Commission's DG Competition will be mindful of the way that competitive markets can encourage firms to produce at the lowest cost, to invest efficiently and to innovate and adopt more energy-efficient technologies. EU State aid rules can also enable R&D and investments in environmentally sustainable industries.

DG Competition has begun work on incorporating aspects of the Green Deal into its policies:

  • In its 2021 Work Programme, the Commission announced a revision of several state aid guidelines, most importantly for the Green Deal the Energy and Environmental Aid Guidelines and a State Aid General Block Exemption Regulation (GBER).

  • On 13 October 2020, the European Commission launched a consultation which runs until 20 November on competition policy and the Green Deal. The Commission is looking for input from interested stakeholders with ideas on how to make competition policy greener, ranging from antitrust and merger control to state aid. Once contributions have been gathered and analysed, the Commission aims to organise a conference early in 2021 to discuss the recommendations. This concept is similar to the conference organised in 2019 on “Shaping competition policy in the era of digitisation”.

  • During a recent webinar with Renew Europe, the political group to which Mrs Vestager belongs, she raised the idea of a green "bonus-malus" system. Under such a system, governments encouraging more sustainable projects would be given a green bonus that could be used to grant extra state aid to environmentally friendly schemes. On the other hand, the Commission would also be able to deny approval to non-environmentally friendly projects. In addition, Mrs Vestager stated that comfort letters (or letters of intent) could be provided to agreements between competitors working on projects with environmental objectives.

  • Mr Régibeau, the Chief Economist of DG Competition, also recently announced that he and his team are working on the development of tools to analyse “green efficiencies” to be considered in merger control reviews.

  • In December 2019, the Commission already approved an Important Project of Common European Interest ("IPCEI") to support research and innovation in the battery value chain. An IPCEI is a project notified jointly by multiple Member States under specific state aid rules. More IPCEI projects are believed to be in the pipeline, including for example on hydrogen technology.

In parallel to the European Commission, national competition authorities have been debating the interplay between competition law and environmental objectives. The Dutch ACM published draft guidelines on sustainability agreements and the Hellenic Competition Commission published a paper on sustainability issues and competition law.

The debate on competition law and sustainability is only just kicking off, but it is clear DG Competition is seriously exploring the ways in which competition policy can contribute to the effectiveness of environmental policies. Bird & Bird will keep you posted on its developments in this (green) field.

For more information contact Francine Cunningham and Pauline van Sande.

 
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