Subsidies in the energy sector can have a harmful or beneficial effect on the environment. The subsidies that lower the price of environmentally harmful energy by changing the relative relationships between energy prices to the benefit of the subsidised resource are environmentally harmful. This can result in the excessive production of energy or excessive use of an energy source that is harmful to the environment. Subsidies that are intended for the use of sustainable energy sources, however, are environmentally friendly, as they are less harmful to the environment than conventional energy sources. Subsidies can contribute to the decrease in the production price of energy as well as the cost of its use. Generally, subsidies improve the competitiveness of subsidised energy sources compared to other energy sources.

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, favourable interest rates, etc. One of the forms of subsidies may be the use of tax policy to eliminate market irregularities. However, the state’s efforts in this area have proven to be inefficient, as energy taxes insufficiently include external costs of energy production. Notwithstanding the mechanism of subsidies, we can distinguish between two forms of subsidies – ‘on-budget’ subsidies and ‘off-budget’ subsidies. The former represent a direct burden to the budget, while the latter are paid out through other sources and by other methods.

The data sheet presents the data on subsidies in the energy sector. The data was obtained from the records as well as public and internal materials of the Ministry of Finance, the Ministry of Infrastructure and the Eco Fund. The data sheets include data on (a) grants to stimulate generation of heat from renewable energy sources (RES) and measures for efficient energy use that were distributed through various institutions over the course of years (Agency of the Republic of Slovenia for Energy Efficiency and Renewable Energy Sources, Eco Fund, Ministry of Environment and Spatial Planning (cohesion funds), programmes for large suppliers, (b) estimated amount of aid provided by the Eco Fund through loans with favourable interest rates, (c) aid granted through priority dispatch of electricity (electricity generated from domestic sources by qualified producers, energy generated from renewable energy sources and combined heat and power (CHP) generation and support for electricity production from domestic sources), (d) aid granted for electricity generation from RES and CHP under the new scheme and aid granted for electricity generation from domestic sources after the scheme was amended in 2009, (e) exemption from payment of CO₂ tax, (f) funds for the closing of the Trbovlje-Hrastnik coal mine, (g) exemptions and reduced payment of excise duties in the use of petroleum products for various purposes, (h) refund of excise duty on diesel fuel in freight and passenger transport.

Based on available data, it has been estimated that subsidies in the energy sector amounted to EUR 324 million for Slovenia in 2014. 63% of this amount was directly or indirectly allocated to measures for efficient energy use and renewable energy sources. Other aid was intended for the use of other energy sources – 10% for coal and 27% for oil and natural gas. In Slovenia, generation and use of nuclear energy is not subsidized.

The acquired data indicate that subsidies in the energy sector are increasing. In 2014, the state granted 205% (160% in real terms) more aid, nominally, than in 2005. The main reason for increasing subsidies in the energy sector is additional payments and support schemes for electricity generation from RES and CHP, payments of incentives for efficient energy use and refunds of excise duty on diesel fuel for freight and passenger vehicles.

Since 2011, the largest amount of aid in Slovenia has been allocated to measures for efficient energy use and renewable energy sources. In 2014, EUR 203 million was spent for this purpose, which was six times more than in 2005.

In nominal terms, subsidies for coal in 2014 amounted to EUR 31 million, of which EUR 9 million was allocated for closing down the Trbovlje-Hrastnik coal mine. Exemptions from payment of excise duty due to electricity production amounted to EUR 22 million. In 2014, subsidies for liquid fuels amounted to EUR 87 million, of which EUR 41 million were refunds of excise duty on diesel fuel for freight vehicles, EUR 20 million were partial refunds of excise duty on agricultural equipment, EUR 12 million were partial refunds of excise duty on the use of mobile machinery and EUR 11 million were exemptions on the payment of excise duty due to electricity production.

According to estimates, subsidies in the amount of EUR 173 million (53%) in 2014 were ‘on-budget,’ which means they were granted from the national budget, while the remaining EUR 151 million (47%) were off-budget subsidies – funds gathered through allowances or contributions outside the national budget. In ‘off-budget’ subsidies, EUR 130 million (estimated) were allocated through the support scheme for electricity production from RES and CHP, and EUR 20.6 million were granted by the Eco Fund for RES and efficient energy use (EEU) measures (grants in the amount of EUR 17.3 million and an estimate of subsidized interest rate in the amount of EUR 3.3 million). In ‘on-budget’ subsidies, EUR 52.3 million were allocated from cohesion funds for RES and EEU measures in public buildings, EUR 9 million of budgetary funds were allocated for the closedown of the Trbovlje-Hrastnik coal mine, while exemptions from the payment of excise duty and refunds of excise duties on energy products were estimated at EUR 111 million.