# L_2011070EN.01004901.xml

| 17.3.2011 | EN | Official Journal of the European Union | L 70/49 |
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17.3.2011

EN

Official Journal of the European Union

L 70/49

---

EFTA SURVEILLANCE AUTHORITY DECISION

No 329/09/COL

of 15 July 2009

on the Norwegian scheme on support for alternative, renewable heating and electricity savings in private households

(Norway)

THE EFTA SURVEILLANCE AUTHORITY (1),

HAVING REGARD to the Agreement on the European Economic Area (2), in particular to Articles 61 to 63 and Protocol 26 thereof,

HAVING REGARD to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice (3), in particular to Article 24 thereof,

HAVING REGARD to Article 1(2) of Part I and Articles 4(4), 6 and 7(3) of Part II of Protocol 3 to the Surveillance and Court Agreement (4),

HAVING REGARD to the Authority’s Guidelines on the application and interpretation of Articles 61 and 62 of the EEA Agreement (5),

HAVING REGARD to the Authority’s Decision No 195/04/COL of 14 July 2004 on the implementing provisions referred to under Article 27 of Part II of Protocol 3 (6),

HAVING CALLED on interested parties to submit their comments pursuant to those provisions (7) and having regard to their comments,

Whereas:

I.   FACTS

FACTS

1.   PROCEDURE

PROCEDURE

By letter dated 13 October 2006 (Event No 393383) the Norwegian Association of Heat Producers (Varmeprodusentenes Forening) (8), filed a complaint alleging that state aid was granted in connection with the Norwegian scheme for alternative, renewable heating and electricity saving measures in private households (9). The Complainant is an independent organisation whose objective is to safeguard the interests of producers of wood burning stoves. The Complainant submitted supplementary information by letter dated 19 October 2006 (Event No 395451).

Varmeprodusentenes Forening

8

9

On 19 December 2007, after various exchanges of correspondence (10), the Authority decided to initiate the procedure laid down in Article 1(2) of Part I of Protocol 3. The Authority’s Decision No 716/07/COL to initiate the procedure was published in the Official Journal of the European Union and the EEA Supplement thereto (11). The Authority called on interested parties to submit their comments thereon.

10

Official Journal of the European Union

11

On 4 February 2008, the Norwegian authorities submitted comments (Event No 463573).

The Authority also received comments from interested parties, which were forwarded to the Norwegian authorities on 21 May 2008, 26 May 2008 and 14 January 2009 (respectively Event Nos 477954, 477902 and 503830). The Norwegian authorities submitted their observations on these comments by letters dated 25 June 2008, 4 July 2008 and 6 March 2009 (respectively Event Nos 483303, 484722 and 511580).

By letter dated 2 April 2009, the Complainant supplied further information (Event No 514264), which was forwarded to the Norwegian authorities on 8 April 2009 (Event No 514886). By letter dated 7 May 2009, the Norwegian authorities presented further comments (Event No 517749).

On 21 April 2009, representatives of the Authority met with representatives from the Norwegian Bio Energy Association (12), an independent association whose objective is to promote rational utilisation of bioenergy in Norway. NOBIO had submitted observations to the Authority’s Decision on 21 May 2008 (Event No 477954).

12

2.   DESCRIPTION OF THE PROPOSED MEASURE

DESCRIPTION OF THE PROPOSED MEASURE

2.1.   THE ALTERNATIVE HEATING SCHEME

The alternative heating scheme was introduced in 2006 (13). The Norwegian authorities have explained that it is aimed at giving consumers an incentive to invest in certain environmentally friendly heating technologies which have a limited spread on the Norwegian market and which can contribute to the reduction the use of electricity in private households (14). The Norwegian authorities have explained that only technologies which are suitable replacements to electricity as a primary source of heating are included under the alternative heating scheme. The scheme covers pellet stoves and boilers, heat pumps connected to waterborne heating systems and control systems for reducing consumption of electricity. As of August 2008 (15), investments in solar heating collectors connected to waterborne heating systems are also included in the scheme.

