S.11. State Aid


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EC approves introduction of stringent emissions’ limit in Italian capacity mechanism

Friday, June 14, 2019

The move appears to be part of a wider effort on the part of the Italian government to reduce emissions in the lead-up to the entry into force of the Clean Energy Package.

The EC approved under State aid rules the introduction of stringent CO2 emission limits in the Italian capacity mechanism, after approving a market-wide capacity mechanism in February 2018.

Italy had not yet taken steps to implement the approved capacity mechanism before notifying the EC of plans to introduce changes to it, which changes will apply to the first auction scheduled to take place later this year.

Italy will only allow capacity providers that comply with stringent CO2 emission limits to participate in the auction. These limits are defined in the (recast) Regulation on the Internal Market for Electricity, which was recently adopted as part of the “Clean Energy for All Europeans Package”, albeit not yet being compulsory.

CO2 emission limits will prevent high-emission electricity generation from participating in the capacity mechanism. In particular, these measures aim to foster the entry of new and greener generation capacity and other technologies, such as demand-response and storage.