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Newly adopted amendments to the guidelines on regional state aid will allow the EU member states to increase support for developing the so-called critical technologies in the less advantaged European regions. The amendments will also enable investments in clean- and bio-technologies, digital and deep-technology sectors in view of strengthening European competitiveness and preserving cohesion and objectives of integration.
There are significant regional disparities in Europe in terms of economic well-being, income and unemployment; EU-wide regional aid aims to support economic development in disadvantaged areas while ensuring a level playing field among the member states and secure adequate level of competition.
Active revision of the EU-wide guidelines on regional state aid began in April 2021, when the Commission adopted a set of revised EU guidelines which entered into force in January 2022.
In June 2023, the Commission proposed the EU-wide strategic technologies platform to enhance EU industrial competitiveness by focusing on projects in the development and manufacturing stages in critical technologies, in the fields of digital technologies and deep tech innovation, clean technologies and biotechnologies, as well as for a sustainable and competitive future for the states.
Strengthening the competitiveness and resilience of the European economy through the green and digital transformations has been the Union’s compass over recent years. The green and digital transitions, anchored in the European Green Deal, set out in the Commission communication in December 2019 and the Digital Decade Policy Program-2030 established by Decision 2022/2481 spur growth and the modernisation of the Union’s economy, opening up new business opportunities and helping the Union to gain a competitive advantage on the global markets. For example, the “green deal” sets out the roadmap for making the Union’s economy climate-neutral and sustainable in a fair and inclusive manner, tackling climate- and environmental-related challenges. And the “digital decade program-2030” sets out a clear direction for the digital transformation of the Union and for the delivery of digital targets at Union level by 2030, in particular concerning digital skills, digital infrastructures, and the digital transformation of businesses and public services.
Strategic Technologies for Europe: digital platform
The Strategic Technologies for Europe Platform, STEP was set up to support European industrial sectors and boosting investment in the member states’ critical technologies.
It is expected that the STEP plan will raise and steer funding across eleven EU-wide programs divided into three targeted investment areas: a) digital technologies and deep-tech innovation, b) clean and resource efficient technologies, and c) biotechnologies.
STEP also supports projects growing skills necessary to the development of those critical technologies: in this regard, STEP introduces a new “STEP Seal”, i.e. a EU-wide label for high quality projects, which is granting STEP projects “visibility and facilitating their access to other possible sources of funding”; the STEP regulation entered into force in March 2024.
Reference to: https://strategic-technologies.europa.eu/index_en
The STEP Seal will be awarded by the European Commission to projects meeting the minimum quality requirements (including eligibility, exclusion, and award criteria) in the selection process of a competitive procedure of calls for proposal under the following five EU-wide programs:
– Digital Europe Program,
– European Defence Fund,
– the EU4Health program,
– Horizon Europe, and/or
– the Innovation Fund.
More in STEP-seal in: https://strategic-technologies.europa.eu/about/step-seal_en
Therefore, immediate actions are required to support the development and manufacturing in the states of critical technologies, which constitute the Union’s primary strategic deficiencies. Developing and manufacturing critical technologies, builds upon the value chains of interlinked economic actors, operating across firms (of different sizes, including SMEs), sectors and borders. Thus, the EU should also safeguard and strengthen the value chains of those critical technologies and their associated services that are critical for and specific to the activities of developing or manufacturing those critical technologies, thereby reducing the Union’s strategic dependencies and preserving the integrity of the internal market, and should address existing labor and skills shortages in those sectors through life-long learning, education, training projects and apprenticeships and the creation of attractive quality jobs accessible to all.
To qualify as critical, technologies should be required either to bring an innovative element with a significant potential to the internal market, or to contribute to reducing or preventing the strategic dependencies of the Union. When assessing the economic potential of critical technologies to the internal market, account should be taken of the fact that measures carried out in a single EU state can have spillover effects in other member states.