13

14

15

Only households that invest in the relevant heating technologies after submitting an application are eligible for funding. The grants are disbursed ex post, after the recipient has submitted a proof of purchase. Private households can apply for a maximum refund of 20 % of documented and eligible costs. The grants are limited to NOK 4 000 for pellet stoves and electronic control systems. For heat pumps, pellet boilers and solar heating collectors the limit is NOK 10 000.

ex post

The aid scheme is administered by Enova SF, a public company (‘
  statsforetak
  ’) fully owned by the Ministry of Petroleum and Energy.

statsforetak

2.2.   NATIONAL LEGAL BASIS FOR THE AID MEASURE

The legal basis for the scheme is the State budget. The scheme was proposed by the Norwegian Government in Parliamentary proposition no 82 (2005-2006), and adopted by Parliament in September 2006. The scheme’s budget has been modified by the adopted suggestions in Parliamentary proposition no 22 (2006-2007), Parliamentary proposition no 59 (2007-2008) and Parliamentary proposition no 1 (2008-2009).

2.3.   BUDGET AND DURATION

The scheme was initiated in 2006 by Parliamentary proposition no 82 (2005-2006). The proposal was adopted by Parliament on 15 September 2006 with a budget of NOK 46 million. In accordance with Parliamentary proposition no 22 (2006-2007), the scheme's budget was later increased by NOK 25 million to a total of NOK 71 million in the last revision of the state budget for 2006.

Enova was not granted additional funding for the scheme for 2007, but as only NOK 2 million were disbursed during 2006, the Parliament decided to transfer the remaining NOK 69 million to the scheme’s 2007 budget.

NOK 40 million were disbursed in 2007. The remaining NOK 29 million of undisbursed funding from the 2007 budget were transferred to the 2008 budget. In addition to this NOK 31 million were allocated over the state budget (16). Thus the total aid scheme budget for 2008 amounted to NOK 60 million.

16

NOK 30 million were disbursed in 2008. The remaining NOK 30 million were transferred to the 2009 budget. Together with NOK 40 million of a new budgetary allocation (17), the total budget for 2009 amounts to NOK 70 million.

17

Since its initiation a total of NOK 142 million have been allocated to the scheme over the state budged, of which NOK 72 million had been disbursed by the end of 2008; there is no defined timeframe for the scheme (18).

18

2.4.   GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

The Authority opened the formal investigation procedure on the basis that the alternative heating scheme could involve state aid. Although the direct beneficiaries of the scheme are final consumers, the scheme is aimed at promoting the use of specific heating technologies. Therefore, the Authority questioned whether indirect state aid is granted to producers, importers and/or sellers of the heating technologies covered by the scheme.

The Authority had doubts whether the scheme could be considered compatible with the functioning of the EEA Agreement. More specifically, the Authority had doubts as to whether the Environmental Aid Guidelines could be applicable as the indirect aid would not contribute to the reduction of the amount of energy used in the producers and/or importers production cycle. Furthermore, the Authority questioned whether the scheme could be considered compatible under Article 61(3)(c) EEA.

3.   COMMENTS BY THE NORWEGIAN AUTHORITIES

COMMENTS BY THE NORWEGIAN AUTHORITIES

The Norwegian authorities argue that the only recipients of the alternative heating scheme are private households which are not undertakings within the meaning of the EEA competition rules, and that the measure, for that reason, cannot be considered to constitute state aid within the meaning of Article 61(1) EEA.

Furthermore, the Norwegian authorities argue that the scheme is not selective as the advantage conferred on the recipient is justified by the nature or general scheme of the system of which it is part and therefore cannot be considered as state aid within the meaning of Article 61(1) EEA. Additionally, the Norwegian authorities argue that the scheme does not distort or threaten to distort competition since wood burning stoves and the technologies entitled to support cannot be regarded as substitutable products and thus not within the same relevant product market. The Norwegian authorities consider the relevant market to be ‘those technologies which can replace electric heating and provide the same level of heating comfort as electric heating during day and night, or in a more technical language, base load heating systems’
   (19). In contrast, wood burning stoves should, according to the authorities, be classified as a supplementary heat source used in addition to the base load source. Wood burning stoves should therefore be characterised as so called ‘peak load’ heating systems.

19

Finally, in case the Authority were to find that the scheme constituted state aid within the meaning of Article 61(1) EEA, the Norwegian authorities argue that the scheme is justifiable under both Article 61(2)(a) and 61(3)(c) EEA on the basis of its respectively social and environmental objectives.

4.   COMMENTS FROM THIRD PARTIES

COMMENTS FROM THIRD PARTIES

The Authority has received comments from two third parties: the Norwegian Association of Heat Producers, which is the Complainant, and NOBIO.

4.1.   COMMENTS FROM THE COMPLAINANT

The Complainant is of the opinion that the alternative heating scheme constitutes illegal state aid within the meaning of Article 61(1) EEA. It alleges that the support to private households must be regarded as constituting an indirect advantage for the producers and/or the importers of the heating technologies covered by the scheme. More specifically, according to the information supplied by the Complainant, the sales of pellet stoves have increased with the introduction of the scheme. The Complainant argues that the introduction of the support scheme has given the producers importers and retailers of pellet stoves the opportunity to increase sales and profits.

