The European Commission will present in the second half of this year a wide-ranging review of its state aid rules to facilitate public funding to strategic areas, as member states await the first transfers of the EU’s recovery funds.
Europe’s crusade to lead the ‘green’ transition and catch up in the
global digital race has driven the Commission to launch a broad review
of its strict state aid rules.
The revision of the restrictions to pump in public resources into
economic sectors, to avoid distortions in the internal market, became
more necessary as member states are getting ready to receive an
unprecedented amount of EU funds to finance the recovery.
The reviews have been in the making since 2019, including various
public consultations with stakeholders, and will cover climate, research
and cutting-edge cross-national projects, among other areas.
The new set of rules, which will be adopted in the second half of
this year, aim to clarify the legal situation of what can be done with
public funds not only for national authorities but also for companies
and private investors.
The series of evaluations conducted by the Commission over the past
months concluded that the state aid rules are fit for purpose, but
targeted adjustments are needed to better align them with the EU’s
overarching green and digital priorities.
The European Commission will launch a ‘comprehensive review’ of EU
competition rules in early 2021, Ursula von der Leyen said on Friday (2
October).
Against this backdrop, the Commission is conducting a “targeted review” of the General Block Exemption Regulation.
This regulation contains a series of sectors that can receive state
aid without going through the normal notification and approval processes
under some circumstances, such as regional airports, SMEs, or culture
and heritage conservation.
The Commission explained that the targeted review wants to improve
the interplay between EU funding rules and state aid rules and
streamline state aid control of national funds.
The Commission also consulted with national governments about an
extension of the General Block Exemption Regulation to cover the
implementation of the Recovery and Resilience Facility, the main pillar
of the EU’s 800 billion recovery fund.
The goal is to ensure a smooth implementation of the facility, in particular to achieve the green and digital targets.
In addition, the revision of this regulation will take into account
the changes in various guidelines currently being modified, including
regional aid; climate, energy and environmental; risk finance; research,
development and innovation.
The European Commission launched on Wednesday (6 February) a
consultation with member states, the European Parliament and other
stakeholders to review the EU’s fiscal rules, the Stability and Growth
Pact.
On the climate front, the EU executive launched on 7 June a public
consultation on the revision of the guidelines on state aid for
environmental protection and energy. The adoption of the guidelines is
foreseen for late 2021.
“Europe will need a considerable amount of sustainable investments.
Although a significant share will come from the private sector, public
support will play a role in ensuring that the green transition happens
fast,” said Commission executive vice-president responsible for
Competition, Margrethe Vestager.
“The revised rules will enable member states to fulfil the EU’s
ambitious environmental objectives of the European Green Deal while
keeping possible competition distortions to a minimum,” she added.
As part of its recommendation, the Commission proposed broadening the
scope of the guidelines to cover new areas, such as clean mobility or
circular economy, and all technologies supporting the Green Deal. Public
aid could fully cover the funding gap to support initiatives in this
fields.
Bureaucracy will be also streamlined and there will be safeguards to
ensure that the public resources go where necessary, and do not distort
the internal market.
Innovation
The EU executive also wants to improve the framework for research,
development and innovation. After concluding a public consultation in
early June, the adoption of the new framework will also come in the
second half of this year.
The Commission proposed updating the definition of research and
innovation that could receive public funding, in particular for digital
technologies.
It also introduced new provisions to allow for public support for
technologies to incentivise investments, especially in small and
medium-sized enterprises, and cut down the red tape.
The Commission also conducted similar reviews for regional aid
guidelines, to support companies in the development of disadvantaged
areas. The revised framework will enter into force next January.
The EU executive will also adopt updated guidelines to promote risk
finance investments by the end of the year and is considering whether
the rules must be revised to support the rollout of the broadband
network.
Finally, the Commission will present in the second half of this year
revised rules for Important Projects of Common European Interest, such
as the batteries or the hydrogen project.
The European Commission is considering reviewing its state aid rules
to support cutting-edge projects financed by several member states, as
requested by national capitals in order to strengthen Europe’s
industrial might.
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