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It is estimated that in 2006 in Slovenia more than 65 million EUR of subsidies were allocated in the energy sector. Despite the fact that the use of fossil fuels is the most harmful to the environment, more than 68 % of aid was, directly or indirectly, intended for the use of fossil fuels; 91 % of these funds were intended for the use of coal. However, significant progress was made in the area of subsidizing and supporting mechanisms, primarily towards the support of measures for efficient use and renewable energy sources.


Subsidies in the energy sector can harm or benefit the environment. Environmentally harmful are those subsidies that lower the price of environmentally harmful energy by changing the relative relations between energy prices to the benefit of the resource that is subsidized; this causes an over-demand of energy that is harmful to the environment. Environmentally friendly are those subsidies that are intended for the use of sustainable energy sources, since the latter are less harmful to the environment – such as conventional energy sources. Subsidies can have an influence on a decrease of the price of such energy and can improve its competitiveness with regard to environmentally harmful energy.

At the level of EU countries, there is no common agreement regarding the definition of subsidies in the energy sector. The term subsidy most frequently includes direct payments to an energy producer or consumer; however, subsidies can also include other, less transparent forms of aid or supporting mechanisms, such as exemption from the payment of taxes and discounts, control of prices, restrictions in trade, restrictions in entering the market, etc. One of the forms of subsidizing is also that the state, with its tax policy, inefficiently eliminates market irregularities, since energy taxes insufficiently include external costs of energy production. Notwithstanding the mechanism of subsidies, we are dealing with two forms of subsidies - »on-budget« subsidies and »off-budget« subsidies. The first ones represent a direct burden to the budget, while the latter ones are paid out through other sources and methods.

The data sheet indicates the data on subsidies in the energy sector; the data were obtained from the records of the Ministry of Finance. The data include forms of aid that were allocated to companies, the basic activity of which is coal mining, electricity and heat production, natural gas distribution; such forms of aid include all categories of state aid (aid to research and development, aid for small and medium enterprises, aid for restructuring, employment, training, energy savings and environmental protection, regional aid). The data sheets also indicate the data on non-refundable funds that were allocated by the Ministry of the Environment and Spatial Planning to legal and natural persons for implemented measures of efficient use and renewable energy sources and for promotional and educational activities as well as funds (in the amount of a subsidized interest rate) that were allocated by the Eco fund for investments in the area of air and climate protection. Data sheets also include allocated funds in the area of priority dispatching of electricity. These data are not included in the records of state aid, since priority dispatching was not considered as state aid until 2007; in accordance with a decision of the European Commission on the scheme of state aid, priority dispatching of electricity must also be considered as one of the forms of state aid.


Charts

Figure EN22-1: Subsidies in the energy sector in fixed prices 2000
Sources: 

Ministry of Finance, 2007; Ministry of the Environment and Spatial Planning, 2007; ELES, 2007.

Show data
2000 2001 2002 2003 2004 2005 2006
coal mio € (2000) - 30.8 65.9 58.7 56.2 32 30.9
petroleum and gas mio € (2000) - 2.6 3.5 2.7 2.5 2.3 1.6
nuclear energy mio € (2000) - 0 0 0 0 0 0
energy suplly (electricity and gas) mio € (2000) - 0.1 0.6 5.1 6.6 4.1 1.3
RES and efficient use of energy mio € (2000) - 2.1 6.9 8.3 16.6 13.6 15.3
unallocated mio € (2000) - 0 0 0.1 0.4 0 0.2
total mio € (2000) 39.4 35.6 77 74.9 82.3 52.2 49.4
percentage of RES subsidies % 5.9 9 11.1 20.3 26.1 31
Figure EN22-2: Distribution of state aid by individual energy sources in 2006
Sources: 

Ministry of Finance, 2007; Ministry of the Environment and Spatial Planning, 2007; ELES, 2007.

Show data
coal petroleum and gas nuclear energy energy supply RES and efficient use of energy unallocated
2001 % 86.5 7.2 0 0.4 5.8 0
2002 % 85.6 4.5 0 0.8 9 0
2003 % 78.5 3.6 0 6.8 11.1 0.2
2004 % 68.6 3 0 8.1 20.3 0.5
2005 % 61.4 4.5 0 8 26.1 0
2006 % 62.7 3.3 0 2.6 31 0.4
Figure EN22-3: Distribution of state aid by individual energy sources in 2001
Sources: 

Ministry of Finance, 2007; Ministry of the Environment and Spatial Planning, 2007; ELES, 2007.

