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State aid: Commission opens two in-depth inquiries into Italian support
measures in energy sector in Sardinia
The European Commission has opened two separate in-depth investigations
under EU state aid rules regarding public support measures in the region of
Sulcis-Iglesiente in Sardinia, Italy.
Firstly, the Commission will investigate the compliance with state aid
rules of support measures amounting to over €400 million granted by Italy since
1998 in favour of Carbosulcis, the company exploiting the Nuraxi Figus coal
Secondly, the Commission will verify whether subsidies that Italy
intends to grant for the 'Sulcis project', i.e.the construction of a coal-fired
plant fitted with a Carbon Capture and Storage Demonstration (CCS) Section, are
in line with EU state aid rules.
inquiries gives interested third parties an opportunity to comment on
the measures. It does not prejudge the outcome of the investigation.
Between 1998 and 2010, Carbosulcis SpA received public support of at
least €405 million in the form of investment and operating aid as well as
support aimed at training, R&D and environmental purposes.
All measures were granted without prior notification to the Commission,
in breach of EU state aid rules.
The Commission will now assess whether this public support was granted
in line with the various EU rules specifying which categories of aid are allowed
and under what conditions.
The Commission invites Italy to quickly submit the necessary
information to allow it to carry out such an assessment.
As concerns the 'Sulcis project', Italy submitted that it mainly aims
at increasing the security of electricity supply of Sardinia and that it
supports industrial research and fosters development in a depressed area.
While the Commission acknowledges the importance of developing carbon
capture technology, it will investigate whether the planned coal-fired power
plant is best suited to address the alleged objective of security of supply in
Sardinia at the lowest cost for the State and whether the envisaged aid is kept
to the minimum necessary to achieve this objective.
Moreover, the Commission will check whether the project may indirectly
subsidise the operation of the local coal mine, which is in principle prohibited
under current EU rules.
In 2006, following a complaint, the Commission became aware of Italy's
intention to subsidise the operation of a coal mine, the Nuraxi-Figus mine, and
the production of electricity obtained from this indigenous coal in Sardinia.
The Commission investigated in parallel past subsidies granted to the
mine and the envisaged subsidies for the integrated Sulcis project, which
included the management of the very same mine and the construction of a power
plant fired with indigenous coal for at least 50% of its requirements.
In 2008, the Commission opened an in-depth investigation into the
Sulcis project as it had concerns that a guaranteed off-take price might provide
an undue competitive advantage to the plant operator over competitors who have
to work without such subsidies.
Moreover, local energy-intensive users would have been able to purchase
electricity at preferential tariffs, in breach of state aid rules (see case
Following the opening of this investigation, Italy withdrew the project
and, in 2011, notified a modified project including a CCS Demonstration Section.
The modified project no longer contains preferential tariffs for local
energy-intensive users. However, it still plans to subsidise the plant operator
in the form of guaranteed off-take tariffs over 20 years following the entry
into operation of the full project.
The aid amount would correspond to the difference between the
guaranteed tariffs and the market prices over the lifetime of the power plant.
Moreover, the project seems to imply the obligation to use local brown
The public support received by Carbosulcis SpA between 1998 and 2010
consisted of investment and operating aid as well as support aimed at training,
R&D and environmental purposes.
State aid control aims to ensure that companies that receive aid do not
benefit from an undue economic advantage distorting competition in the EU Single
State aid may be allowed where it benefits the common interest without
unduly distorting competition.
In particular, EU rules allow state aid for R&D and innovation,
training, and for environmental protection provided that certain conditions are
The non-confidential version of the decisions will be published in the
Official Journal of the EU and made available respectively under the case
numbers SA.20867 for the aid to Carbosulcis and SA.33424 for the planned aid to
the Sulcis Project in the State Aid Register on the competition website once any
confidential issues have been resolved.
New publications of State aid decisions in the internet and in the
Official Journal are listed in the State Aid Weekly e-News.