The European Commission adopted, on Thursday 9 March, a new Temporary Crisis and Transition Framework to encourage support measures in key sectors for the transition to a ‘net-zero’ economy, in line with the ‘Green Deal Industrial Plan’.
The new rules, adopted after consultation with EU countries, are intended to counter the effects of the US Inflation Reduction Act (see EUROPE 13100/3).
In addition, the new framework extends the temporary crisis framework of 23 March 2022 allowing Member States to support the economy in the context of the war in Ukraine.
The new framework introduces new measures, applicable until 31 December 2025, to further accelerate investment in key sectors for the transition to a ‘net-zero’ economy, namely batteries, solar panels, wind turbines, heat pumps, electrolysers and carbon capture usage and storage, as well as for the production of key components and for the production and recycling of related critical raw materials. More specifically, Member States may:
- design simple and effective schemes, with aid capped at a certain percentage of investment costs and nominal amounts, depending on the location of the investment and the size of the beneficiary. Small and medium-sized enterprises as well as companies located in disadvantaged regions are eligible for higher support, to ensure that cohesion objectives are duly taken into account. Member States may grant even higher percentages of the investment costs if the aid is provided in the form of tax advantages, loans or guarantees. Before granting the aid, national authorities must nevertheless verify the concrete risks of the productive investment not taking place within the European Economic Area (‘EEA’) and that there is no risk of provoking relocation within the single market;
- in exceptional cases, provide higher support to individual companies, where there is a real risk of investments being diverted away from Europe. In such situations, Member States may provide either the amount of support the beneficiary could receive for an equivalent investment in that alternative location (‘matching aid’), or the amount needed to incentivise the company to locate the investment in the EEA (‘funding gap’), whichever is the lowest.
This option is subject to a number of safeguards.
First, it can only be used for (i) investments taking place in assisted areas, as defined in the applicable regional aid map; or (ii) cross-border investments involving projects located in at least three Member States, with a significant part of the overall investment taking place in at least two assisted areas, one of which is an ‘a’ area (outermost regions or regions whose GDP per capita is below or equal to 75% of the EU average).
Second, the beneficiary must use state-of-the-art production technology from an environmental emissions perspective. Finally, the aid cannot trigger a relocation of investments between Member States.
In addition, the new framework:
- extends the possibility for Member States to further support the measures necessary for the transition to a ‘net-zero’ industry (deployment of renewable energy, energy storage, decarbonisation of industrial production processes), which Member States can now put in place until 31 December 2025;
- amends the scope of these measures to make support schemes for renewable energy, energy storage and decarbonisation of industrial production processes even easier to design by: - simplifying the conditions for granting aid to small projects and less mature technologies, such as renewable hydrogen, by removing the need for a tendering procedure, subject to certain guarantees; - providing for higher aid ceilings and simplified aid calculations.
Link to the new framework: https://aeur.eu/f/5q4 (Original version in French by Lionel Changeur)