Furthermore, the Complainant argues that the measure distorts or threatens to distort competition because wood burning stoves, which are similar to pellet stoves, are not covered by the scheme.

Finally, the Complainant considers that neither Article 61(2)(a) nor 61(3)(c) EEA can justify the aid scheme in its current form.

4.2.   COMMENTS FROM NOBIO

NOBIO supports the views of the Norwegian authorities and holds that the scheme only entails a direct financial support to private households, and not to undertakings, and that the scheme consequently does not involve state aid within the meaning of Article 61(1) EEA.

Furthermore, in case the Authority were to find that the scheme constituted state aid within the meaning of Article 61(1) EEA, NOBIO argues that the scheme is justifiable under both Article 61(2)(a) and 61(3)(c) EEA, on the basis of its respectively social and environmental objectives.

II.   ASSESSMENT

ASSESSMENT

1.   THE PRESENCE OF STATE AID

THE PRESENCE OF STATE AID

Article 61(1) EEA reads as follows:

‘Save as otherwise provided in this Agreement, any aid granted by EC Member States, EFTA States or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Contracting Parties, be incompatible with the functioning of this Agreement.’

To be considered state aid within the meaning of Article 61(1) EEA, the following four cumulative conditions must be met: The measure must (i) be granted by the State or through state resources, (ii) confer a selective economic advantage on the recipients; (iii) distort or threaten to distort competition; and (iv) be liable to affect trade between the Contracting Parties to the EEA Agreement.

1.1.   PRESENCE OF STATE RESOURCES

The alternative heating scheme is financed by the Norwegian State by means of allocations from the state budget. The measures in question are therefore granted by the State through state resources.

1.2.   FAVOURING CERTAIN UNDERTAKINGS OR THE PRODUCTION OF CERTAIN GOODS

For state support to constitute state aid within the meaning of Article 61(1) EEA it must also confer an economic advantage on undertakings, and be selective in the sense that it favours ‘certain undertakings or the production of certain goods’.

1.2.1.   
  Conferring an economic advantage on undertakings

Conferring an economic advantage on undertakings

The first question to be analysed is therefore whether the scheme in question confers an economic advantage on undertakings (20).

20

The direct recipients of the grants under the alternative heating scheme are private households which cannot generally be classified as undertakings within the meaning of Article 61(1) EEA. However, the grant of a subsidy to an individual or to consumers does not per definition exclude the existence of aid (21). Even if the first or direct beneficiaries of a measure are not undertakings, an indirect advantage may nonetheless be granted to undertakings. The wording of Article 61(1) EEA with its reference to ‘aid granted (...) in any form whatsoever’ covers direct as well as indirect grants of aid, as confirmed by the practice of the European Commission (22) and the case law (23) of the European Court of Justice (24). Therefore, the assessment of whether indirect aid is granted to undertakings must be carried out on a case-by-case basis.

21

22

23

24

The alternative heating scheme is aimed at promoting the sale of specific heating technologies (25). Therefore, in this case, the question of whether undertakings active in the sector of the technologies covered by the scheme benefit from an indirect economic advantage which may fall within the scope of Article 61(1) EEA must be assessed.

25

Article 61(l) EEA does not distinguish between measures of state intervention by reference to their causes or aims, but merely defines them in relation to their effects (26). The question is therefore whether the alternative heating scheme has the effect of granting an indirect economic advantage to the undertakings active in the sectors of the heating technologies covered by the scheme.

26

The Authority does not share the view of the Norwegian authorities according to which the existence of indirect aid depends on whether the ultimate and predominant aim is to provide aid to undertakings, so that only schemes that are constructed to circumvent the prohibition on state aid can constitute indirect aid.

In the case under assessment, the subsidy to private households for investments in specific alternative renewable heating technologies provides them with an economic incentive to purchase these products. The measure creates an incentive for consumers to switch from traditional electric heating to alternative heating systems (27). A higher demand from consumers can result in higher profits for these kinds of technologies which provides an advantage to the undertakings active in the sector of the technologies covered by the scheme in comparison with other undertakings (28).

27

28

The fact that consumers can choose among the technologies covered by the scheme does not mean that the connection between the direct grant from the State to the consumer and the advantage given to the undertakings in question has been eliminated (29).

