State aid: Commission proposes rules to simplify procedures for State aid to green transport

The European Commission has proposed a Council Regulation enabling the Commission to exempt from prior notification under EU State aid rules certain types of aid for rail, inland waterway and multimodal transport, with the objective of promoting green transport.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The Commission's proposal adopted today will enable us to simplify procedures for State aid supporting green transport modes, such as rail, inland waterway and multimodal transport, which are less polluting and more sustainable than road-only transport. The proposal not only streamlines the rules applicable to State aid, but is also in line with the objectives of the EU Green Deal and the Sustainable and Smart Mobility Strategy.”

The proposed Council Regulation builds on the extensive experience gathered by the Commission over years of application of Article 93 of the Treaty on the Functioning of the European Union (‘TFEU') on transport coordination, as well as of the 2008 State aid Railway Guidelines. In addition, it follows on the 2020 State aid Fitness Check, which concluded that the existing rules on transport need adaptation, as the Railway Guidelines are outdated and do not reflect important regulatory and market developments. These developments include in particular the opening to competition of the rail markets and the EU policy priorities in the context of the EU Green Deal, which have increased the importance of a modal shift from road to greener modes of transport, in order to meet the EU's 2050 emissions reduction target.

The new Council Regulation, proposed in the context of the revision of the State aid Railway Guidelines, will enable the Commission to declare certain categories of State aid to greener modes of transport compatible with the internal market. These include certain types of aid in favour of rail, inland waterway and multimodal transport, in particular aid supporting the coordination of transport, that have a limited potential of distorting competition.

Following the adoption of the proposed Regulation by Council, the Commission intends to adopt a Block Exemption Regulation relieving Member States from the obligation of prior notification to the Commission of aid measures falling within these categories. This will provide legal certainty, simplify procedures and cut red tape for Member States, while allowing the Commission to focus its State aid control on the potentially most distortive cases. In addition, this will enable the transport sector to embrace the green and digital transition in line with the EU's strategic objectives, in particular those of the EU Green Deal and the Sustainable and Smart Mobility Strategy.

The proposed Regulation will now be discussed in Council.

Background

Article 108(3) TFEU requires Member States to notify all State aid to the European Commission and to implement it only after the Commission approval. According to Article 108(4) and Article 109 TFEU, following a Commission proposal, the Council can enable the Commission to exempt from prior notification and Commission approval specific categories of aid that have a limited potential to distort competition. To this effect, the Commission adopts Block Exemption Regulations, defining criteria which ensure that aid is compatible with EU State aid rules. Aid fulfilling the criteria can be granted without notification.

The Commission's proposal adopted today covers aid under Article 93 TFEU, which provides that aid for transport by rail, road and inland waterway shall be compatible with the internal market if it meets the needs of coordination of transport or if it represents the compensation for public service obligations.

The roadmap on the proposed Council Enabling Regulation was published on 1 October 2021.

In parallel, the Commission is working on the revision of the State aid Railway Guidelines. After publishing the roadmap of this initiative on 1 October 2021, the Commission launched a public consultation on 22 December 2021, inviting all interested parties to comment on the proposed revision of the Guidelines.