The EU’s answer: TCTF and GBER amendment

The European Commission - as a direct response to the IRA – adopted a new Temporary Crisis and Transition Framework ('TCTF') on 9 March 2023, to foster support measures in sectors critical to the transition to a net-zero economy, in accordance with the Green Deal Industrial Plan. The TCTF, in conjunction with the amendment to the General Block Exemption Regulation ('GBER') that the Commission approved the same day, will help accelerate investment and financing for clean tech production in Europe.

The amendment grants Member States more flexibility to design and implement support measures in sectors that are key for the transition to climate neutrality and to a net-zero industry. It will help speeding up investment and financing for clean tech production in Europe, in line with the Green Deal Industrial Plan. The European Green Deal sets in stone the green transition ambitions of the EU, including the climate targets towards net-zero by 2050. The Green Deal Industrial Plan is set against a complex and varied economic/political backdrop, characterised by the EU’s ambitious green transition goals, the ongoing major energy crisis linked to Russia’s war against Ukraine, and the massive use of subsidies and public funds for the green transition in the US.

The Plan – which aims to increase the EU’s attractiveness for investments in green technologies and net-zero emission products – is based on four key pillars:

1.  The first entails a predictable and simplified regulatory environment.
2.  The second is faster access to investment and financing for the production of clean technologies in the EU. This entails:
    i.  reducing constraints and controls when it comes to access to public financing, and,
    ii.  creating a European sovereignty fund as part of the revision of the multiannual financial   framework.
3.  The third is the development of skills needed for quality jobs in well-paid strategic industries with up-skilling and re-skilling programmes.
4.  The fourth is global cooperation and making trade work for the green transition.

The new TCTF

The new text of the Temporary Framework aims to reduce the EU’s dependence on fossil fuels by accelerating the rollout of renewable energy, the decarbonisation of industry, and the increase of production capacity in strategic sectors, with the ultimate aim of transitioning to a zero-emission economy.

The new Temporary Crisis and Transition Framework:

• Prolongs the possibility for Member States to further support measures needed for the transition towards a net-zero industry. This concerns in particular schemes for accelerating the rollout of renewable energy and energy storage, and schemes for the decarbonisation of industrial production processes, which Member States may now set up until 31 December 2025.
• Amends the scope of such measures to make schemes to support renewable energy, energy storage and decarbonisation of industrial production processes even easier to design and more effective by:
  1. simplifying the conditions for the granting of aid to small projects and less mature technologies, such as renewable hydrogen, by lifting the need for a competitive bidding process, subject to certain safeguards;
  2. expanding the possibilities of support for the deployment of all types of renewable energy sources;
  3. expanding the possibilities of support for the decarbonisation of industrial processes switching to hydrogen-derived fuels; and
  4. providing for higher aid ceilings and simplified aid calculations.
• Introduces new measures, applicable until 31 December 2025, to further accelerate investments in key sectors for the transition towards a net-zero economy, enabling investment support for the manufacturing of strategic equipment, namely batteries, solar panels, wind turbines, heat-pumps, electrolysers and carbon capture usage and storage as well as for production of key components and for production and recycling of related critical raw materials.

Green Deal GBER

The new rules reflect the recent changes to various sets of State aid Guidelines to ensure that the GBER remains fit for the green and digital transition.

They will also set the right foundations to tackle some of the economic effects stemming from Russia's war against Ukraine and contribute to the recovery of Europe's economy, affected also by the coronavirus pandemic and the high energy prices.

In particular, the revised rules:

• Increase and streamline the possibilities for aid in the area of environmental protection and energy, among others to support the rollout of renewable energy, decarbonisation projects, green mobility and biodiversity, as well as to facilitate investments in renewable hydrogen and to increase energy efficiency.
• Extend the possibilities for training and reskilling across sectors by exempting from notification training aid below €3 million (up from €2 million).
• Block exempt aid measures set up by Member States to regulate prices for energy such as electricity, gas and heat produced from natural gas or electricity.
• Clarifies and streamlines the possibilities for risk finance aid, for small and medium-sized enterprises (‘SMEs') and start-ups, as well as for financial products supported by the InvestEU Fund.
• Introduce a very significant increase of notification thresholds for environmental aid as well as for Research, Development and Innovation aid (e.g. for fundamental research up to €55 million (from €40 million), for industrial research up to €35 million (from €20 million), for experimental development up to €25 million (from €15 million)).
• Prolongs the GBER until the end of 2026 for legal certainty and regulatory stability.
• Aligns the provisions of the GBER with the new Regional Aid Guidelines, the Climate, Energy and Environmental State aid Guidelines, the Risk Finance Guidelines, the Research, Development and Innovation Framework and the Broadband Guidelines.