State Aid Modernisation

Revision of the General Block Exemption Regulation (GBER)

First advisory meeting

DG COMP A3

1 July 2013

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Agenda - morning I. Introduction

• The new GBER in the context of SAM • Adoption process

II. Common provisions – new elements

III. Thematic sections part I: 1) SMEs – new elements, including risk finance and start-up 2) RDI - new elements

Commission presentation followed by comments and discussion

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Agenda - afternoon IV. Thematic sections part II:

3) Regional aid - new elements, including ETC 4) Energy & Environment - new elements 5) Training and disadvantaged – new elements

IV. Transparency, evaluation & reporting Commission presentation followed by comments and discussion

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Introduction

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Current GBER Increasing use: total amount above € 17 billion in 2011

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Current GBER • … with shares varying across sections

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Current GBER Represents 2/3 of aid measures and 1/3 of aid volumes in total

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State Aid Modernisation (SAM) Goals: • contribute to sustainable growth • focus on cases with the biggest

impact and provide fast-tracks for small & good aids

• simplify and streamline rules • provide for faster, better

informed & more robust decisions

• increase transparency

with new GBER at the center

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Adoption process New GBER and linkages with other instruments • Enabling Regulation and new categories • Adopted RAG and other Guidelines in public consultation

1. Draft under discussion

July: AC1 Nov: OJ Dec: PC2 Feb: AC2 Apr: Adoption July: entry in force

2. New categories

July : PC1 Sept: AC1 Integration of new categories into draft v2 under process 1?

3. Prolongation current Gber

July: PC1 Sep: AC1 Oct: OJ PC2 Nov: AC2 Dec: Adoption

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Common provisions – new elements

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Simplification Simpler incentive effect check: Option to cut red tape Simpler proportionality check: total costs capped with aid intensities Firms in difficulty: same updated hard criteria for SMEs and LEs Clearer cumulation rules: e.g. EU centrally managed funds Consolidation of some categories

Incentive Effect Main principle: start of works after application for aid Existing rules: large enterprises (LEs) submit documentation and MS check plausibility Simplified option : SMEs & LEs submit written application form before work on project/activity has started to reduce administrative burdens for MS

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Ad hoc aid to Les, incl. infrastructures

Potentially distortive aid: to be notified to Commission for assessment

Alternative option : include in GBER, subject to stricter conditions for checking the incentive effect (documentation establishes a material increase in the size, scope, amount of the project/activity)

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Possible withdrawal of the GBER

Commission may adopt a decision stating that all or some of the future aid measures are to be notified:

• if MS does not comply with conditions and after having provided the MS with the possibility to make its views known

• Can be refer to measures in favor of certain beneficiaries or adopted by certain granting authorities

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Thematic sections:

SMEs – new elements

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Risk finance aid Larger scope: ensure access to debt and equity finance for SMEs while stimulating private investments in line with Europe 2020 • SMEs in their later growth stages • Extension to follow-on investments and replacement capital • Any form of risk finance to better reflect market practices and

cover many financial instruments for SMEs Well-designed compatibility rules: to avert risk of crowding out and distortion of competition Higher notification threshold: annual investment tranche of EUR 1.5m replaced by overall investment cap of EUR 10 m per SME + new minimum private participation thresholds

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Start-up aid Simplification of existing provisions: a broad category that targets market failures of access to finance for all start-ups Scope: small enterprises up to 5-yrs Eligible costs: no limitation Simplified amounts: € 2m loans, € 3m guarantees (nominal amounts) or € 0,4m for grants-interest rates rebates

• amounts doubled for small and innovative enterprises • bonuses for assisted regions

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Thematic sections:

R&D&I – new elements

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RD projects Simplification and streamlining of the conditions for RDI aid: • facilitations for demonstrators and pilots to bridge the gap

between scientific research and market application and to remove the barriers for entrepreneurs to bring "ideas to market"

• improved definitions of experimental development & industrial research to allow for a more flexible coverage of some types of research activities, in particular of certain types of prototypes

MS have a choice between regional and RDI aid

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Thresholds & aid intensities Higher notification thresholds: • fundamental research EUR 40m and industrial research EUR 20m • experimental development only slightly increased to EUR [10]m

due to higher risk of distortion, increase when granted in the form of repayable advances by [50]%

