European Commission Adopts New State Aid Rules On 'Matching Aid' To Promote Its Green Deal Industrial Plan And To Simplify Prior Clearance Procedures

JurisdictionEuropean Union
Law FirmBaker Botts
Subject MatterEnvironment, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity, Renewables
AuthorLeigh Hancher and Matthew Levitt
Published date28 March 2023

On 9 March and together with its long-promised amendment to the General Block Exemption Regulation ('GBER') the European Commission (EC) also endorsed its new Crisis Framework aimed at speeding up investment and financing for clean or green tech production in Europe.

The new Temporary Crisis and Transition Framework (TCTF) aims to foster support measures in sectors which are deemed key for the transition to a net-zero economy, in line with its recently adopted Green Deal Industrial Plan (GDIP). This is essentially a key plank in Europe's response to the USA's Inflation Reduction Act. The TCTF extends the possibility for Member States to support measures needed for the transition towards a net-zero industry. It aims to make schemes to support renewable energy, energy storage and decarbonisation of industrial production processes easier to design and to be more effective. Where there is a real risk of investments being diverted away from Europe, Member States may provide the amount of support the beneficiary could receive for an equivalent investment in that alternative location ('matching aid'). The new 'GBER' retains the three overarching objectives as its predecessors: reduction of the number and administrative cost of ex ante notifications of planned aid to the EC, simplification of the implementation procedures for state aid measures and increased legal certainty. Notification thresholds have been raised for many types of aid, but can the new GBER really serve the urgent goals of the new GDIP?

I. THE GBER

Although the amendments to the new - 110 page long - General Block Exemption Regulation are extensive, the focus is essentially on three policy areas: the greening and digitisation of the economy and security concerns, with support for actions such as decarbonisation, investment in renewable hydrogen, investment networks and co-funding of projects supported by the European Defence Fund. There are only a few sectoral exceptions - including aid for providers of services of general economic interest, aid for operators of land transport and aid for rescue and restructuring of failing or bankrupt companies. The first two categories fall within the scope of other block exemption instruments. As aid for rescue and restructuring is one of the most distortive types of aid for the internal market, it is always notifiable to the EC for prior clearance.

The main amendments to the new GBER can be summarised as follows:

  • The definition of "firm in difficulty" is...

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