Member states wishing to grant state aid to waste management projects will no longer need to submit notification to the European Commission (EC), after the EC adopted new exemption regulations.

Last week (21 May), the EC adopted a revised General Block Exemption Regulation (GBER) for state aid. Part of the State Aid Modernisation (SAM) reform package, the regulations aim to give increased flexibility to member states to grant state aid without prior notification and approval by the commission, provided that certain conditions are met.

The block exemption regulation frees categories of state aid deemed to ‘bring benefits to society that outweigh the possible distortions of competition in the single market triggered by the public funding’ from the requirement of prior notification to the commission.

It is hoped the GBER will ‘significantly reduce the administrative burden for member states and… allow the faster deployment of aid for the companies that receive it’.

GBER details

From 1 July 2014, aid measures for a range of categories will no longer need to be notified to the EC before being implemented, including:

• waste management (including recycling);
• the remediation of contaminated sites;
• district heating and cooling;
• electricity from renewable sources;
• energy infrastructures;
• broadband infrastructure;
• social aid for transporting residents of remote regions;
• aid schemes to ‘make good the damage caused by natural disasters’; and
• investment aid for local infrastructure and research infrastructure.

According to the EC, the changes to state aid for environmental protection and energy have been made to ‘help member states meet their Europe 2020 climate targets, to gradually move to market based support for renewable energy and to incentivise companies to take early steps to meet European standards’.

Specifically, it is thought it can be done through the provision allowing aid for up to 100 per cent of the costs of remediating contaminated land, operating aid for the production of renewable electricity, and operating aid for small-scale renewable energy installations.

The new rules also sets higher notification thresholds and aid intensities, including:

• doubling notification thresholds for research and development (R&D) projects to €40 million (£32.4m) for ‘fundamental research’, €20 million (£16.2m) for ‘industrial research’, and €15 million (£12.1m) for ‘experimental research’;
• replacing the total limit for an eligible risk finance tranche from €1.5 million to €15 million (£1.2m to £12.1m);
• extending the investment aid for sports infrastructures to €15 million (£12.1m), or the total costs exceeding €50 million (£40.6m) per project;
• extending the investment aid for culture and heritage conservation to €100 million (£81.2m) per project.

To ensure a ‘uniform level of compliance’ with the criteria of the GBER and limit distortions of competition, the EC has said that the exemptions will be ‘balanced’ by ‘safeguard mechanisms’. These will be:

• national public registers of individual aid awards – including the name of the beneficiary, the amount of aid granted, the sector in which the company works, the date of granting, and the legal basis – to ‘ensure peer review and greater accountability’;
• strengthened ex post-controls of compliance with the formal conditions for exemption; and
• the collection of ‘solid evidence’ to ensure that the aid does not simply subsidise a project that the beneficiary would have undertaken without the support.

The evaluation of ‘solid evidence’ will only apply to: regional aid (except operating aid); aid for SMEs; aid for access to finance for SMEs; aid for research, development and innovation; aid for environmental protection (except reductions of environmental taxes regarding energy products and electricity); and aid for broadband infrastructures.

Within these categories, evaluation will be required only for large aid schemes, with an average annual budget exceeding €150 million (£121m).

‘Contributing to economic growth without harming fair competition’

Commission Vice-President in charge of competition policy Joaquín Almunia said: "These new rules will cut red tape for member states and encourage them to put in place smart aid measures which contribute to economic growth and do not harm fair competition. If member states make full use of the possibilities for granting aid under the extended exemptions from notification, most aid measures could be immediately implemented, without prior approval from the commission.

“Member states will have to set up a dedicated website so that citizens and stakeholders can see which companies have received state aid, how much and for what purpose. This will help promote the good use of taxpayers' money."

Dr Liz Goodwin, CEO of the Waste & Resources Action Programme (WRAP), welcomed the exemptions for waste management, saying: “When WRAP started work on recycling market development over 13 years ago, we applied to the EU for a state aid clearance to allow us to support projects which helped develop reprocessing technologies and approaches…They, however, and not unreasonably, came at it from the perspective that state aid would be given to a specific company and so the benefits had to accrue to that company.

“[T]his week we learned that the case we had been making had been accepted: the revised General Block Exemption Regulations (GBER), which come into effect July 1 2014, will include, for the first time, projects aimed at improving recycling and reprocessing. It’s the first time this has happened and the economic implications for nations and for the sector are very significant: it means that, in future, all countries in the EU will be able to work to improve their recycling and reprocessing infrastructure, provided the projects go beyond common practice. Importantly, they won’t need to make separate applications for state aid clearance, which is a daunting process, taking significant time and effort.”

Goodwin went on to thanks her colleagues at WRAP and BIS [the Department for Business, Innovation & Skills] for their efforts, which “helped move the thinking in the European Commission forward and has made it easier for market failures to be addressed across Europe”.

Read the new General Block Exemption Regulation.