When assessing whether a technology contributes to reducing or preventing the strategic dependencies of the Union, account should be taken of the analysis carried out at Union level to identify the risks which have potential effects on the entire Union.
The Commission will issue guidance on how the technologies in the three sectors within the scope of this RAG could be considered to be critical, as well as the conditions on the basis of which those technologies can qualify as critical, in order to promote a common interpretation of the projects, companies and sectors to be supported under the relevant programs in light of the common strategic objectives of the relevant programs and the adopted regulation.
In that guidance the Commission should also clarify the notion of value chain and associated services that are critical for and specific to the development or manufacturing of the final products. That guidance should be without prejudice to other guidance on specific programs.
Thus, STEP is aimed at facilitating the Union investment’s needs by helping to better channel the existing Union funds towards critical investment, including in Union-wide and cross-border projects, that have the aim of supporting the development or manufacturing of critical technologies in strategic sectors, while preserving a level playing field in the internal market, preserving cohesion and that have the aim of achieving a geographically balanced distribution of projects financed under the STEP.
Reference to RAG at: https://eur-lex.europa.eu/eli/reg/2024/795/oj
State aid and the EU regional support
The primary objective of the EU-wide state aid control in the field of regional aid is to ensure that aid for regional development and territorial cohesion does not adversely affect trading conditions among the EU member states. In particular, it aims at preventing subsidy races that may occur when the states seek to attract or retain businesses in the EU-assisted areas and to limit to minimum negative effects of regional aid on trade and competition.
The objective of regional development and territorial cohesion distinguishes regional aid from other forms of aid, such as aid for research, development and innovation, employment, training, energy or for environmental protection, which pursue other objectives of economic development (under art. 107. 3, TFEU). In some circumstances, higher aid intensities may be allowed for the types of aid when granted to undertakings established in assisted areas, in recognition of the specific difficulties they face in these areas.
Regional aid can only play an effective role if it is used sparingly and proportionately and is focused on the EU-assisted areas. In particular, the permissible aid ceilings should reflect the extent of the problems affecting the development of the areas concerned. The advantages of the aid in terms of the development of an assisted area must outweigh possibly incurred distortion of competition and trade. The weight given to the positive effects of the aid is likely to vary according to the derogation under art. 107.3, which means that a greater distortion of competition can be accepted in the most disadvantaged areas.
Furthermore, regional aid can only be effective in promoting or facilitating the economic development of assisted areas, provided that it is awarded to stimulate additional investment or economic activity in those areas. In certain very limited, well-identified cases, the obstacles faced by these areas in attracting or maintaining economic activity may be so severe or permanent that investment aid may not be sufficient to enable the area to develop. In this situation the regional investment aid could be supplemented by regional “operating aid”.
Reference to the guidelines in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021XC0429(01)
In the regional aid guidance, RAG the Commission sets out the conditions under which regional aid may be considered to be compatible with the internal market and establishes the criteria for identifying the areas that fulfill the Treaty conditions, e.g. that of art. 107, TFEU.
On that basis, the Commission approves the notified regional aid maps (where the EU states identified) and in which geographical areas companies can receive regional state aid (assisted areas) and at what level (aid intensity).
The new amendment allows the EU member states to amend their regional aid maps to allow increased levels of regional aid for investment projects covered by the STEP by up to: a) 10 percentage points in the regions eligible for aid under Article 107(3)(a) of the Treaty on the Functioning of the European Union (so-called ‘a’ areas); and b) 5 percentage points in the regions eligible for aid under Article 107(3)(c) TFEU, the so-called “c” areas.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3021
Additional reference to: Regulation 2024/795 of 29 February 2024 establishing the Strategic Technologies for Europe Platform (STEP), and amending Directive 2003/87/EC and Regulations 2021/1058, 2021/1056, 2021/1057, No 1303/2013, No 223/2014, 2021/1060, 2021/523, 2021/695, 2021/697 and 2021/241. In: https://eur-lex.europa.eu/eli/reg/2024/795/oj