29

Although the advantage is of an indirect nature, the alternative heating scheme has been established in such a way that there is a direct link from the grant of aid to the consumer and the purchase of the relevant technology. In order to obtain the grant, a proof of purchase of one of the technologies covered by the alternative heating scheme must be submitted to Enova SF.

In light of the above, the Authority considers that the alternative heating scheme provides an indirect advantage to undertakings active in the sector of alternative, renewable heating systems.

1.2.2.   
  The criterion of selectivity

The criterion of selectivity

The next question to be analysed is whether the measure is selective, i.e. whether it favours ‘certain undertakings or the production of certain goods’.

i.e.

The Authority considers that the alternative heating scheme is selective in that it only (indirectly) favours undertakings active in the sector of the alternative, renewable heating technologies covered (i.e. pellet stoves and boilers, heat pumps and solar heating collectors connected to waterborne heating systems and control systems for reducing consumption of electricity). No other undertakings, including those active on the sectors of other renewable heating technologies, can benefit from the grants disbursed under the scheme (30).

30

The Norwegian authorities consider that the advantage granted under the alternative heating system is justified by the nature or general scheme of the system of which it is part. The Authority does not share this view.

The ECJ and the EFTA Court have consistently held that measures granting advantages to certain recipients are not selective if they can be justified by the nature and general scheme of the system of which they are part (31). For a selective measure to be justified by the logic of a system there has to be a general system to which it relates. In addition, the case law has focused the assessment of whether a measure is justified by the nature and logic of the general system regarding schemes that in some form constitute a derogation from taxes, charges or other similar systems of more general application. The Norwegian authorities have not provided any argument with regard to the general system to which the aid measure relates. The alternative heating scheme indirectly confers advantages on certain undertakings active in the sector of the technologies covered by the scheme. In light of the above, the Authority must therefore conclude that the measure is selective within the meaning of Article 61(1) EEA.

31

1.3.   DISTORTION OF COMPETITION AND AFFECTING TRADE BETWEEN CONTRACTING PARTIES

In order to constitute state aid, a measure must distort or threaten to distort competition and be liable to affect trade between the Contracting Parties to the EEA Agreement.

The Authority does not have to establish that an aid has a real effect on trade between EEA States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and threaten to distort competition (32). Any grant of aid to an undertaking exercising its activities in the EEA market is liable to cause distortion of competition and affect trade (33).

32

33

The alternative heating scheme (indirectly) confers an advantage on undertakings active in the sector of alternative, renewable heating technologies. Stimulation of consumer demand for the technologies covered is an intrinsic component of the alternative heating scheme.

Further, according to the figures available to the Authority, by way of example, the sales of one of the technologies covered by the scheme, pellet stoves, have increased and stabilised after the introduction of the scheme in Norway. In comparison, the sales of wood burning stoves, a technology not covered by the scheme, have not experienced a similarly positive development during the same period.

For these reasons, it can be concluded that the aid threatens to distort competition.

As regards the condition relating to the effect on trade, when state aid strengthens the position of an undertaking compared with other undertakings competing in intra-EEA trade, the latter must be regarded as affected by that aid (34).

34

Undertakings active in the sector of heating technologies operate in a European market, therefore the alternative heating scheme affects trade between the Contracting Parties within the meaning of Article 61(1) EEA.

Thus, the conclusion must be drawn that the aid threatens to distort competition and is liable to affect trade between the Contracting Parties to the EEA.

1.4.   CONCLUSION

The Authority considers that the Norwegian alternative heating scheme constitutes state aid within the meaning of Article 61(1) EEA.

2.   PROCEDURAL REQUIREMENTS

PROCEDURAL REQUIREMENTS

Pursuant to Article 1(3) of Part I of Protocol 3, ‘the EFTA Surveillance Authority shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid [...]. The State concerned shall not put its proposed measures into effect until the procedure has resulted in a final decision’.

The Norwegian authorities did not notify the alternative heating scheme to the Authority before it was put into effect. The Authority therefore concludes that the Norwegian authorities have not respected their obligations pursuant to Article 1(3) of Part I of Protocol 3.

3.   COMPATIBILITY OF THE AID

COMPATIBILITY OF THE AID

The Norwegian authorities argue that the aid can be justified under Article 61(2)(a), or alternatively 61(3)(c) EEA in conjunction with the Authority’s State Aid Guidelines on aid for environmental protection.

3.1.   COMPATIBILITY UNDER ARTICLE 61(2)(A) EEA

According to Article 61(2)(a) EEA aid of ‘a social character’ is compatible with the functioning of the Agreement if it is ‘granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned’.

