A new Temporary Crisis and Transition Framework to foster aid for a net-zero economy

The European Commission has adopted a new Temporary Crisis and Transition Framework that fosters support measures in sectors that are key for the transition to a net-zero economy.

The new regulation includes amendments and prolongations of the current Temporary Crisis Framework, which was adopted a year ago to support the EU’s economy during the outbreak of Russia’s war against Ukraine and had already been amended twice, in July and October 2022.

Together with the adoption of an amendment to the General Block Exemption Regulation, the new Temporary Crisis and Transition Framework will foster investment and financing for clean tech production in Europe in light of the new Green Deal Industrial Plan. This Plan was presented last month by the EC with the aim of enhancing the competitiveness of Europe’s net-zero industry and supporting the fast transition to the European Green Deal’s climate neutrality goal.

The new regulation also takes into account the feedback received from Member States in the context of a survey and a targeted consultation launched by the European Commission, which will also assist them in delivering specific projects under their own National Recovery Plans.

Which are the main measures under the new framework?

New extensions and facilities for current measures

The possibility for Member States to further support measures for accelerating the transition to a net-zero industry has been prolonged until the end of 2025. This concerns schemes for accelerating the rollout of renewable energy and energy storage, and schemes for the decarbonisation of industrial production processes.

The new Framework also facilitates the design and implementation of such schemes 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.
2. Expanding the possibilities of support for the deployment of all types of renewable energy sources, as well as for the decarbonisation of industrial processes switching to hydrogen-derived fuels.
3. Providing for higher aid ceilings and simplified aid calculations.

New measures to foster investments in key sectors

The amendment also introduces new measures to further accelerate investments in key sectors for the transition towards a net-zero economy, which will be applicable until the end of 2025. Those mainly involve the manufacturing of strategic equipment like batteries, solar panels, wind heat pumps, electrolysers and carbon capture usage and storage, as well as the production of key components, and the production and recycling of related critical raw materials.

In particular, Member States will be able to design new schemes that provide support capped at a certain percentage of the investment costs and nominal amounts. Cohesion must be secured by granting higher support to SMEs and companies located in disadvantaged regions. Higher percentages of the investment costs may also be granted if the aid is provided via tax advantages, loans or guarantees.

Exceptionally, Member States will be able to provide higher support to individual companies if they spot a real risk of investments being diverted away from Europe. In such situations, they will provide the lowest of the following amounts:

• The matching aid, or the amount of support the beneficiary could receive for an equivalent investment in that alternative location.
• The funding gap, or the amount needed to incentivise the company to locate the investment in the EEA.

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Marina Marcos