On the 17th April 2008 the European Commission published in the OJ (Official Journal of the European Union) 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).

Varmeprodusentenes Forening (the Association of heat producers) filed a complaint, on the 13th October 2006, 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. The complaint was sent to the Norwegian authorities who then investigated the situation.

The support scheme under question

The support scheme is for alternative, renewable heating and electricity saving measures in private households and
was introduced by the Norwegian authorities in 2006. It 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. Also,the support scheme can apply for refunding of maximum 20 % of their documented 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 aimed of the scheme is to give households an incentive to invest in new environmentally friendly heating technologies that will convert or replace existing direct electric heating systems, and thus contribute to the reduction of the use of electricity 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.
• Wood-burning stoves are not covered by the aid scheme.

The complaint:

The complainant alleges that the support to private households may be regarded as constituting an indirect advantage for the producers and/or the importers of the heating technologies 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 scheme will, according to the complainant, due to the reasons mentioned above, distort competition and affect trade between the EEA States.

In response, the Norewegian authorities declared that the measure cannot be considered to constitute State aid because recipients of the support scheme are private households.

The Norwegian authorities offer their definition of the market as ‘those technologies which can replace electric 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’. Thus, argue that 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.