Kirja edastamine

Saatja: <[email protected]> Saadetud: 07.03.2023 17:17 Adressaat: <"Kaja Kallas">; <=?utf-8?Q?Gerrit_M=C3=A4esalu?=>; <"Ardo Hansson">; <"MKM info">; <"RAM Info">; <"RAM Info"> Teema: Letter requesting to dedicate financial support for PV manufacturing from REPowerEU grants during RRP revision Manused: image002.png; Letter_Dedicated Support For European PV Manufacturing Industry In Revised National RRPs – Potential Response To Global Challenges And Local Strategies_7 March 2023.pdf; ESMC proposals to dedicate financial support for European PV manufacturing industry in national RRPs_ENCLOSURE.pdf Dear Prime Minister Kaja Kallas, Dear Minister for Finance Annely Akkermann, Dear Minister of Economic Affairs and Infrastructure Riina Sikkut, On behalf of the European Solar Manufacturing Council (ESMC) please find attached the letter, kindly requesting Estonia to dedicate adequate support to the PV manufacturing industry from the €83 million REPowerEU grants, dedicated to Estonia, during the revision of the national Recovery and Resilience Plan (RRP). The REPowerEU Regulation adopted on 27th February allows Member States to support European PV manufacturing with the additional grants. The European Commission, among others, specifically referred to the need to support manufacturing of components for solar photovoltaic (PV) systems (polysilicon, ingots and wafers, cells, modules and inverters) including capital expenditures in the Guidance on Recovery and Resilience Plans in the context of REPowerEU adopted on 1st February and published in Official Journal of the European Union on 3rd March. By this kind request we would like to highlight the critical momentum to use the available REPowerEU fi- nancing through dedicated activities in your respective national RRP. Now you have a concrete opportunity to transfer the concept of the European net-zero industries’ competitiveness into real actions through dedicated financial support in the revised national RRP, which the European Commission have asked all Member States to submit by 30 April. Please find the letter and detailed guidelines in enclosure attached. We are looking forward to the decisive and game-changing decisions of Estonia in line with the interest of the European PV manufacturing industries and entire European economies. Kind regards, Žygimantas Vaičiūnas Policy Director [email protected] DEDICATED SUPPORT FOR THE EUROPEAN PV INDUSTRY - ESMC’s proposals for the revised RRPs to be submitted by the end of April The European Solar Manufacturing Council (ESMC) welcomes the Guidance on Recovery and Resilience Plans in the context of REPowerEU, presented by the European Commission on 1st February, and the Communication Recovery and Resilience Facility: Two years on A unique instrument at the heart of the EU’s green and digital transformation adopted by the European Commission on 21st February. In the communication, the European Commission strongly encourages Member States to include simple and effective measures in their REPowerEU chapters, dedicated to providing support to strategic net-zero industries and to boost their competitiveness in the context of the net-zero transition. ESMC requests the Member States to align the revision of their national Recovery and Resilience Plans (RRPs) to the proposals of the European Commission by supporting the European PV manufacturing industry in clearly dedicated REPowerEU chapters in the revised RRPs. I. ESMC’s PROPOSALS TO DEDICATE SUPPORT FOR PV MANUFACTURING IN REVISED RRPs It is of utmost importance for the Member States to include REPowerEU chapters in their revised RRPs, as there is currently no specified dedicated financial support-vehicle for net-zero industries. Consequently, the revision of the national RRPs, and their submission to the European Commission by April 30th, is currently the only concrete measure for financial support in which the European PV manufacturing industry could be reflected. These are the key principles proposed by ESMC for the revised RRPs; 1. Including a separate financing line for PV manufacturing – in response to the European Commission’s request to submit the revised RRPs by the 30th April, and with the recommendation to support net-zero industries. 2. Supporting all parts of the PV manufacturing value chain – to ensure competitiveness and strategic supply independence, support must be ensured for all key parts of the PV value chain (polysilicon, ingots and wafers, cells, modules, inventers) across the EU. Member States are flexible on financing implementation and scale up capacities of certain parts of the value chain, however, it is of utmost importance to ensure financing for manufacturing of ingots, wafers and cells, as these investments will automatically trigger investments upwards and downwards on the PV manufacturing value chain. 3. Supporting CAPEX and OPEX expenditures – Member States are invited to use both CAPEX and OPEX financing leveraging measures to balance the support in the most effective way. 4. Dedicating support in proportion to the potential support of the IRA in the US – the support for PV manufacturing should be comparable to the IRA support to ensure a level playing field for the PV manufacturing industry. 