EU/Competition: Energy

Newsletter 8/2020

In July, ESA adopted two major decision on aid to carbon capture in Norway. In a decision of 17.07.20, ESA approved Norwegian Full-Scale Carbon Capture and Storage: up to EUR 2.1bn in aid to meet climate goals. The CCS Full-Scale project is a central part of Norway’s efforts to reduce its carbon footprint and meet the European goal of climate-neutrality by 2050. It is the largest single state aid award ever approved ESA. By supporting the project, the Norwegian government aims to facilitate further scaling up of CCS globally, by sharing knowledge and experience. The project will establish infrastructure for capture, transport and storage of CO2 emissions that can pave the way for future investments, innovation and technology in CCS as a climate-change mitigation tool. The approved project would allow for the establishment of carbon capture facilities at Norcem, a cement factory in Brevik, and Fortum Oslo Varme, a Waste-to-Energy plant. The captured CO2 is then to be transported and stored deep below the seabed in the North Sea. This part of the process is to be carried out by a joint venture between Shell, Total and Equinor, known as Northern Lights. The Full-Scale CCS Project promises to become the first of its kind to go live in Europe. It has a budget of up to EUR 2.57 billion (NOK 27.6 billion), which will cover construction and 10 years of operation. The Norwegian government would cover around 80% of the project’s estimated budget. Shortly thereafter, in a decision of 30.07.20, ESA approved a prolongation of Norway’s financing for the flagship carbon capture testing facility established in Mongstad (the TCM). The TCM will receive financing for a further three years and four months. The aid measure supports the TCM in making CCS technology a sustainable industry with widespread cost-effective deployment possible at scale. The total operating budget of the TCM is estimated at NOK 752 million, of which approximately NOK 578 million (EUR 54 million) is granted as aid over the prolongation period. In 2017, ESA approved NOK 652 million financing of the Mongstad project. Non-confidential versions of ESA’s decision has yet to be made public.

The European Commission unveiled 08.07.20 its plans to promote hydrogen based on renewable electricity like wind and solar, but said low-carbon hydrogen derived from fossil fuels will also be supported in order to scale up production in the short term. In the EU, hydrogen is seen as a potential silver bullet to decarbonise hard-to-abate industrial sectors like steel and chemicals, which currently rely on fossil fuels and cannot easily switch to electricity. It is also seen as a long-term solution for shipping, aviation and heavy-duty road transport where electrification is not feasible at the moment. By 2050, the Commission estimates that clean hydrogen could meet 24% of the world’s energy demand, with annual sales in the range of EUR 630 billion. For Europe, that could translate into 1 million jobs in the hydrogen value chain. However, as of today 96% of hydrogen comes from fossil fuels; to develop renewable hydrogen, produced using mainly wind and solar energy, will require cost reductions in technologies such as electrolysers, not expected to be fully mature until 2030 at the earliest, the Commission said in a statement. In order to scale up production, the Commission said it will follow a phased approach: From 2020 to 2024, the Commission’s objective is to support the installation of at least 6 gigawatts of renewable hydrogen electrolysers in the EU, in order to produce up to 1 million tonnes of renewable hydrogen. From 2025 to 2030, hydrogen needs to become an intrinsic part of Europe’s integrated energy system, the Commission says, with at least 40 gigawatts of renewable hydrogen electrolysers and the production of up to 10 million tonnes of renewable hydrogen in the EU. From 2030 to 2050, the aim is for renewable hydrogen technologies to reach maturity and be deployed at large scale across all hard-to-decarbonise sectors, such as chemicals and steelmaking. Visit the strategy here.

The European Investment Bank (EIB) signed 29.07.20 a USD 350 million loan agreement to support the financing of Europe’s first home-grown gigafactory for lithium-ion battery cells, Northvolt Ett, in Sweden. The financing is supported by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe. In 2018, the EIB also supported the establishment of the demonstration line Northvolt Labs, which produced its first battery cells in late 2019. The new factory is currently under construction in Skellefteå in northern Sweden. Noting the region’s clean power base, building the factory in northern Sweden will enable Northvolt to utilise 100% renewable energy within its production processes. The project is a key competitor to similar Norwegian projects, e.g. Freyr AS. Read more here.

