Invitation to submit comments pursuant to Article 1(2) in Part I of Protocol 3 to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice on State aid with regard to the Norwegian support scheme for alternative, renewable heating and electricity saving measures in private households
Date: 2008-04-17
Institutions: EFTA Surveillance Authority
Subjects: EFTA, Norway, State aid, control of State aid, energy saving, exchange of information, heating, renewable energy

C 96/14

EN

Official Journal of the European Union

17.4.2008

Invitation to submit comments pursuant to Article 1(2) in Part I of Protocol 3 to the Agreement
between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice
on State aid with regard to the Norwegian support scheme for alternative, renewable heating and
electricity saving measures in private households

(2008/C 96/04)

By means of Decision No 716/07/COL of 19 December 2007, reproduced in the authentic language on the
pages following this summary, the EFTA Surveillance Authority initiated proceedings pursuant to Article 1(2)
in Part I of Protocol 3 of the Agreement between the EFTA States on the Establishment of a Surveillance
Authority and a Court of Justice (hereinafter ‘the Surveillance and Court Agreement’). The Norwegian autho-
rities have been informed by means of a copy of the Decision.

The EFTA Surveillance Authority hereby gives the EFTA States, EU Member States and interested parties
notice to submit their comments on the measure in question within one month from the publication of this
notice to:

EFTA Surveillance Authority
Registry
Rue Belliard 35
B-1040 Brussels

The comments will be communicated to the Norwegian authorities. Confidential treatment of the identity of
the interested party submitting the comments may be requested in writing, stating the reasons for the
request.

SUMMARY

PROCEDURE

By letter dated 13 October 2006, Varmeprodusentenes Forening (the Association of heat producers) filed a
complaint against The Kingdom of Norway (Ministry of Petroleum and Energy), regarding the Norwegian
support scheme for alternative, renewable heating and electricity saving measures in private households.

Supplementary information was submitted by letter from Varmeprodusentenes Forening dated 19 October
2006.

By letter dated 9 November 2006, the Authority forwarded the complaint to the Norwegian authorities for
comments. The Norwegian authorities responded by letter dated 15 January 2007.

By a letter dated 21 February 2007, Varmeprodusentenes Forening commented on the letter supplied by the
Norwegian authorities. Supplementary information which included a report from the consultancy, ECON
and a letter was submitted by Varmeprodusentenes Forening dated 2 May 2007.

By e-mail dated 14 November 2007, the supplementary information submitted by the Complainant was
forwarded to the Norwegian authorities. The Norwegian authorities have not presented any comments as
regards the Complainant's supplementary information.

ASSESSMENT OF THE MEASURES

The support scheme for alternative, renewable heating and electricity saving measures in private households
was introduced by the Norwegian authorities in 2006 and is financed by the State budget with
NOK 46 million for 2006. The support scheme's budget was later increased by NOK 25 million in the last
revision of the State budget for 2006. The scheme is administrated by the public company Enova SF and is
still operating.

17.4.2008

EN

Official Journal of the European Union

C 96/15

The scheme covers the following technologies: pellets stoves, pellets boilers, heat pumps in waterborne
heating systems and electronic control systems for electric heating systems. The support scheme is targeted
at private households (final consumers), which can apply for refunding of maximum 20 % of their docu-
mented and eligible costs, limited to NOK 4 000 for pellets stoves and electronic control systems, and
NOK 10 000 for heat pumps and pellets boilers. The scheme is aimed at giving households an incentive to
invest in new environmentally friendly heating technologies that will convert or replace existing direct elec-
tric heating systems, and thus contribute to the reduction of the use of electricity in private households.
Other heating technologies/methods such as environmentally friendly wood-burning stoves are not covered
by the scheme.

By granting private households which purchase specific heating technologies a compensation/subsidy, the
Norwegian authorities may stimulate the sale of these products by giving the consumers an incentive to buy
them. This may allow the producers and importers of the technologies covered by the scheme to increase
their sales without lowering the price at which they sell the products. The producers and importers of the
technologies may thus obtain an indirect economic advantage due to the subsidy given to the final
consumer.

Consequently, the Authority takes the preliminary view that the support scheme may amount to State aid
within the meaning of Article 61(1) of the EEA Agreement.

The Authority has further doubts as to whether the measure in question is covered either by the chapter on
research and development and innovation or the chapter on environmental protection of the Authority's
State Aid Guidelines, cf. Article 61(3) of the EEA Agreement.

