Conference of Europe Ministers of the German Länder, Brussels, 30 January 2020

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Introduction

Ladies and gentlemen

It’s a very great pleasure to be with you today. I want to give my warmest thanks to Heike Raab, for inviting me to you join at this conference.

Because groups like this are what Europe is all about. It isn’t the EU institutions that make the European Union. It’s the countries and cities and regions of our continent, working together to do more than we could ever achieve alone.

Facing today’s challenges

And today – at the start of a new decade, and a new term of office for the European Commission – we face challenges that demand more from our teamwork than ever.

We still have the chance to stop climate change running out of control. But we need to act now. And we need to act together. That’s why this Commission began our term of office with a European Green Deal, to make Europe the world’s first carbon-neutral continent by 2050.

The digital transformation can help us to do that, with innovative solutions to the challenges we face. Because digitisation is changing every part of our lives.  Practically every business in Europe, from the largest to the smallest, will have to adapt to these new, digital ways of doing things. And every member of our society – whether or not they consider themselves to be good with technology – will be profoundly affected by this transformation.

So in a few weeks’ time, we’ll take a large step towards the digital future, with our white paper on artificial intelligence. And in March, we’ll produce a new industrial strategy, setting out our proposals to help European industry prepare for this future, based on the things that have made Europe prosper: our openness and our diversity. Our industrial strategy will be green, for everyone, and based on competition.

Working together to face today’s challenges

This twin transition – to a green and digital economy – is a huge opportunity for Europe. It will help us build a better, stronger, more productive economy. An economy where we can do more with less resources. An economy with good, secure, well-paying jobs. And an economy where European values lead the world.

So we have a huge amount to gain from this transition. The difficulty – as so often in life – is that the process of change can be costly, even painful. And it’s all too easy for those costs to become an obstacle to the changes that we know we need to make.

Just Transition Mechanism

That’s why we need to make sure those costs are shared as fairly as possible.

There are parts of Europe today whose economies still largely depend on digging up fossil fuels, or on industries that produce a lot of greenhouse gases. Those regions will have a particularly big adjustment to make, to help Europe reach its goals – and we have a responsibility not to leave them to face that adjustment alone. Which is why our Just Transition Mechanism will make 100 billion euros available, to support these regions as they convert their economies to clean industry.

Of course, this isn’t the only kind of transition that Europe’s regions are facing. And it can’t change the importance of using our cohesion policy to help our poorest regions to catch up with the rest of Europe. So our work on these two ways of building a fairer, stronger Europe will have to go hand in hand.

Sustainable Europe Investment Plan

But a lot of the investment that Europe needs to make will affect, not just a few regions, but the whole of Europe. Earlier this month, we put forward our Sustainable Europe Investment Plan, to make one trillion euros available for sustainable investments.

A trillion euros is a lot of money. And we can only find that money if we make the most of all our resources. That means getting the best out of national and regional investment, as well as European money. It means business and government working together, to make the most of both public and private resources.

And the rules on state aid can play a vital role, in helping us get the most for our money.

Getting the most out of public resources

The state aid rules help us do more with less, by using competition to drive down costs. Since 2014, state aid rules have required governments to use competitive bidding to hand out state support for renewable energy. And ever since, we’ve seen a remarkable fall in the cost. In Germany, the cost of supporting solar power has been cut in half. And some offshore wind projects now happen with no subsidy at all.

State aid rules can also help us get the most out of what the private sector can do.

One fundamental principle of our rules is that taxpayers’ money shouldn’t crowd out private investment. It should add  something extra, not just replace investments that businesses would have made anyway. Or, even better, we can find ways to use public money, not as a source of investment in itself, but to overcome the obstacles that stop business investing. So that taxpayers’ money works like a catalyst in a chemical reaction, making things happen without being used up itself.

This principle is at the centre of our plans for investing in the Green Deal, through the InvestEU fund. And state aid rules also support this kind of “crowding in” of private investment. For example, they smooth the way for governments to pool their funds together, and unlock large private investments in important projects of common European interest. That investment makes breakthrough innovations possible – including in the regions that are most affected by the transition.

But to turn this innovative potential into world-class products, we need competition – and that’s why it’s so important that the state aid rules go on protecting competition. Public authorities can – and we should – encourage business to innovate. We can help to fund innovation. But in the end, the thing that really drives innovation is when competition means that companies have to innovate to survive.

State aid rules for the future

And as the world around us changes, we need to hold firm to these fundamental principles of the competition rules - including the rules on state aid. But we also need to be sure that the way we put them into action is right for the world we’re in.

Last year, we started to check whether our state aid rules and guidelines are up to date. And the commitment, which this new Commission has made, to support a rapid transition to a green, digital economy, has made that work even more urgent.

That’s why we’ve decided to bring forward our work on the six sets of rules that are most vital for that transition, with the aim of having those new rules in place by the end of next year. That includes our rules on aid for energy and the environment, and for aid to the European regions that need support. It also includes the rules that deal with aid for research, development and innovation; for risk finance to support growing businesses; and for important projects of common European interest. And it includes the relevant parts of our general block exemption rules, which set out criteria for governments to give aid without first getting the Commission’s approval.

We will also seek the views of stakeholders in public consultations and the outcome of the review will not necessarily require dramatic changes. But it will allow us to make sure the state aid rules give full scope for investments to make deep cuts to our emissions. And until those new rules are in place, EU governments can already make full use of the room that the existing rules offer for green objectives – as we explained in the Sustainable Europe Investment Plan.

For example, some 20% of Europe’s greenhouse gas emissions come from industry. And though we’ve come a long way, European industry still has a lot to do, to help reach our climate goals. This is why the rules will give governments more room to support companies to decarbonise and electrify production.

At the same time, we’ll have to make sure that the aid which governments have given in the past is still really justified, in the context of the Green Deal. For example, we’ll have to check that support for energy-intensive industries is strictly limited to what’s necessary – and that it gives those industries the right incentives to decarbonise their production. We’ve just published draft guidelines that deal with state aid to help these industries deal with higher electricity costs linked to the EU’s emissions trading system. Those draft guidelines aim to limit the range of industries that can get this support, and the amount of aid that can be given. They also introduce a new requirement for companies that get aid to become more energy efficient. We welcome all contributions to the ongoing public consultation, which will allow us to reach a balanced outcome by the end of this year.

Conclusion

Because the transition ahead will be complex – and the state aid rules shouldn’t add to that complexity. On the contrary – we should make it as straightforward as we can, to support the investments that are so vital for our future.

But that isn’t the same thing as standing back and letting aid be given unconditionally. Because the conditions in our rules are essential, to help Europe get the very most from the money we spend. And that can help us to preserve our most important asset, to face up to the challenges ahead of us – the support of the public for the changes we need.

So in the review that we’re doing, our aim will be to find the most efficient ways to make sure those essential principles of competition have been met. And I hope I can count on you – together with the many others in Europe who are closely affected by these rules – to share your views on how we can do that, in our new state aid rules for a green and digital future.

Thank you.