Making EU State aid rules fit for the green transition: EU Commission opens a public consultation to review the General Block Exemption Regulation

On 6 October, the European Commission (Commission) launched a public consultation on its proposed targeted amendment of the General Block Exemption Regulation (GBER). The purpose of this revision is to reflect the changes to various sets of State aid guidelines, currently being reviewed and to facilitate public support for the EU’s green and digital transition.

Executive Vice-President Margarethe Vestager stated that the proposal “aims at broadening the possibilities for Member States to implement aid measures supporting the green and digital transition without prior notification and approval by the Commission. This will make it easier and faster for Member States to provide such funding, without causing undue distortions of competition in the Single Market.”

1. Background

In 2019, the Commission conducted a “Fitness check” of State aid rules and guidelines adopted as part of its 2012 State aid Modernisation package to evaluate whether they are still necessary and fit for purpose. The package broadly passed the test, but the Commission deemed some changes necessary, in particular, in light of the challenges ahead in the form of the EU Green Deal and Industrial Digital Strategies.

To this end, the Commission launched a series of public consultations. Namely: (i) a call for contributions on Competition Policy and the EU Green Deal (read more in this blog post); (ii) the proposed revision of the Commission’s Communication on “Important projects of common European interest” (IPCEI) (read more in this blog post); (iii) the Commission’s proposal for “Guidelines on State aid for climate, environmental protection and energy 2022” (CEEAG) (read more in this blog post) and, (iv) the now published consultation on the revision of the GBER.

2. Key proposed changes

The Commission is proposing a number of changes to the GBER in areas where the corresponding State aid guidelines are also being revised. The most significant changes proposed in the targeted GBER revision are (i) the broader scope and increased possibilities for Member States to provide funding and (ii) the increased monetary thresholds for a variety of “green products” which do not require a separate notification to the Commission but will be block exempted.

(i) More possibilities for Member States to provide support for “green products”

The proposed amendments spell out products and projects which are exempted from the notification requirement up to a certain amount such as:

• the reduction of CO2 emissions in line with the Green Deal’s ambitious targets;
• the rehabilitation of natural habitats and ecosystems;
• the protection and restoration of biodiversity;
• the purchase or leasing of clean or zero-emission vehicles; and
• recharging and refuelling infrastructure.

In a similar vein, the amendments seek to cater for the increased role of storage for the integration of renewable energy in the electricity system, by widening the existing exemptions for investment and operating aid for renewable energy to include storage projects that are directly connected to new or existing renewable energy generation facilities.

Investments in green hydrogen projects and infrastructure are also featured in the Commission’s proposals, in line with the objectives of its hydrogen strategy for a climate-neutral Europe, and exemptions for operating aid, albeit only for small-scale hydrogen installations, are included in the amendments.

The new “green products” addressed in the Commission’s draft proposal would each be accompanied by new definitions in Article 1 GBER which clarify the scope of these products.

On the digital side, the proposed amendments seek to allow for the cumulation of aid for energy efficiency with aid for the installation of equipment in buildings for their digitalisation, in particular to increase a building’s smart-readiness, including passive in-house wiring or structured cabling.

(ii) Increased thresholds for notification

In addition to widening the scope of the GBER to include a variety of “green products”, the Commission’s proposal also seeks to introduce new monetary thresholds for notification.

For example:

• for investment aid for environmental or climate-change protection (unless otherwise specified), the Commission proposes to increase the threshold from EUR 15 million to EUR 20 million;
• the Commission introduced a new threshold of EUR 20 million for investment aid in dedicated infrastructure and storage for renewable or low-carbon hydrogen and heat necessary to enable the increase in environmental protection;
• the Commission proposes to increase the threshold for investment aid for recharging or refuelling infrastructures from EUR 15 million to EUR 20 million;
• the Commission proposes to more than double the threshold for investment aid for district heating or cooling systems from EUR 20 million to EUR 50 million;
• the Commission proposes to increase exempted allowances for investment aid in energy infrastructures by almost fifty per cent from EUR 50 million to EUR 70 million; and
• for operating aid for the promotion of electricity from renewable source and renewable hydrogen in small-scale installations, the Commission proposes to increase the threshold from EUR 15 million per project to EUR 20 million per project.

A detailed overview of the main changes and increases in thresholds proposed by the Commission is provided in the table available via this link.

3. Outlook

While the proposal is still in its draft form and the Commission will probably need to clarify some outstanding points such as certain notification thresholds which are still unclear, the targeted amendments are comprehensive and in line with the steps taken so far towards a more sustainable and green economy. The increase in the notification thresholds and the explicit inclusion of more “green products” eligible for state support are both welcome developments to the Commission’s State aid rules.

The adoption of the revised GBER is planned for the first half of 2022. Member States and all other interested parties can respond to the consultation until 8 December 2021.

Please contact us or your usual contact in our Antitrust, Competition and Trade team to discuss these developments further or for support on your own participation in the  public consultation for the targeted review of the GBER.