The beneficiaries would be the producers and importers of certain environmentally friendly technologies,
and thus would seem to fall outside the scope of the chapter of the Guidelines regarding aid for environ-
mental protection Section B point 7.

Finally, its is questionable whether the technologies covered by the scheme fall within one of the research
categories listed in the chapter on research and development and innovation of the guidelines Section 5.1.1
point 71 (fundamental research, industrial innovation or experimental development).

CONCLUSION

In the light of the foregoing considerations, the Authority has decided to open the formal investigation
procedure in accordance with Article 1(2) in Part I of Protocol 3 to the Surveillance and Court Agreement.
Interested parties are invited to submit their comments within one month from publication of this Decision
in the Official Journal of the European Union.

C 96/16

EN

Official Journal of the European Union

17.4.2008

EFTA SURVEILLANCE AUTHORITY DECISION

No 716/07/COL

of 19 December 2007

to initiate the procedure provided for in Article 1(2) of Part I of Protocol 3 to the Surveillance and
Court Agreement with regard to 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) and 6
of Part II of Protocol 3 to the Surveillance and Court Agree-
ment,

Having regard to the Authority's Guidelines (4) on the applica-
tion and interpretation of Articles 61 and 62 of the EEA Agree-
ment,
the chapters on aid for environmental
protection and aid for research and development and innova-
tion,

in particular

Whereas:

I. FACTS

1. Procedure

letter dated 13 October 2006, Varmeprodusentenes
By
Forening (5)
filed a
(the Association of heat producers)
complaint against The Kingdom of Norway (Ministry of Petro-
leum and Energy). The letter was received and registered by the
Authority on 16 October 2006 (Event No 393383). Supple-
mentary information was submitted by letter from the Complai-
nant dated 19 October 2006. The letter was received and regis-
tered by the Authority on 26 October 2006 (Event No 395451).

letter dated 21 February 2007,

the Complainant
By a
commented on the letter supplied by the Norwegian authorities.
The letter was received and registered by the Authority on
23 February 2007 (Event No 411186). Supplementary informa-
tion which included a report from ECON and a letter was
submitted by the Complainant dated 2 May 2007. The letter
and the report were received and registered by the Authority on
3 May 2007 (Event No 419979 and Event No 419977).

By email dated 14 November 2007, the supplementary informa-
tion submitted by the Complainant was forwarded to the
Norwegian authorities. The Norwegian authorities have not
presented any comments as regards the Complainant's supple-
mentary information.

2. Description of the contested measures

2.1. Aid for alternative and renewable heating systems in private

households

The alleged State aid concerns the implementation of an aid
scheme for alternative, renewable heating and electricity saving
measures in private households.

The scheme covers the following technologies: pellets stoves,
pellets boilers, heat pumps in waterborne heating systems and
electronic control systems for electric heating systems.

By letter dated 9 November 2006, the Authority forwarded the
complaint
to the Norwegian authorities for comments. The
Norwegian authorities responded by letter, dated 15 January
2007, enclosed in a letter from the Norwegian Mission to the
European Union, dated 17 January 2007, both received and
registered by the Authority on 17 January 2007 (Event
No 406849).

Wood-burning stoves are not covered by the aid scheme.
According to the Norwegian authorities, wood-burning stoves
are environmentally friendly heating systems. They are, however,
not covered by the scheme because they do not have the ability
to run continuously and thus reduce the consumption of electri-
city for heating to the same extent as the technologies entitled
to support (6).

(1) Hereinafter referred to as ‘the Authority’.
(2) Hereinafter referred to as ‘the EEA Agreement’.
(3) Hereinafter referred to as ‘the Surveillance and Court Agreement’.
(4) 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 EFTA Surveillance
Authority on 19 January 1994, published in OJ L 231, 3.9.1994, EEA
Supplement No 32, 3 September 1994. The Guidelines were last
amended on 3 May 2007, by College Decision No 154/07/COL. Here-
inafter referred to as ‘the State Aid Guidelines’.

(5) Hereinafter referred to as ‘the Complainant’.

A further specification of the criteria under which the products
in question will be eligible for aid is given on Enova SF's
website (7). Enova SF is a public company owned by the Ministry
of Petroleum and Energy.

(6) Letter from the Norwegian Ministry of Petroleum and Energy dated

15 January 2007 (Event No 406849).

(7) http://minenergi.enova.no/sitepageview.aspx?sitePageID=1062

17.4.2008

EN

Official Journal of the European Union

C 96/17

2.2. The objective of the scheme

The scheme is aimed at giving households an incentive to invest
in new environmentally friendly heating technologies which will
convert or replace existing direct electric heating systems, and
thus to contribute to the reduction of the use of electricity in
private households (1).

