30 November 2021: The European Commission published on 18 November a communication on its competition policy that looks at the temporary state aid and antitrust frameworks and how it can effectively support the green and digital transition.

The Commission acknowledges that on one hand the pandemic showed that Europe benefits from robust resilience and innovative capabilities, and that competition policy must also be enforced.

The Commission has adopted its sixth amendment of the State aid Temporary Framework with two objectives. First, the progressive phase-out of crisis measures of the State aid Temporary Framework, with a limited prolongation of existing measures until 30 June 2022. Second, to add new measures to the State aid Temporary Framework to enable targeted support to companies that have been hardest hit by the crisis:

• Investment will be towards a sustainable recovery and seek to create direct incentives for private investment.s
• Member States will be required to set up schemes which benefit a ‘significant number’ of companies.
• The schemes can be in the areas of digital infrastructure, re-tooling of production lines, investment in new machinery or production lines, improving the circular economy, increasing the energy efficiency of buildings, the acquisition of e-bikes/electric vehicles/other forms of clean transportation, supping the up-skilling of workers.
• Solvency support until 2023 will allow member states to leverage private funds and make them available for investments into SMEs.

The Commission also aims to adopt new guidelines of the EEAG, also called Climate, Environmental Protection and Energy Aid Guidelines (CEEAG) by Q4 of 2021, that would apply from 2022. This would go in parallel to the revision of the related sections of the General Block Exemption Regulation (GBER) aim at ensuring a coherent, future oriented and flexible framework to enable Member States to provide the necessary support to make the Green Deal happen.

To that effect, the Commission envisages that the new CEEAG would, for example, allow supporting the decarbonisation efforts of industry based on any technology that can deliver the green transition, using instruments such as carbon contracts for difference for example in relation to the supply of low-carbon hydrogen. Moreover, it proposes, for example, to support measures making zero- or low-carbon production processes economically viable (including by converting existing facilities in a context where increased electrification is needed). To reflect the broad approach needed, the Commission also envisages to facilitate support also in areas such as circular economy and biodiversity as well as clean or zero-emission mobility and energy efficiency of buildings. The ongoing review of State aid rules also aims at ensuring consistency with both established and new regulatory principles relevant to the European Green Deal, such as the 'polluter pays' principle.

Those rules also pay particular attention to the 'do no significant harm' principle within the individualised assessment of positive and negative effects.

 To that effect, the draft CEEAG would support the phasing out of fossil fuels by clarifying that State support for projects involving such fuels, in particular the most polluting ones such as oil, coal and lignite, is unlikely to be found compatible with state aid rules.

More generally, the Commission may, where relevant, take into account negative externalities as part of the assessment of the negative effects of the aid on competition and trade. The European Green Deal also requires appropriate incentives to innovate and provide cleaner products to consumers. Whereas such efforts mainly pass through regulation, competition policy can help in further stimulating consumer demand for cleaner products and creating the right framework conditions. For example, the draft CEEAG proposes to facilitate aid for the acquisition of zero/low carbon emission vehicles and for investments in the related recharging and refuelling infrastructures and will enable support for greener production processes.

Similarly, the Commission will continue to actively support Member States in the design of IPCEIs in support of clean hydrogen technologies and systems. Finally, the new Regional State aid Guidelines enable Member States to support the least favoured regions, as well as regions facing transition or structural challenges, in particular Just Transition Fund regions, adapt to the green and climate transition while ensuring a level playing field between Member States. This is important as State aid rules must continue to preserve the integrity of the internal market, taking into account the cohesion objectives enshrined in the EU Treaties, which are at the heart of European integration.

Read the communication from the Commission here: https://ec.europa.eu/transparency/documents-register/detail?ref=COM(2021)713&lang=en  [1]