5. Speeding up the investments – to be implemented by the end of August 2026 – according to the general requirements of the RRF, the support should be invested and granted the concrete investment results by the end of 2026. 6. The allocation of financing to the PV manufacturing industry is an inseparable part of the EU State aid revision process. In the context of the potential State aid changes, the financial support toPV manufacturing projects will potentially be subject to simplified State aid notification conditions or even some exemptions for a certain period. Allocation of the financing to the PV manufacturing industry would certainly ensure a fast implementation process of the planned PV manufacturing projects once the State aid conditions for PV manufacturing are changed/adapted. 1  II. REFERENCES TO THE RECOMMENDATIONS OF THE EUROPEAN COMMISSION AND REPOWEREU REGULATION European Commission – Guidance on Recovery and Resilience Plans in the context of REPowerEU – presented on 1st February, published in Official Journal on 3rd March. FINANCING OF NET-ZERO INDUSTRIES – financing possibilities of PV manufacturing (pages 17-19):  Member States are encouraged to propose measures and investments in their REPowerEU chapters that would support the EU industry’s transition towards zero- or low-carbon technologies on the road to net zero, preserving the present and future competitiveness of key EU clean-tech industries, supporting the expansion of their productive and innovation capacity, including across key segment of their supply chains and, more generally, preserve the global attractiveness of the EU as an investment location in strategic clean-tech industries. Such investment support (e.g., tax breaks or other forms of support) should be combined with additional reforms that would amplify the impact of the financial support.  Member States can fund the investments in long-term assets and in specific conditions some of the temporary operational expenditures associated with those projects (both in existing RRPs and REPowerEU chapters). To be eligible for the RRF support, these operating costs should be an integral part of the reform/investment that contributes to meeting the assessment criteria of the RRF and be limited and commensurate to achieving the intended long-term results of the investment.  As regards the support of value chains in critical raw materials and technologies linked to the green transition, in particular the Net Zero Industry technologies, this objective can be addressed by measures strengthening the Union’s technological and manufacturing base capacity for clean-tech materials and components to increase the resilience and sovereignty of the EU’s strategic value chains, including by strengthening the circular economy (see the dedicated box below). Strengthening Europe’s industrial base in the context of high energy prices In its Conclusions 15 December 2022, the European Council emphasised the importance of safeguarding Europe’s economic, industrial, and technological base in the context of high energy prices and intensifying global competition. To address these challenges and enhance Europe’s economic resilience and competitiveness, the European Council has called for a coordinated response that involves mobilising all relevant national and EU tools. The REPowerEU Regulation recognises the role that industry has in driving the EU transition away from reliance on fossil fuels and towards a more diversified and renewable energy supply. Firstly, the manufacturing industry accounts for the highest share of EU’s GHG emissions (22 %), and therefore, a rapid decarbonisation of industrial processes represents an essential factor in achieving both the climate and REPowerEU objectives. Secondly, a strong and innovative EU manufacturing, industrial and technological base in key clean-tech value chains is important to ensure that, as it shifts away from fossil fuels towards renewables, the EU does not become over-dependent on third countries for equipment, components and materials that are essential for a net-zero economy. In this context, within their overall balancing of the REPowerEU priorities, Member States are encouraged to propose measures and investments in their REPowerEU chapters that would support the EU industry’s transition towards zero- or low-carbon technologies on the road to net zero, preserving the present and future competitiveness of key EU clean-tech industries, supporting the expansion of their productive and innovation capacity, including across key segment of their supply chains and, more generally, preserve the global attractiveness of the EU as an investment location in strategic clean-tech industries. Such investment support (e. g., tax breaks or other forms of support) should be combined with additional reforms that would amplify the impact of the financial support. It is also worth recalling that Member States can fund the investments in long-term assets and in specific conditions some of the temporary operational expenditures associated with those projects (both in existing RRPs and REPowerEU chapters). To be eligible for the RRF support, these operating costs should be an integral part of the reform/investment that contributes to meeting the assessment criteria of the RRF and be limited and commensurate to achieving the intended long-term results of the investment (e.g., see 2 practical examples below that could be appropriate to