United States: COVID-19 Key EU Developments, Policy & Regulatory Update No. 97

COMPETITION & STATE AID

State Aid

European Commission releases Green Deal Industrial Plan (see here)

On 1 February 2023, the European Commission published the Communication on A Green Deal Industrial Plan for the Net-Zero Age to boost the competitiveness of Europe's net-zero industry (the International Energy Agency estimates that the global market for key mass-manufactured clean energy technologies will be worth some EUR 600 billion by 2030 – more than three-fold today's level) and support the rapid transition to climate neutrality (this Plan "sets in stone" Europe's green transition ambitions, including climate targets towards net-zero by 2050). The Plan complements ongoing initiatives under the European Green Deal and REPowerEU.

The Plan aims at making Europe a leader in the green and digital transitions, in line with the EU's Industrial Policy devised in light of the pandemic and lessons learned (see also Jones Day COVID-19 Update No. 47 of 12 May 2021). The Plan notes, in particular, that industry faces numerous challenges, such as high inflation, post-COVID supply chains disruptions, spikes in energy costs and input prices, and labor shortages.

The Plan is based on four pillars: (1) a predictable and simplified regulatory environment; (2) speeding up access to finance; (3) enhancing skills; and (4) open trade for resilient supply chains.

On speeding up access to finance (second pillar), the Plan indicates that access to funding for net-zero industry is to be broadened and accelerated, particularly since EU industry's market shares are under strong pressure, which the Commission attributes to a "great extent" to subsidies abroad that it views as disrupting the level playing field. The Plan thus foresees the following revisions to State aid rules, and in particular:

• Adapting the existing Ukraine Temporary Crisis Framework, to be transformed into the proposed Temporary Crisis and Transition Framework (TCTF) for State aid (for further details on the proposed TCTF, see below). This aims at enabling Member States to boost investments in strategic sectors for the transition to a net-zero economy, in light of challenges facing industry due to the current Ukraine-Russia crisis and in view of the Commission's green and digital objectives. The proposed TCTF would focus on:
  • The rapid roll-out of aid to support renewable energy and decarbonizing the industry;
  • Investments in producing the strategic equipment necessary for the net-zero transition.

Timing. The draft State TCTF was sent to Member States on 1 February 2023 for consultation. The Commission intends to adopt the TCTF in the coming weeks, taking into account Member State feedback (for further details, see below on Commission consulting with Member States on TCTF).

• Revising the General Block Exemption Regulation (GBER) in light of the Green Deal, notably by:
  • Increasing notification thresholds for support for green investments (e.g., hydrogen, carbon capture/storage, zeroemission vehicles and energy performance of buildings), which will afford Member States with greater flexibility to directly implement aid measures, without having to notify them ex ante to the Commission for approval; and
  • Enlarging the scope of investment aid for recharging and refueling infrastructures.

Timing. The revised GBER's adoption is expected in the coming weeks.

• Important Projects of Common European Interest (IPCEI) related projects* would benefit, in particular, from the above GBER modifications, which would contribute to further streamlining and simplifying the approval implementation of smaller innovative IPCEIrelated projects by small and medium-sized enterprises.