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Energy and environment

Energy and Climate Change

What is the role of State aid?

Support granted by Member States may distort competition because it unfairly strengthens the position of companies that benefit from it vis-à-vis their competitors. This is why EU law foresees a general prohibition of State aid. However, environmental protection is an objective of common interest which, in certain circumstances, may justify the granting of State aid.

State aid can provide incentives to reach the EU targets for a low carbon and energy-efficient economy. The rules for environmental State aid allow a broad range of aid measures for environmental protection, whilst ensuring that any distortions of competition brought about by such measures do not go beyond what is necessary and acceptable.

Do Member States need to notify their planned aid measures?

Certain State aid measures do not need to be notified to the Commission for assessment and approval; they are deemed to result in a limited distortion of competition in view of their

  • limited aid amount (below EUR 200,000 per beneficiary over three fiscal years, according to the de minimis aid Regulation)
  • or limited aid intensity for investment aid (see Section 4 of the General Block Exemption Regulation). Measures covered by this Regulation include:
    • investment aid to go beyond Community environmental standards,
    • aid for the acquisition of greener vehicles,
    • aid for early adaptation to future Community environmental standards by SMEs,
    • investment aid for energy saving measures, promotion of renewable energy and cogeneration,
    • aid for environmental studies and
    • aid in the form of tax reductions

      See examples of measures and cases

Other measures going beyond those thresholds, or which concern other specific aid measures, have to be notified to the Commission and can be examined under:

  • the 2008 Guidelines on State aid for Environmental protection, which encourage Member States to:
    • support the production of renewable energy and energy efficient cogeneration by allowing them to grant operating aid to renewable energy producing companies, covering the full difference between production costs and market price;
    • support for a whole range of measures increasing environmental protection, e.g. energy saving, district heating, going beyond Community standards, waste management or other measures.
  • the 2012 Guidelines on State aid in the context of the EU emissions trading scheme: Member States may support some heavy electricity users at risk of carbon leakage.
  • If an aid category is not covered by the above guidelines, it may still be directly assessed under and declared compatible with the Treaty rules. The Commission will balance the positive effects of the aid (achieving the environmental protection objective, appropriate instrument, necessity and proportionality of aid) against the negative ones (distortions of competition and of trade between Member States).
    Example: aid to a CO2 capture project in the Netherlands, N 190/2009.

More information: