The European Commission (the “Commission”) formally adopted on January 27, 2022 its new State aid guidelines for climate, environmental protection and energy (CEEAG). The CEEAG replaces the guidelines in force since 2014 (EEAG) and integrate the new objectives of the EU Green Deal a 55% reduction in net greenhouse gas emissions below 1990 levels by 2030 and carbon neutrality by 2050. The Commission has estimated that meeting the new 2030 target would require 390 billion euros of additional annual investment compared to 2011-2020 levels, an investment that cannot be supported by the private sector alone, and would therefore require public investment.
The CEEAG applies from 27 January 2022 to aid for environmental protection, including climate protection, and energy granted or intended to be granted from that date. Member States must also adapt their existing aid schemes to comply with the EAEC by 2024. The EAEC has set out the criteria according to which the Commission will assess whether aid can be authorised. Those assessment criteria concern a positive condition, namely whether the aid facilitates the development of certain economic activities within the Union, and a negative condition, namely whether the aid does not adversely affect trading conditions to an extent contrary to the common interest.
The Commission will only assess aid under the EAEC in situations where the aid does not already fall under the exemptions of the General Block Exemption Regulation (GBER). The GBER authorizes aid under certain ceilings without the need for Commission control. It should be noted that the GBER is currently under review to align with the objectives of the European Green Deal and to complement the CEEAG.
In the positive condition, the Commission will analyze (i) the identification of the economic activity which is facilitated by the measure, to support the green economy or to increase its sustainability and the expected benefits of the aid for the protection of environment, including climate change mitigation, or the efficient functioning of the internal energy market; (ii) the incentive effect of the aid, ie whether the aid encourages the beneficiary to change its behavior to engage in a more environmentally friendly economic activity; and (iii) that no relevant provision of Union law, such as, for example, clauses conditioning the aid directly or indirectly on the origin of the products or equipment, has been infringed.
In the negative condition, the Commission will examine (i) the need for State intervention, i.e. whether the aid addresses the market failures preventing the achievement of a sufficient level of protection of the environment or an efficient internal energy market; (ii) the appropriateness of the aid, i.e. whether the objective cannot be (sufficiently) achieved by another measure (e.g. market-based instruments such as the exchange system allowance) or a less disruptive aid instrument (e.g. repayable advance or direct grant); (iii) the proportionality of the aid, i.e. whether the aid is limited to the minimum necessary, i.e. the net additional cost (‘funding gap’) necessary to achieve the objective of the assistance measure; (iv) the transparency of aid, ie its good publicity; (v) the avoidance of undue negative effects of the aid on competition and trade, taking into account the distorting effects on competitors who also act in an environmentally friendly manner, and it will (vi) assess the effects positives and negatives of aid, paying attention to the sustainability of the activity and in particular that it “does not significantly harm” environmental objectives.
These evaluation criteria are specified for each specific category of aid.
Categories of aid that can be assessed under the CEEAG
Most of the categories of environmental protection and energy measures falling within the scope of the previous EEAG are covered by the EEAG in a much broader way. These categories relate to assistance:
- for the reduction and elimination of greenhouse gas emissions, in particular by supporting renewable energies and energy efficiency;
- for improving the energy and environmental performance of buildings;
- for resource efficiency for which the EEAGs also cover the transition to a circular economy, beyond the simple waste management foreseen in the EEAGs;
- reductions in taxes or parafiscal levies when these taxes or levies aim to penalize behavior harmful to the environment but create a competitive disadvantage such that it would not have been possible to introduce them initially without having provided for reductions for some companies;
- for district heating and cooling, including high-efficiency cogeneration;
- for security of electricity supply, extending to storage or load shedding, interconnection, as well as network congestion measures, the possibilities initially offered under the EEAG to support the production adequacy;
- reductions for energy-intensive users of electricity taxes. Under the previous LDAEEs, reductions were possible for levies intended to finance support for energy produced from renewable sources. With the CEEAG, a possible reduction can apply to levies aimed at the broader objective of financing decarbonisation;
- for studies or consultancy services relating to climate, environmental protection and energy, whereas the EEAG only covered environmental studies;
- for the remediation of environmental damage, which is a broader possibility than aid for the remediation of contaminated sites under the LDAEE.
The CEEAG further extends the list of measures that can be supported to support:
- for clean mobility:
- for the acquisition and rental of own vehicles (used for air, road, rail, river and maritime transport) and own mobile service equipment and for the refitting of vehicles and mobile service equipment;
- for the deployment of recharging or refueling infrastructures for clean vehicles;
- for the prevention or reduction of pollution other than by greenhouse gases;
- for the rehabilitation of natural habitats and ecosystems, the protection or restoration of biodiversity and the implementation of nature-based solutions for adaptation and mitigation of climate change;
- reductions in taxes or parafiscal charges, to encourage companies to change or adapt their behavior by engaging in activities that are more respectful of the environment;
- for the closure of power plants using coal, peat or oil shale and mining operations related to the extraction of coal, peat or oil shale.
Whereas previously investment aid for large airports (more than 5 million passengers per year) could only be authorized in exceptional circumstances, such as the relocation of an existing airport, aid for large airports would now also be permitted where the objective of the aid is to improve environmental protection.
Nuclear energy remains outside the scope of the EAEC, as it concerns limited but very large-scale projects, subject to the EURATOM treaty. Aid for nuclear energy would therefore be assessed directly against the provisions of the Treaty.
By aligning state aid rules with the objectives of decarbonizing the economy, the EAEC will enable more public investment to fight climate change, promote environmental protection and support the energy sector. ‘green energy. Compared to the EEAG, the CEEAG authorizes more categories of measures and a higher amount of aid. This aid may cover the net additional cost (funding gap) necessary to achieve the objective of the aid measure, compared to the counterfactual scenario in the absence of aid. CEEAG also recognizes natural (fossil) gas as an energy source that may be needed to transition to a net-zero carbon economy. Therefore, gas could benefit from public support, but only under strict conditions, in order to avoid lock-in effects and to shift investments towards cleaner alternative energy sources. The other fossil fuels would in principle no longer be supported, since the negative effects of the support would probably not be offset, except to facilitate their phasing out.