WRITTEN QUESTION E-2750/00 by Hiltrud Breyer (Verts/ALE) and Alexander de Roo (Verts/ALE) to the Commission. Tax exemption for gas-fired power stations in Germany and legislation on state aid.
Date: 2000-09-01
Institutions: European Parliament, Provisional data
Subjects: State aid, control of State aid, environmental protection, power plant, tax exemption

C 113 E/164

Official Journal of the European Communities

EN

18.4.2001

Reply

(16 November 2000)

Responsibility for monitoring the implementation of all international agreements entered into by the
1.
Community lies with the Commission. This applies also to the Agreements concluded with Israel as well as
with the PLO. The decision to put into effect the EU-Israel Association Agreement was the result of the
completion of the ratification procedure by both the European Parliament (on 29 February 1996) and the
national Parliaments of EU member States.

2.
Regarding the territorial scope of the Association Agreement, Article 83 applies only (cid:145)to the territory
of the State of Israel(cid:146). The term (cid:145)Israel(cid:146) covers the territorial waters, which surround Israel, and under
certain conditions also some sea-vessels. No further definition is contained in the agreement. For its part,
the EC considers that the agreement applies solely to the territory of the State of Israel within its
internationally recognised borders in accordance with the relevant UNSC resolutions. The EC and its
Member States continue to base their relations with Israel and the Palestinians on the principles of
international law, including the Fourth Geneva Convention on the Protection of Civilians (1949) prohibit-
ing, inter alia, the establishment of settlements. The Israeli authorities have, as the Honourable Member
implies, taken a different view on the definition of the State of Israel, and maintain that the settlements
issue is to be solved in the context of the Middle East Peace Process. This has indeed created difficulties in
the application of the preceding EC-Israel Interim Agreement. Talks have been taking place at a technical
level between the Commission and the Israeli authorities to resolve these difficulties.

No shortcomings under the new EC-Israel Association Agreement have come to the Council(cid:146)s

3.
attention.

4.
in its
On the occasion of the first Association Council on 13 June 2000, the EU Presidency,
statement, expressed its particular attachment to the respect of the territorial coverage of the Association
Agreement with Israel.

(2001/C 113 E/174)

WRITTEN QUESTION E-2750/00

by Hiltrud Breyer (Verts/ALE) and Alexander de Roo (Verts/ALE) to the Commission

(1 September 2000)

Subject: Tax exemption for gas-fired power stations in Germany and legislation on state aid

Following adoption of the law on the ecological tax reform on 16 December 1999, environmentally
friendly combined gas and steam turbines (gas-steam power plants) are to be exempted from the tax on
natural gas. Political negotiations between the German government and the Commission are currently
under way on granting approval for this tax exemption pursuant to the legislation on state aid, and on the
time limit for such an exemption. The Commission has proposed restricting the tax exemption to five
years without degression. Nevertheless, there are significant arguments in favour of a longer period
(around ten years).

On what basis did the Commission take its decision to class the planned tax exemption for combined

1.
gas and steam turbines as selective aid within the meaning of Article 87(1) of the EC Treaty?

2. Would the Commission endorse the view taken by the legal expert Dr Sellner that the planned tax
exemption cannot automatically be classed as selective aid within the meaning of Article 87(1) of the EC
Treaty?

3. What factors led the Commission to regard the planned tax exemption as an aid for undertakings
rather than investment aid?

4.
Does the Commission share the view that restricting the measures to a period of five years should be
seen as problematic, given that the new version of the 1994 Community framework on environmental aid
currently undergoing revision would allow a period of ten years?

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Official Journal of the European Communities

C 113 E/165

Does the Commission share the view that restricting the tax exemption for highly efficient gas-steam
5.
power plants to five years would run counter to fulfilment of the obligations laid down in the Kyoto
Protocol on climate change?

Does the Commission share the view that such a tax exemption would not give rise to any distortion
6.
of competition pursuant to Article 87(1) of the EC Treaty because the electricity producers which compete
with gas-steam power plants (nuclear power stations, coal-fired power stations, producers of renewable
energies) have themselves received and continue to receive considerable state support?

Answer given by Mr Monti on behalf of the Commission

(11 October 2000)

1.
By letter dated 16 September 1999, Germany, acting in accordance with Article 88 (formerly
Article 93) of the EC Treaty, notified the Commission of the tax exemption for gas-steam power plants
as one of several measures under the continuation of the ecological tax reform. On 15 February 2000 the
Commission reached a decision on most of the measures notified in this connection (1). The only measure
not covered by the decision was the tax exemption for gas-steam power plants, the reason being that, in
this respect, the notification was not complete. The Commission asked Germany for further information
and has therefore not yet taken a decision on the exemption.

