2022 guidelines on State aid for climate, environmental protection and energy

SUMMARY OF:

Commission guidelines on State aid for climate, environmental protection and energy

WHAT IS THE AIM OF THE COMMUNICATION?

The communication explains how the European Commission assesses when national aid for environmental and climate protection may be compatible with European Union (EU) State aid rules.

To be compatible, the aid must:

encourage economic activity;
incentivise an activity that brings environmental benefits in line with the Green Deal objectives;
not harm competition and trade.

KEY POINTS

The guidelines apply to State aid for:

economic activity that improves environmental protection, including climate protection;
activities in the energy sector covered by EU rules;
sectors covered by specific State aid rules, unless those rules state otherwise.
environmental aid measures in favour of large airports with a passenger volume of over 5 million per year, irrespective of point 17(b) of the aviation guidelines.

The guidelines cover aid for:

the reduction and removal of greenhouse gas emissions, including through support for renewable energy and energy efficiency;
the improvement of the energy and environmental performance of buildings;
the acquisition and leasing of clean vehicles (used for air, road, rail, inland waterway and maritime transport) and clean mobile service equipment, and the retrofitting of vehicles and mobile service equipment;
the deployment of recharging or refuelling infrastructure;
resource efficiency and supporting the transition towards a circular economy;
the prevention or reduction of pollution other than that from greenhouse gases;
the remediation of environmental damage, rehabilitation of natural habitats and ecosystems, protection or restoration of biodiversity and implementation of nature-based solutions for climate change adaptation and mitigation;
security of electricity supply;
energy infrastructure;
district heating and cooling;
reductions from electricity levies for energy-intensive users;
the closure of power plants using coal, peat or oil shale and of mining operations relating to coal, peat or oil shale extraction;
studies or consultancy services on matters relating to climate, environmental protection and energy.

The compatibility test requires the Commission to assess whether the aid helps develop certain economic activities (positive condition) and does not affect trading conditions to an extent contrary to common interests (negative condition). It analyses the following aspects for each individual category of aid.

That the aid facilitates the development of an economic activity:
- identification of the activity facilitated by the measure, its positive impact for society at large and possible relevance for specific EU policies;
- incentive effect of the aid;
- absence of any breach of relevant EU law.
That the aid does not unduly affect trade:
- need for state intervention;
- appropriateness of the aid;
- proportionality of the aid (aid amount limited to the minimum necessary to meet its objective);
- transparency of the aid;
- avoidance of undue negative effectson competition and trade.
The overall balance between the aid’s positive impact and negative effects on competition and trade. This includes factors such as:
- contribution to environmentally sustainable activities and to legally binding targets under the European Climate Law and the EU’s 2030 targets for energy and climate;
- adherence to the ‘do no significant harm’ principle;
- time limit on the aid and ex post evaluation.

The guidelines do not apply to State aid for:

the design and manufacture of environmentally friendly products, machinery, equipment or means of transport;
research, development and innovation;
agriculture, forestry, fisheries or aquaculture;
nuclear energy.

FROM WHEN DO THE GUIDELINES APPLY?

The Commission has applied these guidelines to assess the compatibility of all notifiable aid for climate, environmental protection and energy awarded or intended to be awarded since 27 January 2022. EU Member States must amend, where necessary, existing environmental protection and energy aid schemes in order to bring them into line with these guidelines no later than 31 December 2023.

BACKGROUND

To prevent State aid from distorting, or threatening to distort, competition in the internal market and affecting trade between Member States, Article 107(1) of the Treaty on the Functioning of the European Union lays down the principle that State aid is prohibited. However, such aid may in certain cases be compatible with the internal market on the basis of Article 107(2) and (3) of the treaty.

The State aid guidelines are aligned with the EU’s objectives and targets in the European Green Deal, with EU energy and environmental legislation and with the increased importance being given to environmental, including climate, protection. They provide Member States with a flexible framework to meet the various environmental objectives in a focused and cost-effective way.

They replace the previous energy and environmental State aid guidelines adopted in 2014.

For further information, see:

Legislation (energy & environment) (European Commission).

MAIN DOCUMENT

Communication from the Commission – Guidelines on State aid for climate, environmental protection and energy 2022 (OJ C 80, 18.2.2022, pp. 1–89).