address challenges identified by Member States). Below are some illustrative examples on the measure types that Member States could consider including in the REPowerEU chapters, associated with the REPowerEU objectives. Article 21c 3(b) - decarbonising industry, and increasing the share and accelerating the deployment of renewable energy — Investments in decarbonising steel making, for example replacing blast furnace-based production processes with zero- or low-emission production processes based on electrification or hydrogen. This project could also comprise the production of renewable hydrogen and cover operating costs related to this investment. An accompanying reform could consist of tax breaks for R&I for new zero-emission breakthrough technologies. — Support for manufacturing of components for wind turbines (blades, mats, turbines, cables). This could be combined with a reform setting a binding national target for the wind energy supply and more predictable planning of wind development and auctions. — Support for manufacturing of components for solar photovoltaic systems (polysilicon, ingot and wafer, cell, module, inventor) including capital expenditures. This could be combined with a reform setting a mandatory deployment of solar panels on roofs of large buildings above a certain surface (e.g., offices, supermarkets, warehouses, parking places) or a mandatory deployment of vertical double-face solar panels on highways. Article 21c (3) (d) - incentivising reduction of energy demand — Programmes subsidising purchasing and installation of heat pumps, including industrial heat pumps. The funding could also cover elements linked to the promotion of subsidies and awareness-raising campaigns for SMEs on energy audits. A reform complementing the investment could entail setting a phase-out date for fossil fuel heating in industrial facilities or binding decarbonisation plans at the level of each industrial sector or plants. — Investments supporting the development and uptake of best performing technologies on the utilisation of waste heat in energy intensive industries. The support could also extend to ancillary support linked to the installation (design of the project, patent licenses, training of the staff). The support could also take the form of tax breaks. Member States could combine this with regulatory incentives, such as obligations for certain type of facilities to be equipped with lowtemperature waste heat power generation. Article 21c (3) (e) - supporting electricity storage, and accelerating the integration of renewable energy sources — An energy hub combining the production of solar energy with an on-site large capacity energy storage as part of an industrial plant. The support could also cover certain costs related to the investment, such as the supply of spare parts, labour costs linked to the construction of the facilities and administrative costs. The accompanying reforms could entail a simplification of permitting procedures for the construction of the facilities and their connection to the grid. — An energy storage system giving second life to batteries (for example from electric vehicles). The investment could cover costs related to the procurement of re-used or recycled batteries. This investment could be complemented by a reform reinforcing the recycling obligations on electric car manufactures. Article 21c (3) (f) - supporting the value chains in critical raw materials and technologies linked to the green transition — A facility for fossil-free lithium production from geothermal brines (using the process of direct lithium extraction), including the costs of the set-up phase(e.g., licences for relevant patents). This could be combined with a reform incentivising the uptake of fossil-free lithium, including in the automotive and renewable energy sectors. — Cathode and anode production facilities for batteries, including reuse and recycling facilities for batteries and production of manufacturing equipment for gigafactories. This could be combined with a simplification of permitting procedures for the construction of factories and ambitious targets for the use of recycled batteries and resource efficiency standards. 3   Technological enhancements of copper refineries allowing to recycle pre-treated electronic scrap (or e-material) to recover primarily copper, tin, nickel, and precious metals that are linked to the green transition. This could include transitionary costs covering trainings to requalify existing staff and costs linked to the collection and transportation of the e-waste. A possible complementing reform could include establishing higher separate collection and reuse/recycle targets for e-waste. Which model of support can Member States consider? The design of a relevant financial support instrument should ensure that the funding could be quickly absorbed by the industries in need. In this context, the upscaling of existing support schemes and projects could be considered before creating new financial vehicles. The existing EU industrial alliances (notably on batteries, solar photovoltaics, critical raw materials, and hydrogen) often include draft project pipelines that could be considered for financing under such support schemes, where necessary and proportionate. Similarly, projects that were positively evaluated by the Innovation Fund but that