Brussels (Brussels Morning) – The European Commission approved a €4 billion French scheme to reduce manufacturing sector emissions and support a net-zero economy transition, aligning with the Green Deal.
The European Commission has assented to a €4 billion French scheme to support efforts aiming at lowering greenhouse gas emissions in the manufacturing sector and support its transition towards a net-zero economy, in line with the Green Deal Industrial Plan. The scheme was endorsed under the State Aid Temporary Crisis and Transition Framework, embraced by the Commission on 9 March 2023 and amended on 20 November 2023.
According to the European Commission, France informed the Commission, under the Temporary Crisis and Transition Framework, a €4 billion scheme to fund (i) investments in the electrification of industrial processes and (ii) funding in energy efficiency, to facilitate the transition to a net-zero economy.
How will aid be distributed under this scheme?
Commission states that under this measure, the aid will take the form of direct assistance amounting to up to 30% of the project’s investment expenses. The measure will be open to companies engaged in the manufacturing sector in France. Eligible electrification schemes must lead to a decrease of greenhouse gas emissions from industrial processes of at least 40%, while energy efficiency undertakings must lead to a reduction in the energy engulfed in industrial processes of at least 20%.
For investments linked to activities covered by the EU Emission Trading System (‘ETS’), the emissions decrease must go below the relevant ETS benchmarks in force at the time of granting the aid.
What is the conclusion of the Commission over the French Scheme?
The Commission also uncovered that the French scheme is in line with the requirements set out in the Temporary Crisis and Transition Framework. In special, (i) the aid per beneficiary will not surpass 10% of the total budget (i.e. €400 million), and (ii) it will be given until no later than 31 December 2025. Furthermore, the aid will be subject to requirements to ensure actual emissions savings. The investments must be conducted within 36 months after the aid has been granted.
In addition, public support will be subject to prerequisites to limit undue contortions of competition. In particular, the aid must not allow the beneficiaries to expand their production capacity beyond 2% compared to today.
The Commission figured that the French scheme is necessary, appropriate and proportionate to advance the green transition and encourage the development of certain economic activities, which are of significance for the implementation of the REPower EU Plan and the Green Deal Industrial Plan. On this basis, the Commission authorised the aid measure under EU State aid rules.
Why and When Did the Commission Adopt the Temporary Crisis and Transition Framework?
On 9 March 2023, the Commission assumed a new Temporary Crisis and Transition Framework to foster support efforts in sectors which are key for the shift to a net-zero economy, in line with the Green Deal Industrial Plan. The Framework amends and extends in part the Temporary Crisis Framework, adopted on 23 March 2022, to encourage Member States to use the flexibility foreseen under State aid controls to support the economy in the context of Russia’s fight against Ukraine.
The Temporary Crisis and Transition Framework was revised on 20 November 2023 and on 2 May 2024 to extend a limited number of sections desired to provide a crisis reaction following Russia’s aggression against Ukraine and the phenomenal increase in energy prices.