The Authority notes that derogations from the prohibition on state aid shall be interpreted strictly. The Norwegian alternative heating scheme is targeted at all Norwegian private households. In the Authority’s view, to be considered compatible under Article 61(2)(a) EEA, the scheme must have a social character in the sense that it must benefit a less privileged segment of the population (35). Since the measure is open to all private households on a ‘first come/first serve’-basis, the scheme can not be considered as having a social character within the meaning of Article 61(2)(a) EEA.

35

3.2.   COMPATIBILITY UNDER ARTICLE 61(3)(C) EEA

According to Article 61(3)(c) EEA, aid may be declared compatible with the functioning of the EEA Agreement if it ‘facilitates the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’.

3.2.1.   
  The Guidelines on environmental protection

The Guidelines on environmental protection

The Authority has issued guidelines laying down the criteria it will apply in the assessment of whether state aid measures intended to protect the environment can be considered compatible with the functioning of the EEA Agreement according to Article 61(3)(c) EEA. The alternative heating scheme was initiated in 2006. At that time, the Authority’s Guidelines on environmental protection as last revised 23 May 2001 were applicable (36). The Authority adopted new Guidelines on environmental protection 16 July 2008
   (37), applicable from that date. Thus, a scheme covering these different periods in time must be assessed in light of both sets of guidelines in accordance with the principles laid down in paragraph 74 of the 2001 Guidelines and paragraph 205 of the 2008 Guidelines.

36

37

However, the situation where indirect aid benefits some producers, importers and/or sellers of certain heating technologies for private households, is neither covered by the 2001 Guidelines, nor the 2008 Guidelines.

3.2.2.   
  Compatibility directly under Article 61(3)(c) EEA

Compatibility directly under Article 61(3)(c) EEA

As the 2001 and 2008 Guidelines are not directly applicable to the Norwegian alternative heating scheme, the Authority will assess the compatibility of the scheme directly under Article 61(3)(c) EEA (38). Derogations within the meaning of Article 61(3)(c) EEA must be interpreted narrowly (39) and may be granted only when it can be established that the aid will contribute to the attainment of an objective of common interest, which could not be secured under normal market conditions alone. The so-called ‘compensatory justification principle’ was endorsed by the ECJ in the Philip Morris case (40).

38

39

Philip Morris

40

Appreciating the compatibility of state aid is fundamentally about balancing the negative effects of aid on competition with its positive effects in terms of common interest (41). In order to be declared compatible under Article 61(3)(c) EEA, state aid scheme must:

41

| — | be aimed at a well-defined objective of common interest, |
| --- | --- |

—

be aimed at a well-defined objective of common interest,

| — | be well-designed to deliver the objective of common interest, and in that regard, be an appropriate instrument, have an incentive effect, and be proportionate, |
| --- | --- |

—

be well-designed to deliver the objective of common interest, and in that regard, be an appropriate instrument, have an incentive effect, and be proportionate,

| — | not distort competition and trade in the EEA to an extent contrary to common interest (42). |
| --- | --- |

—

not distort competition and trade in the EEA to an extent contrary to common interest (42).

42

The Authority must assess whether the objective pursued by the measure is necessary, in line with objectives of common interest and, if so, whether this is the least distortive method of pursuing that objective.

Well-defined objective of common interest

Well-defined objective of common interest

The alternative heating scheme pursues an environmental objective by incentivising consumers’ investments in environmentally friendly technologies with a limited spread on the Norwegian market. The Norwegian authorities argue that a wider spread of the alternative heating technologies covered by the scheme will reduce electricity consumption in Norwegian households. Reducing the amount of electricity used for heating private households and stimulating the use of alternative heating systems based on renewable energies, can be considered as an environmentally sensible objective.

Recital nine of the preamble to the EEA Agreement sets out the common goal of preserving, protecting and improving the quality of the environment and to ensure a prudent and rational utilisation of natural resources on the basis of the principle of sustainable development. In the Authority’s view, an aid scheme with the aim of shifting energy consumption towards renewable sources is in line with objectives of common interest.

Well-designed scheme

Well-designed scheme

The criteria for the inclusion of a technology under the scheme are formulated on the basis of the technology’s suitability to replace electric heating. The Norwegian authorities have explained that only technologies that can be categorised as so-called ‘base load heating systems’ are covered by the scheme. According to the Norwegian authorities ‘base load heating systems’ are ‘those technologies which can replace electric heating and provide the same level of heating comfort as electric heating during day and night’
   (43).

