European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

To pursue a higher level of environmental protection, Member States may use State aid as a positive incentive. An aid must lead the recipient to change its behavior in order to actually reach a higher level of protection . The objective of State aid control in the field of environmental protection is thus to ensure that State aid measures result in a higher level of protection than the level which …

Definition and conditions of granting

To pursue a higher level of environmental protection, Member States may use State aid as a positive incentive. An aid must lead the recipient to change its behavior in order to actually reach a higher level of protection . The objective of State aid control in the field of environmental protection is thus to ensure that State aid measures result in a higher level of protection than the level which would be reached without the aid . State aid for environment protection must tend, by implementing the polluter pays principle (PPP) , to outweigh the negative effects of the economic activity on the environment . They are governed by Articles 36 et seq. of the Block Exemption Regulation No 651/2014. Aid for environmental protection which enables undertakings to go beyond EU standards  or to increase the level of environmental protection in the absence of such standards is compatible with the internal market and is exempt from the notification requirement. The aid intensity must not exceed 40% of eligible costs , which may be increased by 20 percentage points for small enterprises and by 10 percentage points for medium-sized enterprises. 

Aid for environmental protection may take different forms, e.g.:

- Investment aid for early adaptation to future Union standards (Regulation No 651/2014, Article 37). The Union standards must have been adopted even if they are not yet in force. The aid intensity must not exceed 30% of eligible costs. The aid intensity may be increased by 20 percentage points for aid granted to small undertakings and by 10 percentage points for aid granted to medium-sized undertakings.

- Investment aid for energy efficiency measures (Article 38). Aid is not  authorized where improvements are undertaken to ensure that undertakings comply with Union standards already adopted, even if they are not yet in force. The aid intensity must not exceed 30% of eligible costs.

- Investment aid for energy efficiency projects in buildings (Article 39). The eligible costs are the overall costs of the energy efficiency project. The aid can be granted in the form of an endowment, equity, a guarantee or loan to an energy efficiency fund or other financial intermediary. The nominal value of the loan or the amount guaranteed must not exceed EUR 10 million per project at the level of the final beneficiaries. The guarantee should not exceed 80% of the underlying loan. Member States can set up energy efficiency funds and/or can use financial intermediaries when providing energy efficiency aid. 

- Investment aid for high-efficiency cogeneration (Article 40). The aid is granted in respect of newly installed or refurbished capacities only. The aid must not exceed 45% of the eligible costs , which may be increased by 20 percentage points for aid granted to small undertakings and by 10 percentage points for aid granted to medium-sized undertakings. 

- Investment aid for the promotion of energy from renewable sources (Article 41). Such aid concerns only sustainable biofuels other than food-based biofuels or those which are subject to a supply or blending obligation. The aid is aid granted to new installations only. The aid intensity must be limited to 45% of eligible costs where the costs of investing in the production of energy from renewable sources can be identified in the total investment cost as a separate investment or can be identified by reference to a similar, less environmentally friendly investment and 30% of eligible costs for certain small installations where a less environmentally friendly investment cannot be established as plants of a limited size do not exist. According to the Court, national legislation may establish an aid scheme for renewable energy which allows the applicant for aid to obtain payment of the aid even if the application was submitted after the start of the work on the project concerned .

- Operating aid for the promotion of electricity from renewable sources (Article 42). Aid is granted to new and innovative renewable energy technologies in a competitive bidding process . The aid is granted as a premium in addition to the market price whereby the generators sell their electricity directly in the market.

- Investment aid for energy infrastructure (Article 48). The infrastructures must be located in assisted areas.  The aid amount must not exceed the difference between the eligible costs and the operating profit of the investment, the eligible costs being the investment costs. Aid for investments in electricity and gas storage projects and oil infrastructure are not exempt from the notification requirement.

- Aid for environmental studies (Article 49). The aid intensity must not exceed 50%, the eligible costs being the costs of the study. Aid cannot be granted to large undertakings for energy audits carried out under Directive No 2012/27.

