EU says it is unlikely to approve state aid for fossil fuels

BRUSSELS (Reuters) – The European Commission is unlikely to approve state aid for fossil fuel projects in future, as part of an overhaul of EU antitrust rules to make them greener, it said on Thursday.

The Commission, which oversees antitrust policy in the 27 European Union countries, vets national governments’ state aid to check that it does not distort competition in the EU single market.

An ongoing review of EU state aid rules will also attempt to align them with the bloc’s climate change policies.

The new rules would “support the phasing out of fossil fuels”, the Commission said in a communication published on Thursday.

“State support for projects involving such fuels, in particular the most polluting ones such as oil, coal and lignite, is unlikely to be found compatible with state aid rules,” the Commission said.

Phasing out coal and lignite – a type of high-emitting coal – is seen as crucial for the EU to meet its targets to cut greenhouse gas emissions.

Member states seeking EU approval for state aid for fossil gas projects would also need to explain how they will ensure such investments comply with EU climate goals and avoid locking in emissions for future years, the Commission said.

EU countries are divided over the role gas should play in their transition to net zero emissions.

Gas, a fossil fuel, produces CO2 emissions when burned in power plants and gas infrastructure is associated with leaks of methane, a potent greenhouse gas.

Gas produces less CO2 emissions than coal, and some coal-dependent eastern European countries see the fuel as a “bridge” to help them transition from coal-fuelled power, to eventually rely on renewable, and in some cases nuclear, energy.

(Reporting by Kate Abnett; Editing by Giles Elgood)