(1)

The EFTA Surveillance Authority (‘ESA’) wishes to inform the Norwegian authorities that, having assessed the Norwegian regional aid map 2022–2027, ESA finds it compatible with the principles set out in the Guidelines on regional State aid (‘the RAG’) (1).

(2)

This decision represents ESA’s assessment of the regional aid map under paragraph 190 of the RAG. The approved map constitutes an integral part of the RAG (2). The regional aid map itself does not involve any State aid and does not constitute an authorisation to grant such aid.

(3)

ESA has based its decision on the following considerations.

(4)

On 1 December 2021, ESA adopted its new RAG by Decision No 269/21/COL. The RAG set out conditions under which notifiable regional aid may be considered compatible with the functioning of the EEA Agreement (3). They also set out criteria for identifying the areas that fulfil the conditions for compatibility under Article 61(3)(a) and Article 61(3)(c) of the EEA Agreement (4).

(5)

According to paragraph 150 of the RAG, the areas which EEA EFTA States wish to designate as ‘a’ or ‘c’ areas must be identified in a regional aid map. Pursuant to paragraph 189 of the RAG, each EEA EFTA State should notify to ESA a single regional aid map applicable from 1 January 2022 to 31 December 2027. In keeping with this, the Norwegian authorities notified the Norwegian regional aid map 2022–2027 by letter dated 2 December 2021 (5).

(6)

The regional aid coverage available for 2022–2027 is set out for each EEA EFTA State in Annex I to the RAG. Norway’s allocation consists of predefined and non-predefined ‘c’ areas.

(7)

The Norwegian authorities can use this allocation to designate predefined and non-predefined ‘c’ areas. The principles governing such designation are found in respectively paragraphs 168 and 169, and paragraph 175, of the RAG.

(8)

According to paragraph 168 of the RAG, EEA EFTA States may designate as ‘c’ areas the predefined ‘c’ areas referred to in paragraph 166. These areas are identified in Annex I to the RAG.

(9)

Paragraph 169 allows for a flexible approach whereby sparsely and very sparsely populated areas other than those predefined as eligible, can be designated on certain conditions.

(10)

In the Norwegian regional aid map 2014–2020, the Norwegian authorities designated sparsely populated areas. The very sparsely populated areas were not identified (6). Instead, the Norwegian authorities designated very sparsely populated areas in the context of an operating aid scheme which was contingent upon being limited to such areas (7).

(11)

Footnote 65 of the RAG contains a new specification that sparsely populated and very sparsely populated areas should be identified on the regional aid map. On this basis, the Norwegian authorities have in their notification included an identification of the designated very sparsely populated areas equivalent to that previously made in the context of an operating aid scheme.

(12)

Accordingly, ESA will first assess the Norwegian authorities’ designation of sparsely populated areas. Thereafter, ESA will assess the Norwegian authorities’ designation of very sparsely populated areas within these areas. As required by the last sentence of paragraph 169 of the RAG, ESA will take account of the population in both the very sparsely and sparsely populated areas when assessing compliance with the population coverage ceiling.

(13)

It follows from the definition in paragraph 19(30) of the RAG that all areas designated on the basis of paragraph 169 are sparsely populated. Accordingly, ESA will only count the population in those areas that are both sparsely and very sparsely populated once when assessing compliance with the population coverage ceiling.

(14)

The first and second sentence of paragraph 169 of the RAG stipulates that, ‘[f]or sparsely populated areas, EEA EFTA States should in principle designate statistical regions at level 2 with fewer than 8 inhabitants per km2 or statistical regions at level 3 with fewer than 12,5 inhabitants per km2. However, EEA EFTA States may designate parts of statistical regions at level 3 with fewer than 12,5 inhabitants per km2 or other contiguous areas adjacent to those statistical regions at level 3, provided that these areas have fewer than 12,5 inhabitants per km2.’

(15)

In Norway, statistical regions at level 3 consist of counties, whereas statistical regions at level 2 amount to larger regions (8).

(16)

The counties of Troms og Finnmark and Nordland are included in their entirety. Based on figures from 1 January 2020 (9), the population densities in these counties are respectively 3,4 and 6,7 inhabitants per km2 (10). Based on the same population data, the population in these areas amounts to 484 546 inhabitants (11).

