New State Aid Rules for Green Projects: The EU’s Road to Climate Neutrality

From this month (January 2022), it will be easier for EU Member States to provide government subsidies (also known as “State aid”) for climate and renewable energy projects.

At the same time, the EU is cracking down on public funding for fossil fuels.

In the EU, State aid is “prohibited unless it is specifically allowed”, meaning that governments may not subsidise businesses unless this aid is approved by the European Commission or qualifies for an “automatic exemption” under one of the Commission’s block exemption regulations.

The new Guidelines on State aid for Climate, Environmental Protection and Energy (the “CEEAG”) detail how the Commission will assess and approve aid that pursues environmental and climate objectives.  The Guidelines are designed to support the European Green Deal and the EU’s 2050 zero net emissions target, and establish a more comprehensive regime for environmental aid compared to the previous guidelines. They follow the direction set out in the Commission’s brief on “Competition Policy in Support of Europe’s Green Ambition”.

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