State aid: revision of GBER and Temporary Crisis Framework to encourage green and digital transition in the EU

On 9 March 2023, the European Commission approved revisions to the General Block Exemption Regulation (GBER) and the Temporary Crisis Framework with the aim of enabling Member States to provide the necessary support to key sectors in line with the Green Deal Industrial Plan in order to accelerate the EU's green and digital transition.

The GBER allows Member States to declare certain categories of aid compatible with the internal market without prior notification to the European Commission, provided that they comply with the general and specific conditions set out in the GBER. The GBER, which has been in force since 2014, has already been revised several times, notably in 2017 to include new categories of aid for ports and airports and in 2021 to include, among others, financing and investment operations supported by the InvestEU fund, European Territorial Cooperation (ETC) projects (also known as Interreg), and new block exemptions for European Innovation Partnership for agricultural productivity and sustainability (EIP) and operational group projects or Community-Led Local Development (CLLD) projects.

The amendments just adopted by the Commission will grant more flexibility to design and implement support measures in sectors that are key for the transition to climate neutrality and a net-zero emissions industry. These changes will accelerate investment and financing for clean technology production in Europe, and contribute to the recovery of the European economy, which has been severely affected by COVID-19 and by the economic consequences of the Russian invasion of Ukraine.

Initially in force until the end of 2020 and extended to the end of 2023 due to the pandemic, the application of the GBER amendments is now extended until the end of 2026.

The revision of the GBER mainly concerns the following categories of aid:

• Aid in the area of environmental protection and energy (support for the deployment of renewable energy, decarbonisation projects, green mobility and biodiversity, etc.);
• Aid for projects involving beneficiaries from several Member States (Projects of Common European Interest in the field of research and development);
• Aid for training and reskilling;
• Aid to regulate energy prices;
• Aid for research, development and innovation;
• Aid for risk financing.

The provisions of the GBER will thus be aligned with the new guidelines on climate, environmental and energy aid and regional aid for 2022-2027.

The entry into force of this new version of the GBER (available on the European Commission's website in its unconsolidated version) is expected to take place in the coming weeks, following its translation into all official EU languages and publication in the OJEU.

The objective of the GBER and its successive revisions is to permit the exemption of even more projects from notification to the Commission. The growing share of spending falling under the GBER implies that, on average, State aid measures that are registered by the Commission can be implemented more quickly by Member States than in the past.

In this respect, it is relevant to note that GBER measures represented 63% of all active measures in 2020 with 4,376 measures adopted on that basis.

This amount is likely to increase in the future as the GBER covers a wider range of aid categories.

In parallel with the revision of the GBER, the Commission also announced the adoption of a new Temporary Crisis and Transition Framework, which (i) amends and partially prolongs the Temporary Crisis Framework, adopted on 23 March 2022, in order to support the economy in the context of Russia's war against Ukraine; and (ii) introduces new measures to accelerate investment in sectors that are essential for the transition to a net-zero emissions economy.

In particular, the Framework provides for the following:

• Prolongs the possibility for Member States to support companies through measures to accelerate the rollout of renewable energy and energy storage and schemes for the decarbonisation of industrial production processes, which Member States can now set up until 31 December 2025;
• Amends the scope of these measures to make them even simpler to design and more effective;
• Introduces new measures, which can also be implemented until 31 December 2025, aimed at supporting investments in strategic equipment (e.g. batteries, solar panels, wind turbines, heat pumps, electrolysers and carbon capture usage and storage) as well as in the production of key components and for the production and recycling of related critical raw materials.

Unlike the GBER, the Temporary Crisis Framework does not provide for an exemption from notification so that Member States must notify their planned aid schemes on this basis before they enter into force.

As for the other categories of aid initially covered by the Temporary Crisis Framework (e.g. aid for limited amounts, liquidity support in the form of State guarantees and subsidised loans, aid to compensate for high energy prices, support for electricity demand reduction), these remain in force until 31 December 2023. The Commission will assess in due course whether there is a need to prolong them.

The new text is available on the European Commission's website at the following link Ukraine (europa.eu). The Commission also specifies that this new Framework could also help Member States in the implementation of specific projects included in their National Recovery Plans.

Member States should now review their existing regimes set up on the basis of the GBER and adapt them accordingly. In addition, the new measures introduced by the Framework may provide opportunities to encourage new promising projects.

CMS has the widest coverage and the largest team of State aid specialists in Europe. In addition, we have extensive experience in setting up aid schemes and supporting individual projects.

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