New State aid Guidelines and Exemption Regulation in the transport sector

On 16 March 2026, the European Commission adopted the new State aid Land and Multimodal Transport Guidelines (“LMT Guidelines”) and the new State aid Transport Block Exemption Regulation (“TBER”).  

The LMT Guidelines replace the 2008 Guidelines on State aid for railway undertakings, with a much broader scope. Indeed, the Commission’s 2020 Fitness Check needed to be revised to reflect market and technological developments and the EU’s current strategic priorities. 

They aim at establishing a coherent State aid framework covering a broad range of sustainable transport modes and aid measures. They will enter into force on 30 March 2026. The TBER will be in place until 31 December 2034. There is no end date for the LMT Guidelines.

Background

The transport sector still accounts for approximately a quarter of all greenhouse gas emissions produced by human activity in the EU. Decisive action is therefore needed to shift more traffic to sustainable forms of land transport and to optimise the performance of multimodal logistic chains. This shift is supported by several regulatory initiatives, most notably those aiming to create a comprehensive trans-European transport network and facilitate inland waterways transport.

To meet those targets, major investments are needed. Competition policy, and especially State aid rules, has an important role to play in enabling the EU to fulfil the policy objectives of Regulation (EU) 2021/1119  of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality when the market alone has insufficient means or incentives to do so while ensuring that public financial support does not unduly affect the functioning of the internal market. It is against this backdrop that the Commission has adopted the new LMT Guidelines and the TBER to encourage Member States’ interventions and facilitate the setting up of aid schemes without too many administrative burdens such as notifications to the European Commission. 

The LMT Guidelines

The LMT Guidelines set out the conditions under which State aid that must be notified to the Commission may be declared compatible with the internal market.

The LMT Guidelines cover all land transport that is more sustainable than road transport, namely rail transport, inland waterways and sustainable multimodal transport. It is therefore broader than the previous Guidelines, which applied to aid for the railway sector.

The types of aid covered by the LMT Guidelines fall into two broad categories. First, they apply to aid that meets the needs of transport coordination under Article 93 of the Treaty on the functioning of the European Union and which includes: (i) operating aid to reduce the external cost of transport; (ii) operating aid to launch new commercial connections for rail and inland waterways; (iii) investment aid for the construction, upgrade and renewal of railway service facilities, inland waterways facilities and multimodal transport facilities; (iv) investment aid for the construction, upgrade and renewal of private sidings; (v) investment aid for the acquisition of vehicles for rail or inland waterways transport; (vi) interoperability (investment) aid; and (vii) investment aid for technical adaptation and modernisation.

For those categories of aid, the LMT Guidelines establish a set of general compatibility conditions that the Commission will apply when assessing notified measures. The aid must contribute to developing sustainable land transport; it must be necessary, appropriate and proportionate; it must have an incentive effect, motivating the beneficiary to change its behaviour; and its negative effects on competition and trade must be limited. 

Second, the LMT Guidelines provide for aid to cover costs relating to  obligations of public service in the rail freight transport sector. 

Several features of the LMT Guidelines are particularly noteworthy. First, they introduce more flexible rules for aid measures that directly contribute to green and digital transitions. This includes aid aimed at reducing the external costs of transport up to 90% of the eligible costs, which are defined as the external costs avoided by using a more sustainable transport mode (e.g. rail, inland waterways or short-sea shipping transport in the context of sustainable multimodal transport) instead of a less sustainable alternative.

Second, the LMT Guidelines introduce safeguards to support the entry and growth of new operators in sustainable land transport markets. The Guidelines also facilitate access to finance for SMEs, small mid-caps (SMCs) and new entrants for the acquisition of vehicles for rail or inland waterways transport.

The TBER

The TBER exempts certain categories of aid from the requirement of prior notification to and approval by the Commission, provided that the conditions set out in the Regulation are met. This constitutes a major simplification in the transport sector, enabling Member States to provide aid where conditions are met and is in line with the Commission's approach to reducing undue administrative burdens. 

The TBER applies to various categories of aid: operating and investment aid provided by the LMT Guidelines and identified above, as well as (i) ad hoc investment aid and investment aid schemes for rail or inland waterways freight terminals and (ii) investment aid for Intermodal Loading Units and cranes on board vessels.

The TBER sets out notification thresholds above which individual aid measures must still be notified to the Commission. These include EUR 15 million per connection for aid to launch new commercial connections, EUR 30 million per project for investment aid for facilities, EUR 10 million per project for ad hoc aid for freight terminals and EUR 4 million per project for private sidings. 

The TBER imposes strict conditions for exemption, including requirements on incentive effect, transparency and publication, and monitoring. Aid schemes with a budget exceeding EUR 150 million in any given year or EUR 750 million in total are subject to an ex-post evaluation requirement. 

Practical implications

The adoption of the LMT Guidelines and the TBER represents a significant development for Member States and undertakings in the sustainable land transport sectors. From a practical standpoint, several implications stand out.

First, the broadened scope of the new framework, extending beyond rail to encompass inland waterways and sustainable multimodal transport, opens up new avenues for Member States to support modal shift and decarbonisation objectives.

Second, the TBER represents a substantial reduction in administrative burden for Member States as it allows Member States to  grant aid without prior notification for a broad range of aid categories, enabling faster implementation of support measures at a time when significant investment in sustainable transport infrastructure is urgently needed to meet climate targets.

Third, Member States with existing aid schemes authorised under the 2008 Railway Guidelines will need to amend those schemes to bring them into line with the LMT Guidelines by no later than 1 March 2027.