The new guidelines on state aid for environmental protection and energy

These new guidelines vary greatly from those in force for the period 2014-2020.

The Commission has estimated that achieving the newly increased 2030 climate, energy and transport targets will require EUR 390 billion of additional annual investment compared to the levels in 2011-2020, with a further EUR 130 billion a year for the other environmental objectives estimated previously. The magnitude of this investment challenge requires mobilising both the private sector and public funds in a cost-effective manner. This will affect all sectors.

These guidelines provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3), point (c), of the Treaty. Any reference to ‘environmental protection’ in these guidelines should be understood as a reference to environmental protection, including climate protection.

The Commission considered that in the context of environmental protection, environmental externalities, information imperfections and coordination failures mean that the costs and benefits of an economic activity might not fully be taken into account by market participants when taking consumption, investment and production decisions, in spite of regulatory interventions. Those market failures, that is to say, situations in which markets, if left to their own devices, are unlikely to produce efficient outcomes, do not lead to optimal welfare for consumers and society at large, resulting in insufficient levels of environmental protection in relation to the economic activities conducted in the absence of State support.

The Commission has identified a number of categories of environmental protection and energy measures in respect of which State aid may be compatible with the internal market under Article 107(3), point (c), of the Treaty under certain conditions:

1. aid for the reduction and removal of greenhouse gas emissions, including through support for renewable energy and energy efficiency;
2. other aid for the reduction and removal of greenhouse gas emissions and energy efficiency;
3. aid for the improvement of the energy and environmental performance of buildings;
4. aid for clean mobility;
5. aid for the acquisition and leasing of clean vehicles and clean mobile service equipment and for the retrofitting of vehicles and mobile service equipment;
6. aid for the deployment of recharging or refuelling infrastructure;
7. aid for resource efficiency and for supporting the transition towards a circular economy;
8. aid for the prevention or the reduction of pollution other than from greenhouse gases;
9. aid for the remediation of environmental damage, the rehabilitation of natural habitats and ecosystems, the protection or restoration of biodiversity and the implementation of nature-based solutions for climate change adaptation and mitigation;
10. aid in the form of reductions in taxes or parafiscal levies;
11. aid for the security of electricity supply;
12. aid for energy infrastructure;
13. aid for district heating and cooling;
14. aid in the form of reductions from electricity levies for energy-intensive users;
15. aid for the closure of power plants using coal, peat or oil shale and of mining operations relating to coal, peat or oil shale extraction;

We will follow up on some of the details of aids specific to certain sectors in later blogs.