On 16th July 2020, the CJEU delivered 16.07.20 its judgment in the Schrems II case (C-311/18).  Most organisations rely on data transfer agreements – SCC/Standard Contractual Clauses – to transfer personal data to countries outside the EEA.  Organisations which transfer personal data to the US can also often rely on the EU-US Privacy Shield. The CJEU was asked to consider if law and practice in the US relating to access to personal data by the intelligence services should mean that either, or both – of these mechanisms should be invalidated. The decision concludes that the Privacy Shield is invalid. SCCs remain valid. However, the CJEU sets out a heavy burden on data exporters which wish to use SCCs; the data exporter must consider the law and practice of the country to which data will be transferred, especially if public authorities may have access to the data. Additional safeguards, beyond the SCCs, may be required. The Commission has also been working on modernizing the SCCs, which date back to 2010 and do not reflect the GDPR requirements. The result was postponed until the Schrems II case was resolved, but we should now expect updated clauses, although the exact timing for the new SCCs is unclear. Companies and organizations will also need to adapt to the successor SCCs in a second phase. The European Data Protection Board (EDPB) published 24.07.20 a set of FAQs on the judgment. The key takeaways are: (i) The CJEU’s assessment of U.S. law must be taken into account for any transfers of personal data to the U.S., irrespective of the transfer mechanism used. (ii) There is no grace period for companies that relied on the EU-U.S. Privacy Shield framework. (iii) Companies can rely on the derogations set forth under Article 49 of the GDPR, provided that the conditions as interpreted by the EDPB in its guidance on Article 49 of the GDPR are met. When transferring personal data based on individuals’ consent, such consent should be explicit, specific to the particular data transfer(s) and informed, particularly regarding the risks of the transfer(s). (iv) Companies should verify whether the processors they use (and their respective sub-processors) transfer data to the U.S. If that is the case and such transfers are not considered adequate (because supplementary measures cannot be provided or because no derogations under Article 49 of the GDPR apply), companies must re-negotiate their contracts to forbid transfers to the US. Visit the EDPB FAQs here. Visit the judgment here.

The Commission adopted 20.07.20 a communication on the protection of confidential information by national courts in proceedings for the private enforcement of EEA competition law. In this regard, national courts are likely to receive requests for disclosure of evidence containing confidential information. The Commission sees it as very important that national courts strike the right balance between the claimants’ right to access relevant information and the right of a party to protect confidential information. To support national courts in this task, the Commission has adopted a Communication seeking to provide practical guidance to national courts in selecting effective protective measures, considering among others the specific circumstances of the case, the type of information requested, the extent of the disclosure, the parties and relationships concerned as well as any administrative burdens and cost implications. The Communication presents a number of measures (e.g. redactions, confidentiality rings, use of experts, closed hearings) national courts may, depending on their procedural framework, order to protect confidential information in the context of disclosure requests throughout and after the closing of the proceedings, and it describes how and when such measures could be effective. The Communication is not binding for national courts and does not modify or bring about changes to the procedural rules applicable to civil proceedings in the different EEA countries. Visit the guidance paper here.

The Commission launched 23.07.20 a public consultation inviting interested parties to comment on draft revised EEA guidelines on regional State aid (the “Regional Aid Guidelines”). The guidelines are key for the assessment of many Norwegian financial mechanisms for regional policies. Stakeholders can respond to the consultation until 30.09.20. Visit the consultation here.

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, published 15.07.20 its final Guidelines on disclosure requirements under the Prospectus Regulation. The Guidelines provide guidance to financial market participants regarding the disclosure of financial and non-financial information in the prospectus. The Guidelines cover a variety of financial and non-financial topics, including: Pro Forma information; Working capital statements; Capitalisation and indebtedness; Profit forecasts and estimates; Historical financial information; Operating and financial review; Options agreements; and Collective investment undertakings. Visit the guidelines here.