(17)

The second sentence of paragraph 169 opens up for designating parts of statistical regions at level 3 with fewer than 12,5 inhabitants per km2, or other contiguous areas adjacent to those statistical regions at level 3, provided that these areas have fewer than 12,5 inhabitants per km2. The possibility to include contiguous areas (swap in) is thus mirrored by the possibility to exclude (swap out) areas within the statistical regions at level 3 with fewer than 12,5 inhabitants per km2.

(18)

Accordingly, parts of the level 3 regions Innlandet and Trøndelag are swapped out of the regional aid map, whereas areas in other level 3 regions are swapped in (12).

(19)

Table 1 below lists the areas in the level 3 regions of Innlandet and Trøndelag that are swapped out (13):

Table 1

Smaller areas that are swapped out

(20)

Based on the population data from 1 January 2020, these swapped out areas have a total population of 504 560 (14).

(21)

Table 2 below provides an overview of the smaller areas with lower population densities than 12,5 inhabitants per km2 that have been swapped in (15):

Table 2

Smaller areas that are swapped in

(22)

Based on the figures from 1 January 2020, these swapped in areas have a total population of 528 360 (16).

(23)

Paragraph 169 of the RAG sets out three requirements, which must be met, in order to swap in smaller areas from a statistical region at level 3 where this region as a whole has a population density above 12,5 inhabitants per km2.

(24)

First, these smaller areas must have fewer than 12,5 inhabitants per km2.

(25)

In previous practice, both ESA (17) and the Commission (18) have assessed the population densities for swapped in sparsely populated areas per level 3 region (statistical regions at level 3 / NUTS 3 regions). There is nothing new in the wording of paragraph 169 to require a different interpretation. Consequently, ESA will follow the same approach under the new RAG.

(26)

It follows from the data presented in Table 2 above, that the population densities in the swapped in areas are below 12,5 inhabitants per km2, when assessed together at the level of their statistical region at level 3. The population density requirement is therefore met for the swapped in areas.

(27)

Second, the swapped in smaller areas must be contiguous areas adjacent to the statistical regions at level 3 with a population density of less than 12,5 inhabitants per km2. On the basis of the borders of the concerned areas, as illustrated by the graphic map attached as Annex III(a) to this decision, ESA concludes that this requirement is met.

(28)

Third, the swapping exercise must not result in the specific allocation of ‘c’ coverage referred to in paragraph 167 of the RAG being exceeded. According to the final sentence of paragraph 169 of the RAG, the population of the sparsely and very sparsely populated areas must be taken together for the purposes of this assessment. However, as clarified in paragraph (13), the population in those areas that are both sparsely and very sparsely populated, will only be counted once when assessing compliance with the population coverage ceiling.

(29)

According to Annex I to the RAG, the specific allocation of ‘c’ coverage for Norway is 25,14 % of the national population. Both ESA (19) and the Commission (20) have in previous practice accepted the use of recent national population data when assessing compliance with the population coverage ceiling. There is nothing new in the wording of paragraph 169 of the RAG which would entail that this approach is not equally compatible with the new RAG. Accordingly, ESA considers the Norwegian authorities’ use of population data from 1 January 2020 acceptable.

(30)

Based on the figures from 1 January 2020, the population of Norway is 5 368 283 (21). The designated very sparsely and sparsely populated areas can therefore, calculated based on these figures, cover no more than 1 349 586 inhabitants.

(31)

The population within the designated sparsely populated areas amounts to 1 348 649 inhabitants (22). This is below the specific allocation of ‘c’ coverage for Norway.

(32)

In this section, ESA will assess the Norwegian authorities’ designation of very sparsely populated areas. Due to the geography and population pattern of Norway, many of the sparsely populated areas qualify, and are designated by the Norwegian authorities, as very sparsely populated.

(33)

The third sentence of paragraph 169 of the RAG stipulates that, ‘[f]or very sparsely populated areas, EEA EFTA States may designate statistical regions at level 2 with fewer than 8 inhabitants per km2 or other smaller contiguous areas adjacent to those statistical regions at level 2, provided that these areas have fewer than 8 inhabitants per km2 and that the population of the very sparsely populated areas taken together with the sparsely populated areas does not exceed the specific allocation of “c” coverage referred to in paragraph 167.’

(34)

Two statistical regions at level 2 in Norway satisfy the population density criterion of 8 inhabitants per km2. These are Northern Norway (23) and Innlandet (24). The level 2 region of Northern Norway has a population density of 4,5 inhabitants per km2 (25), whereas the level 2 region of Innlandet has a population density of 7,5 inhabitants per km2 (26).

