Green transformation continues, the Modernisation Fund announced new calls for facilities that need emission allowances

The European Union is aware of the importance of green transformation, and therefore provides new-old sources to its member states. Recently, the Just Transition Fund was approved, and it will provide help, with its EUR 17.5 billion, to coal-mining regions. In addition, the EU continues the LIFE programme which supports innovative environmental projects. And the Czech Republic is not lagging behind, it announces new calls of the Modernisation Fund for the modernisation of sources and technologies. At the same time, it is necessary to carefully monitor the public aid. For this reason, the Commission published the instructions by which it stipulates the conditions of the public support in relation to the system of emission allowances. As indicated by a new OECD tool, the public support often goes into non-environmentally friendly solutions such as fossil fuels.

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The Union approved the Just Transition Fund with EUR 17.5 billion

The Council of the European Union approved the regulation which establishes the fund with the total of EUR 17.5 billion. The Fund is supposed to enable and facilitate the transition to green economy and is one of the manners by which the European Union seeks to meet its objective of reducing 55% of emissions of greenhouse gases by 2030. The Fund builds on, among other things, the awareness that every EU member state has a different starting position in adapting to climatic changes and transition to a green, carbon neutral economy.

The finances from the fund are intended predominantly to make it easier for the countries with economies dependent on fossil fuels and carbon intensive industry to move to greener and more diversified economy. For this reason, the finances will primarily go to areas in which it is necessary to reduce the use of black coal and lignite, crude oil and peat. The finances are intended for small and medium-sized enterprises, including startups. The emphasis is put on the adaptation of the employees to new work positions, support in search of work and social inclusion.

The Modernisation Fund announces new calls for the modernisation of sources and technologies

The Modernisation Fund announced three new calls, thanks to which dozens of industrial facilities, which are included in the EU emission allowances trading and have had so far the biggest share in pollution of air in the Czech Republic, can prepare the increase in the environmental friendliness of their operations. These primarily include facilities from sectors of manufacturing of steel and iron, cement and lime, cellulase and paper, chemical industry, refineries, etc.

The first two calls focus on smaller scale projects where the support does not exceed EUR 15 million, the third relates to more costly projects. The range of projects that may gain the support is wide. These may include
a renovation or a replacement of an old source by a new one – however, there is a condition that the new fuel must be treated as pure. The amount of the subsidy will range from 30% to 80%, enterprises in coal mining regions will have an advantage in the provision of the subsidy. Applications may be filed from 19 July 2021 to the end of January 2022.

LIFE Programme for environment and climate continues in the period between 2021 and 2027

The European Union approved the continuance of the LIFE Programme which finances eco-innovation projects in the entire Union. The Programme focuses on projects in biological diversity, circular economy, climate change and transition to clean energy. The objective of this programme is to contribute, in the energy sector, to a just transformation to sustainable, circular, energy efficient economy based on energy from renewable sources that is neutral in terms of climate change and resistant to climate changes, and to the protection, renewal and improvement in the quality of the environment. For the period from 2021 to 2027, EUR 5.4 billion is available.

The benefit of the LIFE programme is the high flexibility of the proposed project, the possibility to interconnect the private and public sector and the scientific aspects and business. On the other hand, it is a very competitive European programme putting strong emphasis on innovativeness and applicability of solutions.

Greenhouse gas emission allowances interfere with public aid rules after 2021

The European Commission issued Guidelines on certain State aid measures in the context of the system for greenhouse gas emission allowance trading for greenhouse gas emissions after 2021. The guidelines define conditions under which special measures for the support of trading may be compatible with emission allowances. In addition, they respond to the trend where the increase in the prices of carbon results in the risk that companies in the sectors having the highest costs for the ETS will transfer their business to other jurisdictions (carbon leakage). Member states may provide aid to the companies of up to 75% of indirect ETS costs.

What is the public aid for fossil fuels worldwide

The Fossil Fuel Subsidy Tracker was created based on the cooperation between the Organisation for Economic Cooperation and Development and the International Institute for Sustainable Development (IISD). This map showing the overviews of subsidies in fossil fuels worldwide provides a presentation of provided subsidies and financial aid, both for consumers and producers of fossil fuels. As a result, it will complement the existing efforts of international organisations on the monitoring of this sector and possibly become an important tool for the creation of energy policy.

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