• benefits for EUREKA projects and Joint Undertakings Maximum aid intensities: vary between 100% and 25% with bonuses for SMEs, collaboration or open access new bonus for large companies that invest in "c" regions to

incentivise RDI investments for overlapping eligible costs

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Research infrastructures NEW: construction/ upgrade of infrastructures which perform (fully or partially) economic activities • facilities, resources, related services used by scientific community • clarification on economic / non-economic activities Conditions: only aid to research infrastructures, not end users and accessibility on transparent/non-discriminatory basis & market terms Eligible costs: investment costs in intangible and tangible assets

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Notification threshold: EUR [15]m per infrastructure Maximum aid intensity: [25%] + regional bonuses

Innovation aid for SMEs Simplifies and streamlines conditions for innovation aid measures • support measures in line with Europe 2020 & Innovation Union • all categories of innovation aid for SMEs are grouped together Eligible costs: • obtaining and validating patents • secondment of highly qualified personnel • innovation advisory and support services • process or organisational innovation • participation in fair or exhibition Single maximum aid intensity: 50% of eligible costs

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To be continued in the afternoon

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Thematic sections:

Regional aid – new elements, including ETC

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Regional investment aid

& = Large Enterprise = new activity =existing activity

Criteria: initial investment

in favour of new activity in terms of NACE-4 classification in the region concerned

Aid for LEs in 'c'-regions:

Schemes outside an operational programme: must now contribute to a regional development strategy with clearly identified objectives

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Operating aid for ORs NEW: operating aid to ORs can be block exempted to reduce administrative burden Transport costs: goods produced in outermost and sparsely populated regions

Additional costs (other than transport costs): in outermost regions

&

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ETC Projects Two provisions facilitate European Territorial Cooperation (ETC) projects: given the importance under the EU cohesion policy and the handicaps these projects experience

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Aid for SMEs:

cooperation costs Regional

investment aid:

highest aid intensity

for all

Problem 1: variety of project partners located in different areas Problem 2: projects face additional costs of joint management which are difficult to cover for SMEs

Thematic sections:

Energy & Environment – new elements

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Scope NEW: support for district heating: • to incentivise undertakings to achieve a higher level of

environmental protection than required by EU standards • to facilitate early adaptation to future EU standards for SMEs NEW remediation of contaminated sites: covers cases where the polluter cannot be identified

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Threshold and eligible costs Notification thresholds: EUR [7.5]m per undertaking per investment project Simplified calculation method of eligible costs: Cost of green investment or total costs in case of integrated investment

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Commission seeks the views of stakeholders on this change aid intensities are left open at this stage of the consultation

No systematic need for counterfactual (complex extra-costs methodology)

Investment aid to increase level of protection

No systematic identification of alternative investment required: • costs of "green" investment, when this is easy to identify as

separate investment (e.g. pollution filter) or when it is possible to easily identify an obvious counterfactual (e.g. EUR 6 vs EUR 5 truck)

• total costs for green investments, when it is not possible to easily identify a separate investment or an obvious counterfactual (e.g. RES plant)

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RES support Two alternative models to support to Renewables: • Investment model: total costs of the "green" investment - aid

intensities not defined at this stage • Best auctioning model: technology neutral, open and

competitive bidding process • Option 1: with standard balancing responsibilities • Option 2: with extended balancing responsibilities

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Training and

disadvantaged – new elements

Age: 15-24 years

Thematic sections:

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Training aid Simplification of the rules: no distinction between general and specific training responding to difficulties with the qualification and enforcement highlighted by Member States and stakeholders Simplification of eligible costs: • trainers' personnel costs • trainers' and trainees' operating costs • advisory service costs Maximum aid intensity for all: 50% + bonuses for training to disabled or disadvantaged workers and for SMEs Notification threshold: EUR 2m per project

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Employment of disabled & disadvantaged

'severly disadvantaged' includes • unemployed for at least 24 months • unemployed for at least 12 months

and specific disadvantage

New definitions with larger scope: 'disadvantaged worker' includes young people between 15-24 yrs

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Transparency & Reporting

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Transparency & Reporting Single state aid website: Standardized information available 10-y • Better control over aid granted & easier enforcement for MS • Better accountability of public spending • Successfull in other policy fields (Structural Fund, CAP, SGEI) Reporting: individual awards > € 3 mio Streamlined standard form Evaluation of very large schemes: • Annual budget > 0,01% GDP & EUR 100m • To ensure more effective and efficient use of public funds

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Thank you!

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