(35)

The Norwegian authorities have designated the level 2 region Northern Norway as eligible in its entirety. Thus, all areas in Northern Norway are to be regarded as very sparsely populated for the purposes of the RAG.

(36)

As mentioned in paragraph (16) above, based on figures from 1 January 2020, the population in these areas amounts to 484 546 inhabitants.

(37)

The wording of the third sentence of paragraph 169 of the RAG allows for designating smaller contiguous areas adjacent to those statistical regions at level 2 with fewer than 8 inhabitants per km2. While this is not stated explicitly, the possibility to include such contiguous areas must logically be mirrored by the possibility to exclude areas within the statistical regions at level 2 with fewer than 8 inhabitants per km2. This interpretation is also in line with previous practice (27).

(38)

In accordance with this, the level 2 region of Innlandet is only partially designated as very sparsely populated. Table 3 below presents the included areas in Innlandet, and the population density in this area (28):

Table 3

Included areas in Innlandet

(39)

Based on population figures from 1 January 2020, the population in these areas is 143 115 inhabitants (29).

(40)

The adjacent areas to Northern Norway are all located in the level 3 region of Trøndelag.

(41)

Table 4 below presents the included areas in Trøndelag and the population density in this area (30):

Table 4

Included contiguous areas to Northern Norway

(42)

The population in these areas is 73 683 inhabitants when calculated on the basis of the population figures from 1 January 2020 (31).

(43)

The adjacent areas to Innlandet are located in the level 3 regions of Trøndelag, Møre og Romsdal, Vestland, Rogaland, Agder, Vestfold og Telemark, and Viken. These areas are presented in the below Table 5 (32).

Table 5

Included contiguous areas to Innlandet

(44)

The population in these areas is 301 848 inhabitants when calculated on the basis of the population figures from 1 January 2020 (33).

(45)

Paragraph 169 of the RAG sets out three requirements, which must be met, in order to swap in areas from statistical regions at level 2 with a population density above 8 inhabitants per km2.

(46)

First, these areas must have fewer than 8 inhabitants per km2.

(47)

As established in paragraph (27) above, both ESA (34) and the Commission (35) have previously assessed the population densities for swapped in sparsely populated areas together, per their respective level 3 region (statistical regions at level 3 / NUTS 3 regions). For very sparsely populated areas designated in the context of an operating aid scheme, ESA did not assess the population densities in the concerned areas at a smaller unit level than level 3 (36).

(48)

There is nothing new in the wording of paragraph 169 of the RAG to require a departure from this established practice. Accordingly, ESA will follow the same approach under the new RAG.

(49)

It follows from the data presented in Tables 4 and 5 above that the population densities in the swapped in areas are below 8 inhabitants per km2 when the areas located in the same statistical region at level 3 are assessed together. As the statistical regions at level 3 are part of the larger regions at level 2, this entails that the population densities in the swapped in areas are also below the threshold of 8 inhabitants per km2 if assessed at the level of the included areas in each region at level 2.

(50)

The population density requirement is therefore met for the swapped in areas. As established by Table 3, the population density requirement is also met for the designated areas in Innlandet assessed together.

(51)

Second, the swapped in areas must be contiguous areas adjacent to the statistical regions at level 2 with a population density of less than 8 inhabitants per km2. On the basis of the borders between the concerned areas, as illustrated by the graphic map attached as Annex III(b) to this decision, ESA concludes that this requirement is met.

(52)

Third, the swapping exercise must not result in the specific allocation of ‘c’ coverage referred to in paragraph 167 of the RAG being exceeded. According to the final sentence of paragraph 169 of the RAG, the population of the very sparsely populated areas must, for the purposes of this assessment, be taken together with that of the areas which are only sparsely populated.

(53)

The population within the designated very sparsely populated areas amounts to 1 003 192 inhabitants (37). This population was included when assessing the compliance of the designation of sparsely populated areas with the population coverage ceiling in paragraph (31) above. On this basis, ESA concludes that the population coverage of the Norwegian regional aid map does not exceed the specific allocation of ‘c’ coverage referred to in paragraph 167 of the RAG.

(54)

In the regional aid map 2022–2027, the Norwegian authorities have designated sparsely and very sparsely populated areas eligible for regional aid. On the basis of the above assessment, ESA considers that this designation has been made in accordance with the RAG.