2.3. National legal basis for the scheme

The legal basis for the scheme is the State budget (2). The
scheme was proposed to the Parliament on 15 September 2006
with a budget of NOK 46 million. The scheme's budget was
later increased by NOK 25 million in the last revision of the
State budget for 2006. The aid scheme will be administered by
Enova SF.

2.4. Recipients

The scheme is targeted at private households (final consumers),
which can apply for refunding of maximum 20 % of docu-
mented and eligible costs,
limited to NOK 4 000 for pellets
stoves and electronic control systems, and NOK 10 000 for
heat pumps and pellets boilers.

2.5. Possible effects of the aid scheme

The complainant alleges that the support to private households
may be regarded as constituting an indirect advantage for the
the heating technologies
producers and/or the importers of
covered by the scheme. According to the complainant
the
support scheme will lead to an increase in demand for these
products. Thus, the support scheme gives the producers and/or
importers the opportunity to increase sales and profits. The
complainant also alleges that the price for these products, due
to the indirect advantage, may be increased.

The scheme will, according to the complainant, due to the
reasons mentioned above, distort competition and affect trade
between the EEA States.

3. Comments by the Norwegian authorities

in their
the recipients of

comments on the
The Norwegian authorities,
complaint, have argued that
the support
scheme are private households and not undertakings within the
meaning of Article 61(1) EEA. Thus, for this reason the measure
cannot be considered to constitute State aid. To support their
view, the authorities refer to the Authority's decision of 3 May
2006, regarding the Norwegian Energy Fund, Commission Deci-
sion No 158/02 and Commission Decision No 369/05.

(1) St. prp. No 82 (2005-2006), press release from the Ministry of Petro-

leum and Energy of 25 August 2006 and of 14 September 2006.

that

argue

the Norwegian authorities

Furthermore,
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 autho-
rities define the market as ‘those technologies which can replace elec-
tric 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’ (3). Wood-burning stoves are by the
Government classified as a supplementary heat source used in
addition to the base load source. According to the Government,
wood-burning stoves can therefore be characterised as peak-load
heating systems.

On these grounds, the Norwegian authorities argue that the aid
in question will not distort or threaten to distort competition,
since there is no direct competition between the technologies
covered by the scheme and wood-burning stoves.

II. APPRECIATION

1. The presence of State aid

1.1. State aid within the meaning of Article 61(1) EEA Agreement

Article 61(1) of the EEA Agreement 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
in so far as it affects trade between Contracting
goods shall,
Parties, be incompatible with the functioning of this Agreement.’

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

1.2. Presence of State resources

The support scheme is financed by the Norwegian State over
the State budget. The measures in question are therefore granted
by the State through State resources.

1.3. Selective economic advantage

For State support to constitute State aid within the meaning of
Article 61(1) it must first grant an economic advantage on the
recipients. Second, the aid measure must be selective in that it
favours ‘certain undertakings or the production of certain goods’.

(2) It is not clear from the information available to the Authority whether

(3) Letter from the Norwegian Ministry of Petroleum and Energy dated

the scheme is of limited duration.

15 January 2007 (Event No 406849) on page 5.

C 96/18

EN

Official Journal of the European Union

17.4.2008

The first question to be analysed is therefore whether the
scheme in question confers an economic advantage on under-
takings (1).

The direct beneficiaries of the aid scheme in question are final
consumers
(Norwegian households), and not undertakings
falling within the scope of Article 61(1). However, the scheme is
aimed at promoting the sale of specific heating technologies (2).
It can therefore be asked whether the producers and/or impor-
ters of the technologies covered by the scheme benefit from an
indirect economic advantage which may fall within the scope of
Article 61(1).

