State aid: Commission seeks comments on draft proposal to further facilitate the implementation of aid measures promoting green and digital transition – The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology
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The European Commission invites Member States and all other interested parties to comment on some proposed changes to the General Block Exemption Regulation (GBER). The aim of the proposed revision is to reflect the changes made to the different sets of State aid guidelines, which are currently under revision, and to further facilitate public support for the EU’s green and digital transition. . The new rules will help lay the groundwork for a sustainable economy in an era of recovery from the effects of the coronavirus pandemic. Member States and other interested parties can respond to the consultation until 8 December 2021.
Executive Vice President Margrethe Vestager, in charge of competition policy, said: “Our proposal aims to expand the possibilities for Member States to implement aid measures supporting the green and digital transition without prior notification and approval from the Commission. This will allow Member States to provide this funding more easily and quickly, without causing undue distortions of competition in the single market. We encourage all public authorities, businesses and other interested parties to participate in this important consultation.“
The GBER declares specific categories of State aid compatible with the Treaty, provided that they meet certain conditions, and exempts these categories from the obligation of prior notification and approval by the Commission.
Exempting certain aids from the obligation of prior notification and approval by the Commission is a major simplification, which allows Member States to provide aid quickly, when the conditions limiting distortions of competition in the single market are met. It is important to find the right balance between block-exempt aid, subject to clear criteria to limit potential distortions of competition, and other state aid which must be assessed by the Commission before it can be implemented.
The rules set out in the GBER are complementary to those set out in the State Aid Guidelines, which set out the conditions under which the Commission assesses whether state aid which does not benefit from a block exemption and therefore should notified to it are compatible with the single market. Together, these two sets of rules form a complete set of rules for certain areas of state aid law.
The Commission is therefore proposing a number of targeted changes to the GBER to reflect changes to various sets of state aid guidelines which are currently under review (i.e. the regional aid guidelines , the guidelines on state aid for climate, energy and the environment, the guidelines on risk finance guidelines and the research, development and innovation framework). The aim of the ongoing review of these guidelines and the proposed review of the GBER is to promote public funding that contributes to the achievement of current EU priorities, including the Green Deal and European industrial and digital strategies, and to ensure that state aid rules reflect the most recent market and technological developments.
In this context, the Commission is proposing a number of modifications to the GBER in areas where the corresponding State aid guidelines are also being revised. Specifically:
Help for environmental protection and energy
- Expand the possibilities for Member States to support various types of ‘green’ projects, such as the reduction of CO2 emissions, rehabilitation of natural habitats and ecosystems, protection and restoration of biodiversity, clean or zero-emission vehicles and recharging and refueling infrastructures.
- Introduce new “green” conditions that must be met for large energy-intensive companies to benefit from a block exemption in the form of reduced tax rates under the Energy Taxation Directive. This will ensure that the aid will lead to an increase in energy efficiency and investments in projects leading to substantial reductions in the recipient’s greenhouse gas emissions.
- Support for increased role of storage for the integration of renewable energies into the electricity system, by extending the existing exemptions in terms of investment and operating aid for renewable energies to storage projects which are directly connected to renewable energy production facilities new or existing.
- Facilitate investments in green hydrogen, by providing for block exemptions for investment aid for green hydrogen projects and investments in hydrogen infrastructure. In this regard, operating aid for small green hydrogen promotion plants will also be exempt from the notification requirement.
- Encourage ambitious building renovation projects, by introducing a “green bonus” (ie higher aid intensities exempt by category) for aid for improving the energy performance of buildings. The bonus will apply when improvements in energy performance lead to a significant reduction in primary energy demand.
Investment aid in risk financing
- Clarify and rationalize the rules relating to risk financing aid, in line with the parallel review of the risk financing guidelines, for example by clarifying the rules for eligibility for such aid under the GBER.
- Widen the scope of aid for business creation to aid in the form of transfer of intellectual property rights (IPR) from a research organization where the underlying IPR has been developed to innovative small businesses that need to bring a new product or service to market.
Aid for research, development and innovation
- Simplify the conditions for granting aid for research, development and innovation without prior notification or approval, for example by including the possibility of calculating the indirect costs of R&D projects via a simplified cost approach and the introduction of new compatibility rules for the support of testing and experimentation infrastructures (sometimes also called “technological infrastructures” ).
- Align the conditions with the new guidelines on regional aid, for example by extending the possibility of granting operating aid to prevent or reduce depopulation also in areas with low population density (so far only possible for areas with very low population density).
In addition to the consultation launched today, the draft proposal will also be discussed in two meetings between the Commission and the Member States, the first taking place towards the end of the consultation period and the second taking place after the draft has been revised. the basis of comments received during the public consultation. This process will ensure that both Member States and other interested parties will have sufficient opportunities to comment on the Commission’s draft proposal.
The proposal under consultation and full details of the public consultation are available here.
The adoption of the revised GBER is scheduled for the first half of 2022.
Article 108 (3) of the Treaty on the Functioning of the European Union (TFEU) obliges Member States to notify all state aid to the European Commission and to implement it only after approval. of the Commission. The EU’s enabling regulation on state aid allows the Commission to declare that certain categories of state aid are compatible with the single market and exempt from the notification obligation under the Treaty.
The general block exemption regulation allows Member States to implement certain aid measures directly, with complete legal certainty. The 2014 General Block Exemption Regulation allowed Member States to implement a wide range of state aid measures without prior Commission approval, as they are unlikely to distort competition , and has been amended several times to simplify the rules and extend the scope. As a result, over 97% of all state aid measures are now implemented by Member States without the need to obtain prior approval from the Commission. This is in line with the Commission’s approach of focusing on delivering more and faster, while doing less where it does not add value.
As part of its ongoing review of the competition rules to ensure that they are adapted to the changing market environment, the Commission launched in January 2019 an assessment of certain rules on aid for competition. States adopted as part of the 2014 State Aid Modernization Package. The assessment, which took the form of a Fitness Check, focused, among other things, on the State Aid Guidelines concerning regional aid, aid for research, development and innovation, aid for risk financing and aid for environmental protection and energy. The evaluation has shown that, overall, the system and rules for controlling state aid are suitable for their purpose. However, it also showed that the individual rules needed some adaptation, also in light of the European Green Deal and the EU’s industrial and digital strategies, as well as further streamlining. The Commission is therefore reviewing the applicable state aid guidelines and the corresponding GBER rules.
Today’s proposal follows the recent amendment to the GBER that the Commission adopted in July 2021 to align the applicable state aid rules with the funding rules of the new multiannual financial framework. The Commission is now proposing a number of additional adjustments to the GBER.