Amendment to the GBER Regulation and the European Green Deal

A powerful revision of the GBER Regulation, which the European Commission has been working on for the past months, will enter into force tomorrow. Today, Commission Regulation 2023/1315 of 23 June 2023 was published in the Official Journal of the European Union, providing another valuable instrument for achieving the objectives of the European Green Deal.

The European Green Deal, a long-term strategy presented by the European Commission back at the end of 2019, aims to make Europe the first climate-neutral continent by 2050 and already reduce net greenhouse gas emissions by at least 55% compared to 1990 in 2030. The Green Deal Industrial Plan aims to increase the competitiveness of Europe’s carbon-neutral industry and support a rapid transition to carbon neutrality. Ursula von der Leyen, President of the Commission, emphasised that one of the key pillars of this plan is to accelerate investment and financing for the development of clean technologies in Europe, with public support as the instrument to play a key role. Effectively allocated and well-targeted support can really help Member States to achieve the ambitions of the European Green Deal.

To this end, in order to speed up and simplify the granting of state aid, the Commission has revised the so-called Block Exemption Regulation, also known as the GBER Regulation (i.e. Commission Regulation 651/2014 of 17 June 2014 declaring certain types of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty). This Regulation establishes certain categories of Member State aid that are compatible with the internal market and, consequently, the intention to grant them is not subject to notification to the European Commission. The result of the review of the GBER Regulation is a draft amendment to the Regulation, announced and provisionally approved at the beginning of March 2023, which envisages a number of changes in terms of increasing the freedom of Member States to design and introduce support measures in sectors crucial for the transition towards climate neutrality and carbon-neutral industry.

Following further work on the draft, the European Commission last week formally adopted a package of amendments to the GBER Regulation. On 23 June 2023, the final draft of the amending regulation on this matter appeared on the Commission’ s website, and today it was published in the Official Journal of the European Union as Commission Regulation 2023/1315. This is the first such comprehensive amendment of this key piece of legislation for the provision of state aid.

What are the most important changes envisaged in the revision of the GBER Regulation?

According to an official communication from the Commission, the revised rules will firstly increase and streamline the possibilities for aid in the field of environment and energy, inter alia to support the deployment of renewable energy, decarbonisation projects, green mobility and biodiversity, as well as to facilitate investments in renewable hydrogen and energy efficiency.

The new rules will also facilitate certain projects involving beneficiaries from several Member States, such as Important Projects of Common European Interest (IPCEI), in the area of research and development by increasing aid intensity levels and notification thresholds.

However, the increase in thresholds itself mainly concerns areas of environmentally-oriented aid. In the case of investment aid for environmental protection, the thresholds have been doubled from a ceiling of EUR 15 million to EUR 30 million per undertaking and project. The same increase also applies to investment aid for charging or refuelling infrastructure used to supply energy for zero- or low-emission vehicles. The amendments also provide for the introduction of exemptions for aid not previously included in the regulation: aid for infrastructure dedicated to environmental upgrading and storage (EUR 25 million per project), investment aid for the combined improvement of energy and environmental performance of buildings (EUR 30 million per undertaking and project), aid to facilitate energy performance contracting (EUR 30 million total remaining nominal funding per beneficiary) or finally aid in the form of reductions in environmental taxes or charges (EUR 50 million per project per year).

An increase in the thresholds is also foreseen in the context of operating aid for the promotion of RES-E and renewable hydrogen in small-scale projects and for renewable energy communities – from EUR 15 million to EUR 30 million per company and project. Aid for energy infrastructure, where the thresholds have been raised from €50 million to €70 million per company and project, will also not be notified. Finally, the revised GBER is to block exempt aid measures introduced by states to regulate the price of electricity gas and heat produced using natural gas.

The revision of the GBER Regulation is accompanied by the adoption by the Commission of a new Temporary Crisis and Transition Framework to further support the transition to a net-zero-emission economy, which extends the possibility for Member States to support the measures necessary to achieve this objective. This applies in particular to schemes to accelerate the deployment of renewable energy and energy storage and schemes to decarbonise industrial production processes, which Member States can now set up until 31 December 2025.

As an aside, however, it is worth noting that the package of amendments to the EU Regulation not only includes changes for more effective environmental protection, but also provides for a significant increase in the notification thresholds for aid for research, technological development and innovation and their valorisation also in areas not covered by this year’s review.

How does the amendment to the GBER fit in with the Polish strategic documents concerning the directions of development of the energy sector?

All of the Commission’s actions above are in line with the programme of Poland’s Energy Policy until 2040 (PEP2040). As we read in this document, investment outlays on the energy transformation in 2021-2040 may reach approximately PLN 1 600 billion, while investments in the fuel and energy sectors will involve funds close to PLN 900 million. The projected outlays in the electricity generation sector will reach approx. The projected outlays in the electricity generation sector will reach approx. PLN 320-342 billion, of which as much as ca. 80% will be earmarked for carbon-free capacity, i.e. RES and nuclear power. Approximately PLN 260 billion of EU and national funds will be directed to the national energy and climate transition by 2030 through various mechanisms, including: Cohesion Policy, the Instrument for Reconstruction and Enhanced Resilience, the Just Transition Fund, ReactEU, etc.

The amended GBER Regulation will allow for a more efficient and effective achievement of the specific objectives envisaged by PEP2040, such as the expansion of electricity generation and grid infrastructure, the development of renewable energy sources or, finally, the improvement of energy efficiency.

The amendment to the GBER Regulation, published today in the EU Official Journal, will enter into force tomorrow. Importantly, it will also extend the validity of the EU regulation until the end of 2026, as the current regulation was only to apply until 31 December 2023. The adopted package of amendments is, above all, a great opportunity for Member States, which will be able to launch further aid programmes in a much quicker and deformalised manner. These programmes, which are already eagerly awaited by a whole host of investors who, once they meet certain conditions, will receive even greater amounts of support for their projects than before.

Authors: Dr Magdalena Porzeżyńska, legal counsel, trainee solicitor Jan Karsznicki