It has been established through case-law and practice of the
European Commission that State aid may be granted indirectly
through a third party, even where the direct beneficiary does
not constitute an undertaking for the purposes of Article 61(1)
EEA (3). In Case C-156/98, Germany v Commission, the European
Court of Justice held that a tax relief granted to individuals for
profit made by sale of shares, provided that the profit was then
used to acquire new shares in companies seated in Berlin or the
new German Länder, constituted State aid within the meaning
of Article 87(1) EC (4). The Court of Justice found that the tax
renunciation enabled the investors to take holdings in those
undertakings on conditions that in tax terms were more advan-
tageous. Similarly,
in a recent decision the Commission held
that aid granted to final consumers amounted to State aid
within the meaning of Article 87(1) EC (5). According to
Article 4(1) of the 2004 Italian Finance Act, purchasers of TV
decoders capable of receiving signals transmitted using terrestrial
technology were entitled to a public grant of EUR 150. The
Commission found that the measure indirectly conferred an
economic advantage upon television broadcasters operating on
the
digital
networks that carry the signal.

terrestrial and cable platforms and operators of

In accordance with the case law cited above, the question is
whether the producers and/or importers of the heating technol-
ogies covered by the scheme are given an indirect economic
advantage, i.e. whether the scheme has lead to an increase in
their sales and profit margins which they would not have had if
the measure had not been put into effect.

By granting private households which purchase specific heating
technologies a compensation/subsidy, the Norwegian Govern-
ment may stimulate the sale of these products by giving the
consumers an economic incentive to do so. As expressed in
St. prp. No 82 (2005-2006) Section 2 (‘Tiltak rettet mot hush-
oldninger’) the scheme is inter alia aimed at contributing to the
spread of mature technologies that have limited spread in the
market. The same is also expressed on the Enova website (6).

(1) Undertakings are for the purpose of Community competition law
defined as entities engaged in economic activity, regardless of their legal
status, see for instance the Court of Justice judgment in Case C-41/90,
Höfner, [1991] ECR I-01979 at paragraph 21.

(2) St. prp. No 82 (2005-2006) page 1.
(3) Case C-382/99, Netherlands v Commission, [2002] ECR I-5163.
(4) Case C-156/98, Germany v Commission, [2000] ECR I-6857.
(5) Commission Decision of 24 January 2007 — Only the Italian version

is authentic.

(6) http://minenergi.enova.no/sitepageview.aspx?sitePageID=1013&over-

rideArticleID=149 — ‘Støtten er en bonus til dem som går foran og viser
ansvar for egen energibruk ved å ta i bruk teknologier som er tilgjengelige, men
så langt ikke spesielt vanlige i allmenn bruk.’.

lowering the price at which they sell

This may allow the producers and/or importers to increase their
sales without
their
products. According to the complainant, it can also be observed
that the demand for the products in question has risen after the
scheme was put into effect.

The Authority therefore takes the preliminary view that the
producers and/or importers of the heating technologies covered
by the scheme may have obtained an economic advantage
within the meaning of Article 61(1) EEA.

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

The scheme in question does not apply generally to all under-
takings in Norway. It is targeted at undertakings operating in
the market for heating methods/technologies, and thus limited
to one specific economic sector. The measure is therefore selec-
tive within the meaning of Article 61(1) EEA.

1.4. Distortion of competition and effect on trade between contracting

parties

To constitute State aid a measure must also distort or threaten
to distort competition and effect trade between the Contracting
Parties to the EEA Agreement.

The producers of
scheme seem to operate in an European market.

the heating technologies covered by the

Regarding one of the products covered by the scheme, pellets
stoves, all but one producer is non-Norwegian and hence oper-
ates in more than one EEA State. The Norwegian producer,
Bionordic, states on its homepage that ‘Bionordic AS is developing
high-efficient bioenergy products for the European market’ (7). When
State aid strengthens the position of an undertaking compared
with other undertakings competing in intra-community trade
the latter must be regarded as affected by that aid (8).

In addition to intra-EEA competition between pellets stove
producers and/or importers, there may be intra-EEA competi-
importers and
tion between pellets stove producers and/or
producers of other products. The aid scheme in question
excludes from support,
for example, other environmentally
friendly heating technologies, such as traditional wood-burning
stoves, even though the latter seem to fulfil similar needs
for the consumers as the technologies covered by the scheme.
Wood-burning stoves are for instance comparable to pellets
stoves when it comes to size and design.

(7) See:

http://www.bionordic.no/index.php?NyheitNr=47&cat1=0&cat2=0&
artrangering=Rangering&artrantype=ASC&la=EN

(8) Case 730/79, Philip Morris v Commission, [1980] ECR 2671, para-

graph 11.