43

The Norwegian authorities have explained that the alternative renewable heating technologies covered by the scheme share three features: they must have had a limited spread on the Norwegian market, be capable of replacing electric heating and require a certain minimum of user intervention. The Authority notes that not all technologies covered by the alternative heating scheme are well-suited to fully replace electric heating (44). However, the Norwegian authorities have reasoned that technologies covered by the scheme are better designed to systematically reduce the amount of electricity utilised for the purpose of heating a normal household.

44

To give grants to consumers in order to promote a shift of demand away from electric heating towards alternative, renewable heating systems in households, seems to be an appropriate instrument to influence the consumers’ behaviour directly. Without the support granted by the State under the alternative heating scheme, consumers’ demand would not as likely have been changed towards renewable heating technologies within the same time frame.

Where certain environmentally friendly measures are not set in effect, state aid can in principle be considered compatible (45). The alternative heating scheme aims at providing a consumer incentive for investments in environmentally friendly technologies suitable for reducing electricity consumption that have a limited spread on the Norwegian market for heating in households.

45

Moreover, the Authority considers that the aid amount is limited to the minimum of what is necessary to give consumers an incentive to shift from electric heating systems to the alternative renewable heating sources covered by the scheme. The alternative heating scheme involves a refund of up to 20 % of documented eligible costs with a maximum of either NOK 4 000 or NOK 10 000 depending on the type of technology. The maximum sum granted for the acquisition of an alternative heating technology is proportionate to the cost of the relevant technology.

For these reasons, the Authority finds that the scheme is well-designed to deliver the environmental objective of common interest.

No distortion of competition and trade in the EEA to an extent contrary to common interest

No distortion of competition and trade in the EEA to an extent contrary to common interest

Finally, it must be assessed whether the potential to distort competition and trade in the European Economic Area is of a nature contrary to the common interest.

The grants are paid directly to the consumers, who can choose freely among the products that meet the objective criteria of the scheme independently of the undertaking offering the alternative heating technology. Thus, the scheme avoids unnecessary distortions of competition and trade in the EEA in the sector of the technologies covered by the scheme.

The Complainant argues that the scheme distorts competition since it covers pellet stoves but not wood burning stoves. According to the complainant, wood burning stoves represent a technology that closely resembles pellet stoves and should be covered by the scheme. Conversely, the Norwegian authorities argue that wood burning stoves do not fulfil the objective criteria established under the alternative heating scheme. The Authority takes the opinion that, although the complainant may be right in claiming a competitive relationship between wood burning stoves and all or at least some of those technologies covered by the aid scheme, it appears that wood burning stoves do not fulfil the requirements to qualify for grants under the scheme. In that regard, the Authority does not object to the objective criteria under the scheme and the Norwegian authorities assessment of which heating technologies are better suited to fulfil the environmental aims pursued under the scheme. The alternative heating scheme is based on three objective criteria for eligibility (i.e. limited spread in the market, capability to replace electricity as a primary source of heating and minimum user intervention) all or some of which wood burning stoves appear not to fulfil. Moreover, the Authority acknowledges that wood burning stoves already represent a well-spread technology in Norway. The Authority thus considers that the criteria for eligibility under the aid scheme are objectively justified and that the scheme does not violate other provisions of the EEA Agreement, including the rules on non-discrimination on grounds of nationality or of equal treatment. Moreover, the Authority considers that the Norwegian authorities have further limited the negative effects on competition by establishing a relatively low aid intensity. Therefore, the Authority holds that the possible distortion of competition created towards wood burning stoves and other potentially competing technologies is not contrary to the common interest and seems justifiable on the basis of the balancing test carried out above.

For these reasons, the Authority considers that the scheme is aimed at a well-defined objective of common interest; is well-designed to deliver the objective of common interest, and in that regard, an appropriate instrument, which has an incentive effect and is proportionate; and, finally, that it does not distort competition and trade in the EEA to an extent contrary to the common interest. Accordingly, the Authority finds that the scheme is justified under Article 61(3)(c) EEA.

4.   CONCLUSION

CONCLUSION

In light of the foregoing considerations, the Authority concludes that the Norwegian scheme on support for alternative, renewable heating and electricity savings in private households constitutes state aid within the meaning of Article 61(1) EEA compatible with Article 61(3)(c) EEA.

The Norwegian authorities are reminded of the obligation resulting from Article 21 of Part II of Protocol 3, read in conjunction with Article 6 of Decision No 195/04/COL, to provide annual reports on the implementation of the scheme.