(55)

According to Annex I to the RAG, the allocation of non-predefined ‘c’ coverage for Norway is 6,87 % of the national population. Norway can use this coverage to designate non-predefined ‘c’ areas in accordance with the conditions in paragraph 175 of the RAG.

(56)

The areas designated by the Norwegian authorities as non-predefined ‘c’ areas, are presented in the below Table 6 (38).

Table 6

Non-predefined ‘c’ areas

(57)

On the basis of the most recent population figures from 1 January 2020, the population in the areas designated as non-predefined ‘c’ areas is therefore 4 224 inhabitants.

(58)

According to paragraph 175(3)(iii) of the RAG, EEA EFTA States may designate as non-predefined ‘c’ areas islands that have fewer than 5 000 inhabitants.

(59)

As follows from the figures presented in Table 6 above, the population on each of the islands of Utsira, Kvitsøy and Aukra is less than 5 000 inhabitants. The condition in paragraph 175(3)(iii) of the RAG is therefore met.

(60)

Based on the population data in Table 6 above, the population within these designated areas furthermore amounts to 0,08 % of the total population. This is well below the allocation of non-predefined ‘c’ coverage for Norway of 6,87 % in Annex I to the RAG.

(61)

On this basis, ESA concludes that the designation of non-predefined ‘c’ areas in the Norwegian regional aid map 2022–2027 is in accordance with the RAG.

(62)

A list of the areas included in the regional aid map, including their status as very sparsely populated, sparsely populated, or non-predefined ‘c’ areas, is included as Annex I to this decision. Annex II contains more detailed information on the statistical units in those municipalities that have been split when designating eligible areas.

(63)

It follows from paragraph 151 of the RAG that the regional aid map must also specify maximum aid intensities applicable in the eligible areas during the period of validity of the approved map.

(64)

The maximum aid intensities in the map apply to regional investment aid. The maximum intensities allowed for such aid under the RAG, are set out in its Section 7.4.

(65)

As specified in Table 7 below, the Norwegian authorities have notified maximum aid intensities for large enterprises of 20 % and 10 % in respectively predefined ‘c’ areas and non-predefined ‘c’ areas. These maximum intensities are increased by 20 percentage points for small enterprises and 10 percentage points for medium-sized enterprises (39).

Table 7

Maximum aid intensities

(66)

With respect to the maximum aid intensities in predefined ‘c’ areas, paragraph 182(1) of the RAG stipulates that the aid intensity for large enterprises must not exceed 20 % in sparsely populated areas. As all of the areas designated under the quota for predefined ‘c’ areas are sparsely populated, the maximum aid intensity stipulated by the Norwegian authorities for these areas is in accordance with the RAG.

(67)

The increases allowed for medium-sized and small enterprises in predefined ‘c’ areas are also in accordance with the RAG. It follows from paragraph 186 of the RAG that the aid intensities may be increased by up to 20 percentage points for small enterprises or up to 10 percentage points for medium-sized enterprises.

(68)

As regards the maximum aid intensities in non-predefined ‘c’ areas, paragraph 182(3) of the RAG stipulates that the aid intensity for large enterprises must not exceed 10 % in non-predefined ‘c’ areas that have a GDP per capita above 100 % of the EEA average and an unemployment rate below 100 % of the EEA average. Since the designated non-predefined ‘c’ areas fall within this category, the Norwegian authorities have set the maximum aid intensity to 10 %.

(69)

The scope under paragraph 186 of the RAG for increasing the aid intensities for small and medium-sized enterprises, however, apply also for non-predefined ‘c’ areas. The increases of the maximum aid intensity in these areas, as presented in Table 7 above, are therefore also in accordance with the RAG.

(70)

In accordance with paragraph 189 of the RAG, the Norwegian authorities have notified a single regional aid map applicable for the period 1 January 2022 to 31 December 2027.

(71)

It follows from paragraph 194 of the RAG that a mid-term review of the regional aid maps will be carried out in 2023. ESA will communicate the details on the mid-term review by June 2023.

(72)

On the basis of the foregoing assessment, ESA finds that the Norwegian regional aid map 2022–2027 is compatible with the principles set out in the RAG. The approved map constitutes an integral part of the RAG.

(73)

Annexes I, II, and III(a) and (b), form an integral part of this decision.