Guidelines  supplement the scheme and are applied to all measures notified to the Commission either because the measure is not covered by the block exemption regulation or because such block exemption regulation imposes an obligation to notify aid individually, irrespective of the sector taken into consideration . Aid measures are assessed and developed according to the balancing test which makes it possible to check whether the aid is actually pursuing an objective of common interest connected with environmental protection, is an appropriate instrument, has an incentive effect and is proportional, whether distortions of competition are limited and whether the principle of transparency has been respected. The aid amount must be limited to the minimum needed to achieve the environmental protection sought . The aid intensity must never exceed 100% of the eligible costs according to the guidelines (pt 78). An increase of 5 to 15 percentage points may be granted for aid concerning the acquisition of an eco-innovation asset or the launching of an eco-innovation project for energy and environmental investments located in assisted areas fulfilling the conditions of Article 107(3)(a) or (c) of the Treaty (pt 78(a)). The aid intensity can be increased by 10 percentage points for medium sized enterprises and 20 percentage points for small enterprises where they are faced with relatively higher costs to achieve environmental or energy objectives compared to the size of their activity and also with capital market imperfections which force them to bear such costs. Environmental aid should not be used to grant unnecessary support to undertakings which are unable to adapt to more environmental friendly standards and technologies .

See Commission Decision No 2001/605/EC of 26 July 2000, Aid scheme implemented by Spain for the purchase of commercial vehicles via the Cooperation Agreement of 26 February 1997 between the Ministry of Industry and Energy and the Official Credit Institute, LawLex200500004727JBJ, which excludes the compatibility of the aid to the purchase of commercial vehicles where the calculation of the subsidy is proportional to the price of the vehicle without ensuring a higher environmental and safety performance.

The level of protection is at least that required by EU standards.

Except for the design and manufacture of environmentally friendly products, machines or means of transport with a view to operating with fewer natural resources and action taken within plants or other production units with a view to improving safety or hygiene, as well as environmental protection measures relating to air, road, railway, inland waterway and maritime transport infrastructure. For agriculture and fisheries, the Guidelines apply to aid granted to undertakings active in the processing and manufacturing of products.

The completed investments would not have been undertaken without any aid.

Case T-176/01 Ferriere Nord v Commission [2004] ECR II-3931, LawLex200500005253JBJ: an investment cannot benefit from the EU framework of environmental protection aid where the improvements made to the environment only represent the collateral effects of a renewal of obsolete equipment.

According to the PPP, the polluter should pay all the costs of its pollution, including the indirect costs borne by society.

Either by setting mandatory standards or by market-based instruments which may involve the granting of State aid to all or some of the undertakings which are subject to them.

Irrespective of the presence of mandatory national standards that are more stringent.

The eligible costs correspond to extra investment costs necessary to achieve a required level of environmental protection. As for it, the investment cost depends on the counterfactual situation: where the cost of investing in environmental protection can be easily identified in the total investment cost, the environmental protection-related cost constitutes the eligible costs; in all other cases, the extra investment costs are established by comparing the investment with the counterfactual situation in the absence of aid. Where the undertaking is adapting to national standards adopted in the absence of EU standards, the additional investment costs necessary to achieve the national level constitute the eligible costs; where the national standards to which undertakings adapt or go beyond are more stringent than the EU protection or go beyond, the additional costs necessary to achieve a higher level of protection constitute the eligible costs, and the costs incurred to reach the EU level are not taken into consideration. Where there is no standard, the eligible costs are the costs necessary to achieve a level of environmental protection higher than the level which would be reached without the aid.

The eligible costs are the extra investment costs for the equipment needed for the installation to operate as a high-efficiency cogeneration installation, compared to conventional electricity or heating installations of the same capacity or the extra investment cost to upgrade to a higher efficiency when an existing installation already meets the high-efficiency threshold.

Case C-470/20 AS Veejaam and OÜ Espo v AS Elering, Judgment of 15 December 2022, LawLex202300002218JBJ.

A competitive bidding process is not required for installations with an installed electricity capacity of less than 1 MW for the production of electricity from all renewable sources except for wind energy, where aid may be granted in the absence of a competitive bidding process as described in paragraph 2 to installations with an installed electricity capacity of less than 6 MW or to installations with less than 6 generation units.

Commission Notice No 2014/C 200/01 of 28 June 2014, Guidelines on State aid for environmental protection and energy 2014-2020, OJ C 200/1 of 26 June 2014.

European Competition Law

413. Definition and conditions of granting

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413. Definition and conditions of granting

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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