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State Aid

PR(08)48: The EFTA Surveillance Authority adopts new Guidelines on State Aid for Environmental Protection

16.7.2008

The EFTA Surveillance Authority has today adopted new State aid Guidelines on aid for environmental protection (the “Environmental Guidelines"). In substance the new Environmental Guidelines correspond to the guidelines adopted by the European Commission on environmental protection except for necessary adjustments based on particularities of the EEA Agreement.

Market operators may not take into account environmental damage of their business operations which from a society point of view are desireable to address. There may therefore be a market failure. Although state aid is in principle prohibited, the grant of state aid for environmental protection, on certain conditions, may nevertheless be acceptable for purposes of addressing this market failure. 

State aid may enable individual undertakings to change their behaviour and adopt more environmentally friendly processes or invest in greener technologies. The new Enviromental Guidelines constitute therefore an important contribution to the efforts in   providing the right incentives for EFTA States and for industry to increase their efforts for the environment. However, state aid for environmental protection must always be balanced against the negative effects of such aid on competition and trade.

Just like in the guidelines applicable so far, state aid may, on certain conditions, be granted for investment costs and as operating aid. For purposes of investment aid state aid may only be granted to support the extra costs directly connected to the environmental benefit of the investment and not for the entire investment costs of the project.

Key changes and important provisions of the new Environmental Guidelines include:

  • New rules in the guidelines include provisions on aid for environmental studies, aid for district heating, waste management aid and aid involved in tradable permit schemes.
  • Projects under the new Environmental Guidelines falling below certain thresholds (by reference to aid amounts or capacity) are subject to a standard assessment. Projects above such thresholds will be subject to a more detailed and stricter assessment as they have the greatest potential to distort competition and trade.
  • The aid intensities have increased considerably in the new Environmental Guidelines: For large enterprises investement aid intensities have been increased to 50%-60%. For small enterprises the intensities have increased to 70%-80%.
  • Long term derogations from environmental taxes may be authorised when certain conditions are met and the minimum level of European Community harmonised taxes are respected. Where the Community minimum levels are not respected, long term derogations may be authorised if it can be demonstrated that such derogations are necessary and proportionate.
  • State aid may be authorised to support investments going beyond a Community standard.Only the standards that originate in Community legislation are considered as Community standards.

The new Envrionmental Guidelines are linked to the future adoption of a block exemption on state aid which, when the relevant conditions are met, will relieve the EFTA States from their notification obligation with respect to the grant of certain types of environmental aid.

The new Environmental Guidelines replaces the guidelines on environmental protection which have been applicable so far.

For further information, please contact:

Mr. Amund Utne
Director, Competition and State Aid Directorate
Tel. (+32)(0)2 286 18 50

Ms Lena Sandberg-Mørch
Senior Officer, Competition and State Aid Directorate,
tel. (+32)(0)2 286 18 69

 

16 July 2008




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