State aid rules for environmental protection with focus on low-emission mobility
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1 State aid rules for environmental protection with focus on low-emission mobility Seminar on State Aid for Environmental Protection Brussels, 24 September 2018 The views expressed in this document are those of the author and may not in any circumstances be regarded as stating an official position of DG Competition or of the European Commission. Vanessa NOZAR Rodrigo PEDUZZI European Commission DG Competition Unit H2 R&D&I, IPCEI and Environment
2 Outline 1. State aid control: basic rules Notion Compatibility principles GBER 2. Environmental State aid Categories of environmental aid under the GBER (not covered in this presentation: energy production and distribution, waste) 3. Focus on Low-emission mobility Context Vehicles Infrastructure 2
3 1. State aid control: Basic rules
4 Key State aid principles General prohibition and exemptions Exclusive competence of the Commission Objective notion Measured in relation to its effects Burden of proof on Commission Notification and standstill obligations 4
5 Notion of aid Art 107 (1) TFEU Notion of aid and general prohibition Any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the internal market. 5
6 Notion of aid - Conditions of existence Cumulative conditions: ❶ ❷ ❸ ❹ ❺ Granted by a Member State or through State resources Advantage: favouring Selectivity: certain undertakings or the production of certain goods Effect on trade between Member States Distortion or risk of distortion of competition Commission Notice on the notion of aid (OJ 2016/C 262/01) 6
7 Procedure for new aid Article 108 TFEU Notification obligation Standstill obligation State aid needs to be notified unless: It falls under the scope of one of the existing exemption regulations (GBER, SGEI) It falls under the scope of an authorised aid scheme Non-notified aid is deemed unlawful 7
8 Common compatibility principles Contribution to well-defined objective of common interest Need for state intervention Appropriateness of State aid Existence of incentive effect Proportionality of the aid amount (aid limited to minimum necessary) Avoidance of undue negative effects on competition and trade Transparency 8
9 GBER GBER (General Block Exemption Regulation Commission Regulation 651/2014) ): wide range of categories of aid covered Standard measures considered not very harmful deemed to be compatible Do not need to be notified to the Commission State aid is only exempted under GBER where all compatibility conditions are met There are more ex-post checks Member States should have appropriate processes in place to administer the GBER The Commission may suspend or withdraw the GBER from a Member State where non-compliance is identified 9
10 GBER (2) When does GBER apply? Certain types of aid and sectors excluded (cf. Article 1) Notification thresholds GBER does not cover aid above the levels set out in Article 4 Aid must be transparent (it is possible to calculate precisely the GGE of the aid ex ante) Incentive effect Transparency requirements Reporting obligations Evaluation obligation for large aid schemes 10
11 2. Environmental State aid
12 Environmental State aid in general 2014 Environmental and Energy State Aid Guidelines (EEAG) -> compatibility criteria Compared to 2008 EEAG, main changes on energy (e.g. renewables, capacity mechanisms -> not in the scope of this presentation) Currently, large majority of aid measures implemented under GBER Notification needed when GBER criteria not fully met, typically because higher aid intensities are needed -> competitive bidding required by EEAG 12
13 Investment aid to increase environmental protection (Art. 36 and Art. 37 GBER) Go beyond applicable EU standards or increase level of environmental protection in the absence of EU standards (Art. 36 GBER) Early adaptation to future EU standards (Art. 37 GBER) Eligible costs = extra investment costs Aid intensity: Art. 36 GBER: 40% + bonuses for SMEs and assisted regions Art. 37 GBER: between 5% and 20% depending on type of undertaking and time before entry into force of the EU standard + bonus for assisted regions Notification threshold: 15mio/undertaking/project 13
14 Investment aid for energy efficiency measures (Art. 38 GBER) Enables undertakings to reduce energy consumption Aid intensity: 30% + bonuses for SMEs and assisted regions Not to comply with already adopted EU standards Eligible costs = extra investment costs necessary to achieve a higher level of energy efficiency Notification threshold: 15mio/undertaking/project 14
15 Aid for energy efficiency projects relating to buildings (Art. 39 GBER) Loan, guarantee, State equity, endowment Energy Efficiency Fund/Financial Intermediary Loan guarantee Building owners or tenants Loans or guarantees for final aid recipient to improve energy efficiency of a building Minimum 30% of total financing from private investors Repayment of at least the nominal value of the loan Nominal value of loan < EUR 10 million and guarantee < 80% of underlying loan Eligible costs = overall costs of energy efficiency project Not for compliance with EU standards 15
16 Reduction of environmental taxes (Art. 44 GBER) Comply with Energy Taxation Directive (2003/96/EC) Selection of beneficiaries on the basis of transparent and objective criteria Respect of minimum tax levels in ETD 16
17 Remediation of contaminated sites (Art. 45 GBER) Respect of Polluter Pays Principle: aid only if polluter cannot be identified or cannot be made to bear costs Eligible costs = costs of remediation minus increase in land value Aid intensity can reach 100% of eligible costs Notification threshold: 20mio/undertaking/project 17
18 Aid for environmental studies (Art. 49 GBER) Eligible costs = costs for the studies Aid intensity: 50% + SMEs bonuses Notification threshold: 15mio/undertaking/project 18
19 3. Focus on low-emission mobility
20 The big picture: environment and competitiveness Transport = almost ¼ of Europe's greenhouse gas emissions (no decrease since 1990); main cause of reduced air quality 'Dieselgate' 'Low emission zones' in cities; planned bans of some diesel cars; full prohibition of new internal combustion engine cars in the future? Importance of automotive industry for EU economy: jobs, R&D, exports Massive investments ongoing globally (e.g. China) Link with key technologies such as batteries Several EU supporting policies 20
21 Market developments Recent boom in electric vehicles: from 1 to 3 million globally between 2015 and 2017 Still niche market (less than 2% of car sales), but growing fast; quite advanced in some countries All major carmakers now offer models Infrastructure also expanding: around 33,000 public charging points in NL, but fewer than 100 in BG Normal network in urban centres + fast-charging points on motorways (with EU support) Large actors in different sectors want a piece of the action: carmakers, petrol, energy, telecommunication, large retailers 21
22 Vehicles Mostly passenger cars and public transport buses, some vans Mostly grants, some tax exemptions Legal assessment: No aid (lack of selectivity) Compatible aid: Going beyond/absence of EU standards (Art.36 GBER + EEAG) 22
23 Charging Infrastructure Dedicated vs. public, semi-public Coverage: national, regional, local 3 relevant levels (developers/ owners, operators, end users) Compatible aid - Art. 107(3)(c) TFEU Focus until now on owners (= usually operators), users not affected by analysis 23
24 Thank you!
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