New state aid rules for aid combined with EU support and for the green and digital transition

On 23 July 2021, the Commission extended the scope of the General Block Exemption Regulation (“GBER”), adopted in 2014 in two respects. The Regulation amending the GBER was published in the OJEU on 29 July 2021.

The GBER allows Member States to grant individual aid or set up aid schemes compatible with the internal market, without having to notify this to the European Commission beforehand. Only a brief subsequent information is necessary.

The first extension of the GBER applies to aid granted within the framework of projects under programmes of the European Union. State aid which is granted by national authorities for projects funded via and approved by certain EU centrally managed programmes can be now exempted from notification to the European Commission.

In concrete terms, the aim is to better coordinate the GBER with the EU's own financing programmes. This will reduce unnecessary burdens. In future, Member States will be able to rely on the evaluation of projects that have already been carried out at the level of EU programmes, instead of having to carry out their own assessments under the GBER.

Depending on the programme, Member States can, for example, add their own funds or contributions from the Recovery and Resilience Facility to projects that the EU is already funding or acknowledging as to be in the European interest, thus providing additional support.

The concerned funds are relating to:

• Financing and investment operations supported by the InvestEU Fund;
• Research, Development and Innovation projects having received a “Seal of Excellence” under the programmes Horizon 2020 or Horizon Europe (see our article of 30 June 2021);
• Co-funded Research and Development projects under the programmes Horizon 2020 or Horizon Europe or Teaming actions under these programmes; and
• European Territorial Cooperation (“ETC”) projects, also known as “Interreg”.

For example the new GBER provides for the following new categories of aid:

• Aid for costs incurred by SMEs participating in community-led local development (“CLLD”) projects or European Innovation Partnership (“EIP”) for agricultural productivity and sustainability Operational Group projects;
• Aid for costs incurred by undertakings participating in ETC projects;
• Aid for projects awarded a Seal of Excellence quality label;
• Aid for Marie Skłodowska-Curie actions and European Research Council Proof of Concept actions
• Aid to co-funded research and development projects; and
• Aid for Teaming actions under the Horizon 2020 or the Horizon Europe programme.

Finally, with regard to the “Interreg” fund, the amendment widens the scope of the exemption already present in the GBER for aid granted to ETC projects. The already existing block exemption, which was limited to aid being provided to SMEs, is extended to allow aid to be provided also to large undertakings.

This extension of the GBER will simplify the interplay between the rules applicable to funding and state aid, in the context of the implementation of the new Multiannual Financial Framework (“MFF”) 2021-2027.

The second extension of the GBER includes new categories of aid supporting the European Union's twin transition to a green and digital European Union while also supporting the economic recovery from the consequences of the COVID-19 pandemic.

For this purpose, for example the following aid categories are included in the GBER:

• aid granted to projects which improve the energy efficiency of buildings. The changes aim to simplify the rules relating to this category which is already covered by the GBER, e.g. through a simplification of the eligible costs’ calculation method for certain categories of buildings but also the introduction of two new exemptions for state aid. The first new exemption concerns the possibility of combining aid for energy efficiency measures in buildings and aid for renewable energy installations, storage facilities for renewable energies produced, equipment and infrastructure for recharging of electric vehicles and investments in the digitisation of buildings. The second exemption concerns the possibility that the aid measures also relate to the facilitation of energy performance contracts.
• aid for recharging and refuelling infrastructure for low-emission or zero-emission vehicles.
• aid for fixed broadband networks, 4G and 5G mobile networks, certain trans-European digital connectivity infrastructure projects and certain connectivity vouchers. The existing GBER rules are reviewed and extended to aid in favour of 4G and 5G networks, aid for projects of common interest in the field of trans-European digital connectivity infrastructures and aid intended to fund certain vouchers for consumers to facilitate teleworking, online education, training services or for SMEs.

In addition to the two extensions of the GBER described above, there is the following third extension: In principle, undertakings in financial difficulties may not receive aid under the Block Exemption Regulation. In the light of the Corona pandemic, an exemption has so far been applied to undertakings that got into difficulties in the period from 1 January 2020 to 30 June 2021. This exemption has now been extended by half a year. Now, under the GBER, aid to undertakings in difficulty may also be exempted from the notification requirement if the undertaking got into difficulties between 1 January 2020 and 31 December 2021.

All these measures are part of a bigger picture. In July 2020, the Commission decided to extend the validity of the GBER until 2023 (see our article of 8 July 2020). At the same time, in recent months, the Commission has launched several public consultations on its guidelines applicable to various categories of aid (aid for environmental protection and energy, aid for RDI, aid for risk finance investments, etc.).

The extension of the scope of GBER fits into the broader context of the post-coronavirus recovery. The Commission wants to repair the economic and social damage caused by the pandemic. To do so, it has launched the recovery plan called “NextGenerationEU”, intended to stimulate economic recovery after the crisis, while also transforming it into a greener, more digital and more resilient economy (more information via this link).

One of the main instruments of this recovery plan is the “Recovery and Resilience Facility”, with a budget of EUR 672.5 billion in the form of loans and grants, which aims to support reforms and investments undertaken by Member States.

In order to access these funds, Member States have to develop national recovery and resilience plans, outlining all the reforms and public investment projects envisaged, which will have to be put in place by 2026. To date, the majority of states, including Belgium (more information via this link available in French and Dutch), Germany, France and Spain, have submitted their national plans to the European Commission.

Forward-looking, national plans must contribute to the Union's green and digital transition as well as to growth and job creation.

The current reform of the GBER aims to support this development and facilitate the implementation of these plans by the Member States.

In order to ensure the legal certainty of public funding and to avoid violations of EU state aid law, including the resulting obligation to repay aid with interest, a thorough examination of the conditions set by e.g. the GBER is essential.

Further changes to the GBER are expected as part of the review of the various guidelines currently under review.