The Norwegian authorities are also reminded that all plans to modify this scheme shall be notified to the Authority.

HAS ADOPTED THIS DECISION:

Article 1

The Norwegian scheme on support for alternative, renewable heating and electricity savings in private households constitutes aid within the meaning of Article 61(1) EEA. The aid scheme is compatible with the functioning of the EEA Agreement on the basis of Article 61(3)(c) EEA.

Article 2

This Decision is addressed to the Kingdom of Norway.

Article 3

Only the English version is authentic.

Done at Brussels, 15 July 2009.

For the EFTA Surveillance Authority

Per SANDERUD

President

Kristján A. STEFÁNSSON

College Member

---

(1)  Hereinafter referred to as the Authority.

1

(2)  Hereinafter referred to as the EEA Agreement.

2

(3)  Hereinafter referred to as the Surveillance and Court Agreement.

3

(4)  Hereinafter referred to as Protocol 3.

4

(5)  Guidelines on the application and interpretation of Articles 61 and 62 of the EEA Agreement and Article 1 of Protocol 3 to the Surveillance and Court Agreement, adopted and issued by the Authority on 19 January 1994, published in the
  Official Journal of the European Union (hereinafter referred to as OJ) L 231 of 3.9.1994 p. 1 and EEA Supplement No 32 of 3.9.1994 p. 1. Hereinafter referred to as the State Aid Guidelines. The updated version of the State Aid Guidelines is published on the Authority’s website: http://www.eftasurv.int/fieldsofwork/fieldstateaid/guidelines/

5

Official Journal of the European Union

(6)  Decision No 195/04/COL of 14 July 2004 published in OJ L 139 of 25.5.2006 p. 37 and EEA Supplement No 26 of 25.5.2006 p. 1 as amended. The consolidated version of the Decision is published on the Authority’s website: http://www.eftasurv.int/fieldsofwork/fieldstateaid/legaltext/.

6

(7)  Published in OJ C 96 of 17.4.2008 p. 14 and EEA Supplement No 20 of 17.4.2008 p. 58.

7

(8)  Hereinafter referred to as the Complainant.

8

(9)  Hereinafter referred to as the alternative heating scheme.

9

(10)  For more detailed information on the various correspondence between the Authority and the Norwegian authorities, reference is made to the Authority’s Decision to open the formal investigation procedure, Decision No 716/07/COL.

10

(11)  Published in OJ C 96 of 17.4.2008 p. 14 and EEA Supplement No 20 of 17.4.2008 p. 58.

11

(12)  Hereinafter referred to as NOBIO.

12

(13)  Further information about the scheme can be found on Enova SF's website: http://www.minenergi.no/ and http://www.minenergi.no/sitepageview.aspx?sitePageID=1062

13

(14)  Parliamentary proposition no 82 (2005-2006), press release from the Ministry of Petroleum and Energy of 25 August 2006 nr. 98/06 and of 14 September 2006 nr. 107/06.

14

(15)  See Parliamentary proposition no 1 (2008-2009) p. 56.

15

(16)  Parliamentary proposition no 59 (2007-2008) p. 123.

16

(17)  Parliamentary proposition no 1 (2008-2009) p. 56.

17

(18)  In Parliamentary proposition no 59 (2007-2008), the Norwegian authorities note that the scheme will be reviewed in light of the Authority’s final decision.

18

(19)  Letter from the Norwegian Ministry of Petroleum and Energy dated 15 January 2007 (Event no: 406849), p. 5.

19

(20)  For the purpose of Community competition law, undertakings are defined as entities engaged in economic activity, regardless of their legal status, see for instance the judgment in Case C-41/90 Höfner and Elser [1991] ECR I-1979, paragraph 21.

20

Höfner and Elser

(21)  Case C-156/98 Germany v Commission [2000] ECR I-6857.

21

Germany v Commission

(22)  Hereinafter referred to as the Commission.

22

(23)  Case C-156/98 Germany v Commission [2000] ECR I-6857; C-382/99 Netherlands v Commission [2002] ECR I-5163; Case C-457/00 Belgium v Commission [2003] ECR I-6931, paragraph 57; see also the Opinion of AG Jacobs in Case C-457/00, paragraph 59.

23

Germany v Commission

Netherlands v Commission

Belgium v Commission

(24)  Hereinafter referred to as the ECJ.

24

(25)  Parliamentary proposition no 82 (2005-2006) page 1.

25

(26)  Case C-382/99 Netherlands v Commission, paragraph 61; C-487/06 P, British Aggregates Association v Commission, judgment of 22 December 2008, paragraph 87.

