BELGIUM: An Introduction to Competition/European Law: State Aid

Seizing the Future: the EU Opens the Floodgates 

In the wake of multiple crises, from the tumult of COVID-19 to the unsettling spectre of Russia’s war of aggression against Ukraine, the EU has faced its share of challenges in recent years. In response to gas supply disruptions and soaring energy prices, coupled with the introduction of the US Inflation Reduction Act and China’s 14th Five-Year Plan, the EU introduced various instruments to provide financing rapidly to industries in an attempt to weather the crises and facilitate the transition to a net-zero economic model.

Temporary Crisis and Transitional State Aid Framework 

At the forefront of Europe’s drive towards a net-zero economy stands the Temporary Crisis and Transitional State Aid Framework (TCTF). During the past year alone, the TCTF has spearheaded nearly 200 approval decisions, constituting more than 30% of all European Commission decisions. The TCTF serves as a vital conduit for public support within the EU, providing a streamlined pathway for financing in critical sectors. With an approval process by the European Commission of just 19 days upon notification, the TCTF facilitates swift progress (in comparison with the months-long process of a classic notification) and minimises bureaucratic hurdles.

Operating until 31 December 2025, the TCTF aims to expedite aid schemes supporting private investments in critical sectors by bolstering the production of essential equipment like batteries, solar panels, wind turbines, heat pumps, electrolysers, and carbon capture and storage technologies. Through the TCTF, EU member states now possess the flexibility to design straightforward and efficient financial support schemes, including grants, tax relief, loans, or guarantees. Under the right conditions, the support opportunities within the TCTF can extend to large enterprises, offering aid of up to 40% of a EUR350 million public investment.

In exceptional cases where there is a real risk of investment being diverted away from the EU, member states may offer even higher levels of support to individual companies. This includes offering either the amount of support equivalent to an investment in an alternative location (matching aid) or the amount needed to incentivise the company to locate the investment in the EU (funding gap) – whichever is lower. The alternative of matching aid certainly offers opportunities to leverage potential subsidies from the EU, the US, and other countries to maximise the subsidy. However, this option is subject to strict safeguards and businesses need assistance to navigate it carefully in order to make the most of it.

Furthermore, the TCTF significantly enhances its backing for renewable energy initiatives and energy storage endeavours, including hydrogen projects. With aid intensity reaching up to 45% of the investment costs, and potentially extending to cover the entire investment under the right conditions, the TCTF fosters robust support for sustainable energy ventures.

Lastly, the TCTF introduces a pivotal provision known as operating aid, designed to alleviate daily expenditures for enterprises under the form of two-way contracts for difference, tethered to the energy output of installations, with contract durations extending up to 20 years. Given the European Commission’s generally cautious approach to authorising such aid in the past, it is important to seize this opportunity.

GBER: complementary aid measures in the energy sector 

For businesses operating within the energy sector, the General Block Exemption Regulation (GBER) serves as a complementary tool to the TCTF. By exempting certain categories of aid from prior notification requirements, the GBER streamlines the process of securing support for environmentally friendly initiatives even further.

The recent amendments to the GBER have expanded the scope of eligible aid measures, raising aid intensities and notification thresholds across several categories. From investment aid for renewable energy to support for energy-efficient infrastructure, the GBER offers a wide array of opportunities for businesses to thrive in the green economy. Under the GBER, the following categories of aid are exempted from the obligation for prior notification:

• investment aid for recharging or refuelling infrastructure;

• investment aid for the acquisition of clean vehicles or zero-emission vehicles and for the retrofitting of vehicles;

• investment aid for the promotion of energy from renewable sources, of renewable hydrogen and of high-efficiency cogeneration;

• investment aid for energy-efficient district heating and/or cooling; and

• investment aid for energy infrastructure.

Under the right conditions, the aid intensity for most of these categories may reach up to 100% of the costs of the investment. Each of these measures has specific notification thresholds, but an overarching threshold of 30 million should serve as a first limit not to be exceeded. Should the amount fall below this threshold, any of these measures could be implemented without notification to the European Commission.

Gateway to enhanced support for businesses 

For businesses looking to thrive in the evolving green investment landscape, these expanded TCTF measures – coupled with the GBER exemptions – provide a perfect gateway to enhanced support. With the help of State aid and EU funding experts, the TCTF and GBER have tailored solutions for SMEs, large businesses and industry players looking to make strategic investments.

The clock is ticking on these exceptional measures. Now is the time for businesses to seize the opportunity, align their business goals with the objectives of the TCTF, and secure the financial support they need.