were below the funding threshold could also be supported. Furthermore, the RRF loans offer competitive financing conditions. There are various solutions that could be used to pass on these advantageous costs of capital onto the businesses, for example: — channelling the RRF loans through international financial institutions, multilateral development banks and commercial banks to ensure a rapid uptake; without relying on resources of the public administration; — deploying loan guarantees to reduce the risk for lenders and make it more attractive for them to provide financing for clean-tech projects; — developing a fund offering bridge financing solutions to allow companies to bridge the gap between the time they incur expenses and the time they receive revenue from the longer-term investments. POTENTIAL STATE AID CHANGES – after the changes State aid notification might be not necessary (pages 26- 27):  State aid rules fully apply to the additional or revised reforms and investments. It is the responsibility of each Member State to ensure that these reforms and investments comply with the EU State aid rules, in particular proportionality, and follow the applicable State aid procedures.  In this context, the Commission’s Climate, Energy and Environmental Aid Guidelines 2022 (‘CEEAG’) provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, an energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU. Moreover, the General Block Exemption Regulation (‘GBER’), currently under review, declares specific categories of State aid compatible with the Treaty, provided that they fulfil clear conditions, and exempts these categories from the requirement of prior notification to and approval from the Commission. By way of example, with regard to measures contributing to the REPowerEU objectives, Member States are encouraged to consider the provisions of Section 4 of the GBER concerning aid for research, development and innovation and Section 7 on aid for environmental protection.  The State aid Temporary Crisis Framework adopted by the Commission on 23 March 2022 to support the EU economy in the context of Russia’s invasion of Ukraine may also be relevant for the State aid assessment of RRF measures in individual instances, where the aid remedies the economic effects following the aggression against Ukraine by Russia. The Commission is currently assessing possible updates to the State Aid Temporary Crisis Framework and the GBER, such as broadening their scope and raising notification thresholds, which as a result, should facilitate the clearance of RRF/REPowerEU measures. Furthermore, as a large number of Member States have included investments related to Important Projects of Common European Interest (IPCEIs) into their RRPs, the approval of IPCEI related projects will be further streamlined and simplified. This is important to ensure a timely implementation of such investments and their completion by the deadline set out by the Regulation establishing the RRF, i.e., 31 August 2026. A timely and successful implementation of those flagship projects will be key to the RRF’s contribution to the green and digital transition and to its overall success. 4   As per the 2021 RRP Guidance and template, Member States are invited to specify in their modified RRPs for each new or revised reform and investment whether they consider that the measure requires a State aid notification, and if so, provide an indication of the timing of the pre-notification and notification. If the Member State considers that the measure does not require a notification, the Member State should include a reference to the existing State aid authorisation decision or provisions in the GBER or other block exemption regulations considered applicable to the measure, with the underlying justifications, or a description of the reasons why the measure does not qualify as State aid. When anticipating the timeline for the fulfilment of the relevant milestones and targets, the Member States need to ensure sufficient time for the Commission to clear any State aid that might be present in the relevant investment measures and that requires a State aid notification. The Commission stands ready to provide preliminary guidance to the Member States on the compliance of each investment foreseen in their modified RRPs with the State aid regulatory framework. Member States are encouraged to share their (pre)notification schedule with the Commission to ensure sufficient anticipation.  While the State aid rules may evolve until 2026, it should be recalled that under State aid rules, the relevant moment for the assessment of a measure is when the State aid is granted, i.e., the moment when a legally enforceable right to receive the aid is conferred on the beneficiary. As long as the relevant State aid framework provides for a compatibility basis of a measure at that moment in time, it can be implemented (the State aid can be paid and investments can be carried out), even if the State aid rules change thereafter. 