Show data
coal petroleum and gas nuclear energy energy supply RES and efficient use of energy unallocated
2001 % 86.5 7.2 0 0.4 5.8 0
2002 % 85.6 4.5 0 0.8 9 0
2003 % 78.5 3.6 0 6.8 11.1 0.2
2004 % 68.6 3 0 8.1 20.3 0.5
2005 % 61.4 4.5 0 8 26.1 0
2006 % 62.7 3.3 0 2.6 31 0.4
Figure EN22-4: Budget funds intended for research and development in the area of electricity production and efficient energy consumption, indicated in € 1995
Sources: 

Eurostat, 2007.

Show data
1996 1997 1998 1999 2000 2001 2002 2003 2004
Production, distribution and rational use of energy [1995 €] 387627 929769.1 717927.3 728348.1 720214.7 537396.3 431119.9 681309.3 590963.3
Share of R&D in the energy sector in total R&D % 0.5 1.2 1 0.9 1 0.7 0.6 0.9 0.7
Share of R&D in GDP % 0.5 0.5 0.5 0.6 0.5 0.5 0.5 0.6 0.6
Figure EN22-5: Budget funds intended for research and development in the area of electricity production and efficient energy consumption in 2004, indicated in current prices
Sources: 

Eurostat, 2007.

Show data
General research on production and distribution Fossil fuels Nuclear vaccination Radioactive waste Nuclear fusion Solar heat and photovoltaic Geothermal energy Water, wind Use of biomass Efficient use of energy
distribution EUR 760820.3 21629.5 0 0 0 21629.5 21629.5 0 21629.5 108845.3
Other research and development in energy sector
distribution EUR 130474.8

Goals

Slovenian energy policy that is defined in the Resolution on the National Energy Programme set specific objectives in the area of subsidizing, especially in the area of efficient use and renewable energy sources. The National Energy Programme stipulates that, in the area of measures for efficient use and renewable energy sources and for supporting educational and promotional activities, the state should annually devote 58.42 million EUR, of which 33.8 million EUR are for the measures of efficient energy use and 16.27 million EUR for the promotion of renewable energy sources. In the area of subsidizing the use of coal, Decision 1407/2002/EC was adopted at the EU level, which permits the continuation of coal subsidizing until the end of 2010; the subsidies are supposed to be intended for restructuring of production with regard to social and regional aspects and provision of access to economically justified supplies of domestic coal as strategic reserves.


On the basis of the available data for Slovenia, it is estimated that subsidies in the energy sector in 2006 amounted to 65.2 million EUR. 62.7 % of this amount was directly and indirectly intended for the use and extraction of coal and 31 % for efficient use and renewable energy sources. The remaining aid was intended for the use of other energy sources or it was not possible to specify the purpose of subsidizing. In Slovenia, the production and consumption of nuclear energy is not subsidized.

The obtained data clearly indicate that subsidies in the energy sector have been decreasing in recent years. In 2006, 3.4 % less funds (in real terms, 5.4 %) were allocated by the state in comparison with 2005. The main reason for the decrease of subsidies are smaller payments in the area of priority dispatching of electricity from coal; moreover, less funds were also allocated to companies, the basic activity of which is the supply of electricity, natural gas and warm water.

It is estimated that in 2006 €21.3 million of subsidies (32.7 %) were of an »on-budget« nature, which means that they were allocated from the state budget; the remaining €43.9 million (67.3 %) represent »off-budget« subsidies. In the area of »off-budget« subsidies, €40.8 million were allocated in the area of priority dispatching*, while the remaining €3 million mainly represent exemptions of tax payments and subsidized interest rates.