17.4.2008

EN

Official Journal of the European Union

C 96/19

that

identical

stoves. The complainant also argues

According to the complainant the cost savings due to less use of
for wood-burning stoves and
electricity is almost
pellets
the two
technologies produce comparable heating effect, that the sale of
pellets-stoves has increased significantly and that the sale of
wood-burning stoves has declined after the scheme was put into
effect. To support its view, the complainant inter alia refers to an
evaluation report made by Nord Trøndelagforskning regarding a
similar aid scheme put into effect by the Norwegian authorities
in 2003 (1). Furthermore,
the complainant has engaged the
consultancy, ECON (2) to assess the economic effects of
the
scheme. ECON concludes that there is a degree of substitution
between pellets stoves and wood-burning stoves. It also finds
that the payments to consumers may have the same effects as
payments made directly to the producers. This information indi-
cates that the measure in question sets the producers covered by
the scheme in a more favourable position to the detriment of
other producers of environmentally friendly heating systems
such as wood-burning stoves.

The Norwegian authorities dispute this analysis by the complai-
nant. In their opinion, wood-burning stoves do not compete
with the products covered by the scheme since they do not have
the ability to run continuously and thus to reduce consumption
of electricity for heating to the same extent. According to the
Norwegian authorities, wood-burning stoves can be regarded as
a supplementary heating source, while the technologies covered
by the scheme can be classified as base load heating systems
which give the same heating comfort as electric heating.

Regardless of the competition between these two products, the
producers of pellets stoves seem, as mentioned above,
to
compete in an European market and it may therefore distort
competition and affect trade between contracting parties.

Furthermore, the other products covered by the scheme also
seem to be produced by undertakings operating in the EEA
market. Leading producers of for instance heat pumps are inter-
national companies like Panasonic, Mitsubishi Electric, Toshiba,
Sanyo and Daikin.

The Authority therefore takes the preliminary view that the
scheme distorts or threatens to distort competition and effect
trade between the Contracting Parties to the EEA Agreement.

2. Procedural requirements

Pursuant to Article 1(3) of Part I of Protocol 3 to the Surveil-
lance and Court Agreement, ‘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 have not notified the Authority of
any measures taken in relation to the support granted to house-

(1) NTF-report 2005:2.
(2) ECON report 2007-040.

holds' purchase of pellets stoves, heat pumps in water-born
heating systems and control systems for electricity saving.
Therefore, in the event that the Authority comes to the conclu-
sion that the contributions given to households constitutes State
aid within the meaning of Article 61(1) of the EEA Agreement,
the Norwegian Authorities will be considered not
to have
respected the notification and stand still obligation pursuant to
Article 1(3) of Part I of Protocol 3 to the Surveillance and Court
Agreement.

The grant of State aid within the meaning of Article 61(1) of
the EEA Agreement, which has not been notified, constitutes
unlawful State aid within the meaning of Article 1(f) in Part II
of Protocol 3 to the Surveillance and Court Agreement.
It
follows from Article 14 in Part II of Protocol 3 the Surveillance
and Court Agreement
the Authority shall decide that
unlawful aid which is incompatible with the State aid rules
under the EEA Agreement must be recovered from the benefici-
aries unless it would be contrary to a general principle of law.

that

3. Compatibility of the aid

Supposing that
the contested funding constitutes State aid
within the meaning of Article 61(1) EEA, it must be assessed
whether it can be declared compatible with the functioning of
the EEA Agreement.

In the Authority's view, the support scheme does not seem to
comply with any of the exemptions provided for in Article 61(2)
or (3)(a) or (b) of the EEA Agreement. The question is therefore
whether
the aid can be justified under Article 61(3)(c).
According to this provision aid may be declared compatible
with the common market 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’.

The Authority will assess the support scheme according to
Article 61(3)(c) of the EEA Agreement in conjunction with the
Authority's State Aid Guidelines, in particular the chapters on
aid for environmental protection and aid for research and devel-
opment and innovation (3).

It is to be noted that the Norwegian authorities have not specifi-
cally invoked this provision, nor have they provided any expla-
nation of how the contested aid measure ‘does not adversely affect
trading conditions to an extent contrary to the common interest’.

However, in their comments on the complaint the Norwegian
authorities refer to Commission Decision No 369/05, where the
Commission,
inter alia held that aid granted to owners of
dwelling houses for the conversion from direct-acting electro
heat into district heating or heat pumps, could be authorised on
the basis of point 30 of the Commission's Environmental Aid
Guidelines (4).

(3) An element in the assessment of the compatibility of the scheme would
also be whether the scheme is of a limited duration. The Authority
would normally not approve schemes with a duration exceeding
10 years. As mentioned in footnote 9 above, it is not clear from the
information available to the Authority whether the scheme is of limited
or unlimited duration.