2. European Commission‘s Communication Recovery and Resilience Facility: Two years on A unique instrument at the heart of the EU’s green and digital transformation – adopted on 21st February 2.1. The RRF as an agile crisis-response tool: REPowering the Union for the net-zero age (pages 5-6):  The EU’s Green Deal Industrial Plan makes it clear that both the RRF and REPowerEU are at the centre of the Union’s plans to enhance the competitiveness of Europe's net-zero industry and support the fast transition to climate neutrality. The reforms triggered by the implementation of the RRF, including on accelerating permitting, will have an enabling effect on investments necessary for the net-zero transition, including from the private sector. In addition, RRF funds will be available to Member States to finance further measures promoting the deployment and manufacturing of net- zero technologies in Europe, enhancing training and skills for all people to enable the green and digital transitions, supporting EU net-zero industry projects and the creation of quality jobs, incentivising R&I for new zero-emission breakthrough technologies and assisting industries in the face of high energy prices, including through tax breaks. As large amounts of private capital will also be necessary, advancing the Capital Markets Union to ensure deep and integrated capital markets in the EU is an essential complement to the RRF.  To effectively sharpen Europe’s competitive edge, REPowerEU strengthened the RRF's financial firepower. Additional RRF grants (EUR 20 billion) funded by the EU Emissions Trading System will be available to Member States to promote REPowerEU objectives. Member States may transfer a part or the whole of the Brexit Adjustment Reserve allocation (up to EUR 5.4 billion) as well as up to 5% of the cohesion policy funds (up to EUR 17.9 billion) to dedicate grants to these objectives. Furthermore, Member States will be able to use the remaining RRF loans (EUR 225 billion) with substantial pre-financing for the investments and reforms Member States are now invited to present in their REPowerEU chapters by 30 April 2023. 3.2. Revision of the plans (pages 9-10):  In 2023, most Member States will revise their plans to add REPowerEU chapters and access additional funding opportunities. The revision of the plans also represents an opportunity to reflect on the lessons learned from the implementation phase and take them into account in the design of both new and revised measures, increasing the level of ambition of the plans. The Commission Guidance on the revision of the recovery and resilience plans in the context of REPowerEU adopted on 1 February 2023 explains how to apply various elements of the Regulation to optimise the design of the revised plans and incorporate measures that can contribute the most to the RRF objectives. The Commission will support Member States to identify and tackle potential bottlenecks in the implementation of existing measures. 5   The Commission also strongly encourages Member States to include in their REPowerEU chapters simple and effective measures to provide support to strategic net-zero industries and boost their competitiveness in the context of the net-zero transition.  This in particular could include one-stop shops for permitting processes for net-zero projects or tax breaks for businesses undertaking clean-tech manufacturing investments. The Facility can also finance investments to equip the workforce with the skills necessary for this industrial transition. Also, REPowerEU can finance investments in zero-emission mobility to help decarbonising the transport sector. 3. REPowerEU Regulation 2023/435 of the European Parliament and of the Council – adopted on 27th February REPowerEU chapters in recovery and resilience plans (pages 13-14) 1. Recovery and resilience plans submitted to the Commission after 1 March 2023 that require the use of additional funding under Articles 14, 21a or 21b, shall include a REPowerEU chapter containing measures and their corresponding milestones and targets. The measures in the REPowerEU chapter shall be either new reforms and investments, started from 1 February 2022 onwards, or the scaled-up part of reforms and investments included in the already adopted Council implementing decision for the Member State concerned. 3. Reforms and investments in the REPowerEU chapter shall aim to contribute to at least one of the following objectives: (a) improving energy infrastructure and facilities to meet immediate security of supply needs for gas, including liquified natural gas, notably to enable diversification of supply in the interest of the Union as a whole; measures concerning the oil infrastructure and facilities necessary to meet immediate security of supply needs may be included in the REPowerEU chapter of a Member State only where that Member State has been subject to the exceptional temporary derogation in Article 3m(4) of Regulation (EU) No 833/2014 by 1 March 2023, due to its specific dependence on crude oil and its geographical situation; (b) boosting energy efficiency in buildings and critical energy infrastructure, decarbonising industry, increasing the production and uptake of sustainable biomethane and of renewable or fossil-free hydrogen, and increasing the share and accelerating the deployment of renewable energy; (c) addressing energy poverty; (d) incentivising reduction of energy demand; (e) addressing internal and cross-border energy transmission and distribution bottlenecks, supporting electricity storage and accelerating the integration of renewable energy sources, and supporting zeroemission transport and its infrastructure, including railways; (f) supporting the objectives set out in points (a) to (e) through an accelerated requalification of the workforce towards green and related digital skills, as well as through support of the value chains in critical raw materials and technologies linked to the green transition. 