In Slovenia, coal is still the most subsidized energy product. In 2006, €40.9 million of funds were allocated, of which €14.6 million was intended for the closure of the RTH coal mine and €26.3 million was paid to the companies Trbovlje thermal power plant and Ljubljana thermal power and heating plant for the priority dispatching of electricity. In the area of efficient use and renewable energy sources, €20.2 million of subsidies were allocated in 2006. Within the funds for efficient use and renewable energy sources, €13.3 million was paid out to qualified electricity producers (production from RES), €2.8 million was the estimated amount of state aid in the area of the subsidized interest rate of allocated loans, and €1.9 million of non-refundable funds was allocated for the measures of efficient use and renewable energy sources. €2 million was paid out (non-refundable funds and capital investments) for biomass district heating from foreign donations (GEF).

In 2006, the share of subsidies intended for the promotion of efficient use and renewable energy sources increased to 30.1 %, which is 4 percentage points more than the previous year. The main reason is the increase in the number of allocated loans with a subsidized interest rate and increase in the payment to qualified electricity producers from RES. In 2006, a significant decrease of payments for priority dispatching can be noticed in the area of electricity subsidizing; namely, €3 million.

Budget funds for research and development in the area of energy
In the area of financing of research and development in Slovenia, there was no typical increasing trend of funds that are intended for such research. In 2004, funds were, in comparison with 1996, by 52 % higher, whereby the amount of funds at the annual level significantly changed in the considered period. According to the amount of funds that were intended for research in the area of energy, the energy sector within the framework of the national development guideline does not represent a significant development area. In the considered period, only 1 % of all funds were intended for research in the energy sector (see Figure EN22-4).

In 2004, €1.1 million of budget funds were intended for research and development in the energy sector. The majority of funds (70 %) were used for general research in the area of energy production and distribution, 8 % of funds were allocated for research in the area of renewable energy sources, 10 % in the area of efficient energy use and 12 % of funds were intended for other research in this area.

* Priority dispatching includes funds for electricity production in Trbovlje thermal power plant, Ljubljana thermal power and heating plant and some smaller CHP power plants as well as funds for distribution (funds for distribution are intended for the financing of qualified electricity producers from RES).


Data for Slovenia

Source database: The data on subsidies and state aid are collected by the Ministry of Finance since 1998. The data on state aid can be found in the records on state aid, while the complete data on funds intended for the promotion of efficient use and renewable energy sources are kept by the Ministry of the Environment and Spatial Planning and by the Eco Fund. The data on priority dispatching is administered by the system operator of electricity - ELES.
Data administrator: the Ministry of Finance, Ministry of the Environment and Spatial Planning, ELES and Eurostat.

Methodology and frequency of data collection: The data on state aid and subsidies are collected promptly by individual authorities for each individual year. The methodology of data collection is determined only by the Ministry of Finance, which also keeps records of state aid; namely, the Ministry of Finance must classify in its records only the state aid. A substantial share of payments in the energy sector is not in the form of state aid (for instance, non-refundable funds and a subsidized interest rate for efficient use and renewable energy sources for households and small and medium enterprises); therefore, these funds are not recorded in these records. Furthermore, funds received from priority dispatching were also not considered, until 2007, as state aid and were not included in the records. In accordance with a decision of the European Commission (Case No C 7/2005), the Ministry of Finance shall have to include priority dispatching in the Records on state aid. The data on priority dispatching were obtained from ELES, while from 2007 these data are also available from the Records on state aid.

Data processing methodology: The data on subsidies were obtained in current prices. The nominal data had to be deflated with the GDP deflator to obtain a time comparison and for the determination of real changes in the amount of subsidizing funds.

Information concerning data quality:
- Advantages: the source of basic data on subsidies for the period 2000–2006 is the Ministry of Finance; however, the data in its records do not represent all funds (subsidies) that were paid in the energy sector. Other sources of data are the Ministry of the Environment and Spatial Planning, the Ecological Development Fund and ELES.
- Reliability: The data were obtained from four different sources (administrators); therefore, there is a possibility that some amounts of paid-out subsidies are doubled.
- Assessment: Adequacy: 3; Accuracy: 3; Completeness over time: 1; Completeness over space: 1

References:
- Resolucija o Nacionalnem energetskem programu (ReNEP) (Resolution on the National Energy Programme, Official Gazette of the RS, No. 57/2004) DZ.
- Commission Decision of 24 April 2007 on the State aid scheme implemented by Slovenia in the framework of its legislation on qualified energy producers – Case No C 7/2005
- Energy subsidies in the European Union: A brief overview; EEA Technical report; 1/2004


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