26

Netherlands v Commission

British Aggregates Association v Commission

(27)  For a similar line of reasoning, see Commission decision of 24 January 2007 C (2006) 6630, in case N 270/2006, paragraph 40.

27

(28)  See Commission decision of 26 April 2006 C (2006) 1519, in case N 142/2005, point 3.1.

28

(29)  See Commission decision of 24 January 2007 C (2006) 6630, in case N 270/2006, paragraph 43.

29

(30)  
  Ibid. paragraph 46-47.

30

Ibid.

(31)  Case C-143/99 Adria-Wien pipeline GmbH and Wietersdorfer & Peggauer Zementwerke GmbH [2001] ECR I-8365, paragraph 42 and the judgment of the EFTA Court in the joined cases E-5/04, E-6/04 and E-7/04 Fesil and Finnfjord and others v EFTA Surveillance Authority, [2005] EFTA Court Report, page 117, paragraph 77.

31

Adria-Wien pipeline GmbH and Wietersdorfer & Peggauer Zementwerke GmbH

Fesil and Finnfjord and others v EFTA Surveillance Authority

(32)  See the judgment of the EFTA Court in the joined cases E-5/04, E-6/04 and E-7/04 Fesil and Finnfjord and others v EFTA Surveillance Authority, [2005] EFTA Court Report, page 117, paragraph 93, Case C-372/97 Italy v Commission [2004] ECR I-3679, paragraph 44, and Case C-66/02 Italy v Commission [2005] ECR I-10901, paragraph 112.

32

Fesil and Finnfjord and others v EFTA Surveillance Authority

Italy

Commission

Italy

Commission

(33)  Joined Cases T-92/00 and T-103/00 Diputación Foral de Álava and Others v Commission [2002] ECR II-1385, paragraph 72.

33

Diputación Foral de Álava and Others

Commission

(34)  Case E-6/98 The Government of Norway v EFTA Surveillance Authority Rec. 1999 p. 74, paragraph 58, and Case 730/79 Philip Morris v Commission [1980] ECR I-2671 paragraph 11. see also Case C-75/97 Belgium v Commission [1999] ECR I-3671, paragraph 47 and Case T-217/02 Ter Lembeek v Commission, [2006] ECR II-4483, paragraph 181.

34

The Government of Norway v EFTA Surveillance Authority

Philip Morris v Commission

Belgium

Commission

Ter Lembeek

Commission

(35)  See for example the Guidelines on Application of Articles 92 and 93 of the EC Treaty and Article 61 of the EEA Agreement to State aids in the aviation sector OJ C 350 10 December 1994 p. 7, section III.3.

35

(36)  Hereinafter referred to as the 2001 Guidelines.

36

(37)  Hereinafter referred to as the 2008 Guidelines.

37

(38)  See Case T-288/97, Regione Autonoma Friuli Venezia Giulia v Commission [2001] ECR II-1169, paragraph 72.

38

Regione Autonoma Friuli Venezia Giulia v Commission

(39)  Case C-301/96 Germany v Commission [2003] ECR I-9919 paragraph 66 and 105.

39

Germany v Commission

(40)  Case 730/79 Philip Morris v Commission [1980] ECR I-2671.

40

Philip Morris v Commission

(41)  See the Commission’s State Aid Action Plan of 7 June 2005, COM (2005) 107, paragraph 11.

41

(42)  See Commission decision of 24 January 2007 C (2006) 6630, in case N 270/2006, paragraph 67.

42

(43)  Letter from the Norwegian Ministry of Petroleum and Energy dated 15 January 2007 (Event no: 406849), p. 5

43

(44)  For instance, according to the Enova SF buyers’ guide for solar heating collectors connected to waterborne heating systems (a technology covered by the scheme), these systems are only able to satisfy up to 50 % of a households’ total heating requirements. When provided with sufficient amounts of solar energy, solar heating collectors have the ability to run continuously without regular supervision, and when they are in operation, they provide the consumer with a convenient, albeit partial, source of alternative heating. The buyers’ guide is available at the Enova SF webpage:

44

http://www.minenergi.no/sitepageview.aspx?sitePageID=1083.

(45)  Both the 2001 and the 2008 Guidelines deal with aid for renewable energy sources where the aid is a form of compensation for the economic disadvantage renewable sources of energy face in competition with less environmentally friendly sources of energy, see 2001 Guidelines paragraphs 49-59 and 2008 Guidelines paragraphs 48-50.

45

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