6 The application of the methodology to the amount referred to in Article 21a(1) will result in the following share and amount per Member State (pages 23-24): 7 Republic of Estonia Dear Prime Minister Kaja Kallas, Dear Minister for Finance Annely Akkermann, 7 March 2023 Dear Minister of Economic Affairs and Infrastructure Riina Sikkut, DEDICATED SUPPORT FOR EUROPEAN PV MANUFACTURING INDUSTRY IN REVISED NATIONAL RRP – POTENTIAL RESPONSE TO GLOBAL CHALLENGES AND LOCAL STRATEGIES The decisive and concerted actions of the European Commission, the European Council, and the European Parliament in February 2023 demonstrated the united approach to ensure level playing field conditions for the European net-zero industries vis-à-vis their global counterparts. The European Solar Manufacturing Council (ESMC), representing the European PV manufacturing industry, welcomes the decisions and actions already taken for the sectors that are strategic for the green transition and are adversely impacted by foreign subsidies or high energy prices. European PV manufacturing industry being one of the key strategic net-zero industries should benefit from the adapted State aid framework allowing targeted, temporary and proportionate support to be deployed speedily, including via tax credits as agreed by the European Council on 9 February. The European Council also invited the Commission and the Council to mobilise all available funding, and to use the existing financial instruments, to provide timely and targeted support for these strategic sectors. On 1 February, the European Commission presented Guidance on Recovery and Resilience Plans in the context of REPowerEU and on 21 February adopted the Communication Recovery and Resilience Facility: Two years on A unique instrument at the heart of the EU’s green and digital transformation, in which the Commission strongly encourages EU Member States to include simple and effective measures to provide support to strategic net-zero industries in their REPowerEU chapters, and by that boost their competitiveness in the context of the net-zero industry transition. Support possibility for the value chains in critical raw materials and technologies linked to the green transition are also included with the additional €20 billion financing confirmed in REPowerEU regulation adopted on 27 February. By this letter, we would like to highlight the critical momentum to use the available REPowerEU €20 billion financing through dedicated activities in your respective national Recovery and Resilience Plan (RRP). Now you have a concrete opportunity to transfer the concept of the European net-zero industries’ competitiveness into real actions through dedicated financial support in the revised national RRP, which the European Commission have asked all Member States to submit by 30 April. On behalf of ESMC, we highlight that the European Commission, among others, specifically referred to the need to support manufacturing of components for solar photovoltaic (PV) systems (polysilicon, ingots and wafers, cells, modules and inverters) including capital expenditures. Although investments in solar energy is the fastest and most cost-effective way to reduce Europe´s energy dependence on fossil fuels, European PV manufacturing capacities has declined from almost half global production to less than 4% of solar modules and even smaller proportion in other parts of the value chain. Consequently, it means a loss of hundreds of thousands green jobs and a relocation of PV production to an environmentally less optimal production sites comparing to Europe. We are ready to change this trend by taking back investments to Europe, but for that the support of political leaders is critical. In the previous letter of 18 January 2023, ESMC kindly requested your support for the European Commission‘s actions to revise the State aid framework and support the European PV manufacturing industry by dedicated concrete financial support vehicle, including the creation of a €20 billion fund to de-risk the investments. Including of the concrete financial support for the European PV manufacturing industry in the financial REPowerEU chapters during the revision of the RRP would effectively pave the grounds for the competitiveness of this industry and its essential capacity scale-up. Referring to the call of the European Council, and the recommendations to the Member States in the Guidance provided by the European Commission, we are requesting Estonia to take this opportunity to dedicate adequate support to the PV manufacturing industry from the €83 million REPowerEU grants, during the revision of the national RRP. ENCLOSURE: European Solar Manufacturing Council (ESMC) proposals to dedicate financial support for the European PV manufacturing industry in the national RRPs, to be revised and submitted to the European Commission by the end of April (7 pages). On behalf of the European Solar Manufacturing Council, Co-Chair Co-Chair Co-Chair Vice-President Secretary General Eicke Weber Gaëtan Masson Carsten Rohr Vincent Bès Johan Lindahl