By letter dated 22 August 2000, Germany withdrew the pending notification and informed the
Commission of its intention to reformulate the tax exemption. At the same time, a corresponding new
notification was sent.

2.

The Commission is not in possession of the assessment made and so cannot express an opinion on it.

3.

It follows that the Commission has not as yet taken a decision in this respect either.

In general, the following can be said regarding the procedure for classifying aid as investment aid. As a
precondition for authorisation, the Commission(cid:146)s various guidelines provide that investment aid granted
for the purposes more closely defined in the guidelines may be authorised if it does not exceed an intensity
also laid down in those guidelines. This intensity is in each case to be determined on the basis of the
eligible costs, again laid down in the relevant guidelines. For example, the current Community guidelines
on state aid for environmental protection (2) provide that, in principle, investment aid may be authorised
up to an intensity of 30 %. Intensity relates strictly to the extra costs necessary to meet the environmental
objectives.

Consequently, aid is eligible as investment aid with a given intensity only when it is set against the eligible
costs of the investment, thereby enabling a given intensity to be established.

According to the Commission(cid:146)s provisional assessment, this has not, however, been done in the present
case. Although the tax exemption envisaged in the relevant provision of the Mineral Oil Tax Law applies
solely to new gas-steam power plants, the only restriction imposed is one of time, namely ten years, and
no link is made to the costs associated with the investment, with the result that it is impossible to establish
an aid intensity.

4.
The Commission is currently examining the notified measure in the light of the current Community
guidelines on state aid for environmental protection and taking into account its existing decision-making
practice regarding the approval of operating aid.

It has not as yet taken any decision on the new version of the Community guidelines on state aid for
environmental protection. In evaluating a measure such as the one in question, it will, however, have to be
borne in mind in each case that
is not to grant an exemption from newly introduced
environmental taxes so as to make it easier for existing firms to adjust to the new cost situation, but to
exempt new plant from a tax which already exists.

the point

C 113 E/166

Official Journal of the European Communities

EN

18.4.2001

The Commission is always favourably disposed towards environmental aid. This is also the case when
5.
it comes to assessing environmental aid intended to implement the obligations of the Kyoto Protocol on
climate change. However, it does not follow that the aid control rules do not in principle apply to such
measures.

6.
A distortion of competition exists when the measures affect a competitive relationship between firms
or branches of production. According to the Commission(cid:146)s provisional assessment, that would not seem to
be ruled out in this case. The fact that competitors may in turn be recipients of other forms of state aid
cannot mean that Article 87(1) (formerly Article 92(1)) of the EC Treaty is not relevant. Instead, such aid
should in turn be examined to ascertain whether it is compatible with the common market.

(1) See under: http://europa.eu.int/comm/secretariat_general/sgb/state_aids/industrie_1999.htm, N 575/A/99.
(2) OJ C 72, 10.3.1994.

(2001/C 113 E/175)

WRITTEN QUESTION P-2753/00

by Konstantinos Alyssandrakis (GUE/NGL) to the Council

(1 September 2000)

Subject: Advance of Turkish occupying forces in Cyprus

On the eve of the opening of direct talks on Cyprus between the two communities in Geneva, the Turkish
occupying army has advanced its positions, taking an area of between 200 and 300 metres in the Strovilia
area of Cyprus, near the British Army base and inside the neutral zone controlled by UN forces. This new
provocation on the part of Turkey and Denktash is likely to undermine the Geneva talks between the two
communities and reveals Turkey(cid:146)s contempt for UN resolutions.

Will the Council condemn this fresh provocation, and what action will it take with a view to ensuring that
the neutral zone is cleared of Turkish troops and fostering the achievement of a just and viable solution to
the Cyprus question on the basis of UN resolutions?

Reply

(20 November 2000)

1.
The first and foremost interest of the Council is that a global, fair and viable solution be found to the
Cyprus question, consistent with the relevant resolutions of the United Nations Security Council. The
Council considers that the proximity talks under the aegis of the United Nations currently under way are
the best means to reach such a solution.

2.
The Council fully supports the efforts of the United Nations in this regard, and urges all parties
concerned to refrain from any acts which could undermine the talks. The EU is cooperating closely with
the UN and other international players in order to foster the achievement of a just and viable solution.

3.
The issue of the military advance around Strovilia, which negatively affected the atmosphere and
increased tensions in the proximity talks and obstructed the work of Unficyp, which is mainly responsible
for monitoring and maintaining the ceasefire established on 16 April 1974 in order to prevent a
resumption of fighting, should be resolved in the UN framework and not be allowed to disturb the
proximity talks. Restoration of
the status quo ante would enable the proximity talks to continue
unimpeded.