(4) See point 30 of Commission Decision No 369/05.

C 96/20

EN

Official Journal of the European Union

17.4.2008

dice to the final decision of the Authority, which may conclude
that the measures in question are compatible with the func-
tioning of the EEA Agreement.

In light of the foregoing considerations, the Authority, acting
under the procedure laid down in Article 1(2) of Part I of
Protocol 3 to the Surveillance and Court Agreement, requests
the Norwegian authorities to submit their comments within
one month of the date of receipt of this Decision.

receipt of

In light of the foregoing consideration, the Authority requires
that, within one month of
the
Norwegian authorities provide all documents, information and
data needed for assessment of the compatibility of the support
scheme. It requests the Norwegian authorities to forward a copy
of this letter to the potential aid recipients of the aid immedi-
ately,

this decision,

HAS ADOPTED THIS DECISION:

Article 1

The EFTA Surveillance Authority has decided to open the
formal investigation procedure provided for in Article 1(2) of
Part I of Protocol 3 to the Surveillance and Court Agreement
against Norway regarding the support scheme for alterative,
renewable heating and electricity savings in private households.

Article 2

are

authorities

The Norwegian
to
Article 6(1) of Part II of Protocol 3 to the Surveillance and
Court Agreement, to submit their comments on the opening of
the formal investigation procedure within one month from the
notification of this Decision.

requested,

pursuant

Article 3

The Norwegian authorities are required to provide within one
month from notification of this decision, all documents, infor-
mation and data needed for assessment of the compatibility of
the aid measure.

This Decision is addressed to the Kingdom of Norway.

Article 4

Only the English version is authentic.

Article 5

Done at Brussels, 19 December 2007.

For the EFTA Surveillance Authority

Per SANDERUD

Kristján Andri STEFÁNSSON

President

College Member

According to the Authority's State Aid Guidelines on environ-
mental protection,
investments in energy savings may qualify
for an exemption from the general prohibition laid down in
Article 61(1) (1). What is meant by ‘energy savings’
is further
explained in the Guidelines Section B (Definitions and scope). It
follows from Section B point 7 that energy-saving measures
should be understood as meaning, among other things, action
which enables companies to reduce the amount of energy used
in their production cycle. The design and manufacture of
machines which can be operated with fewer natural resources as
such are not covered by the Authority's guidelines.

The indirect aid to producers and/or
importers of certain
heating methods/technologies are not directly covered by the
above mentioned Section of the Authority's State Aid Guidelines
on environmental protection, since the aid will not contribute
to the reduction of the amount of energy used in the producers
and/or importers production cycle. In cases where the direct
beneficiary is
the Commission and the
Authority have not normally assessed the indirect benefit to
producers of environmentally friendly products or technologies,
but assessed the aid under the Environmental Guidelines due to
the application of the criteria therein on the direct beneficiary
of the aid (2). The Authority has doubts with regard to an appli-
cation of the Guidelines to a scheme such as the present.

an undertaking,

Against this background the Authority has doubts as to whether
the Environmental Guidelines are applicable to the scheme.

For the same reasons, the Authority has doubts as to whether
the scheme may be exempted directly under Article 61(3)(c).

the Authority takes the preliminary view that

Finally,
the
support scheme in question is not covered by the State Aid
Guidelines' chapter on aid for research and development and
innovation. The possible indirect aid to the producers of the
heating technologies covered by the scheme do not fall within
the research categories listed in the Guidelines Section 5.1.1
point 71 (fundamental research, industrial research or experi-
mental development), as the products covered by the aid
scheme are ready-developed technologies.

4. Conclusion

Based on the information submitted by the Norwegian authori-
ties, the Authority has doubts whether the aid measure(s) consti-
tute aid within the meaning of Article 61(1) of the EEA Agree-
ment. Furthermore, the Authority has doubts whether these
measures can be regarded as complying with Article 61(3)(c) of
the EEA Agreement, in combination with the requirements laid
down in the Authority's State Aid Guidelines on environmental
protection and on aid for
research and development. The
Authority thus doubts that the above measures are compatible
with the functioning of the EEA Agreement.

II of
Consequently, and in accordance Article 4(4) of Part
Protocol 3 to the Surveillance and Court Agreement,
the
Authority is obliged to open the procedure provided for in
Article 1(2) of Part I of Protocol 3 of the Surveillance and Court
Agreement. The decision to open proceedings is without preju-

(1) Section C point 25 of the Environmental guidelines.
(2) See for example Commission Decision No 369/05.