The CEEAG, or Climate Environment and Energy Aid Guidelines, represent a set of rules established by the European Commission as a building block of European State aid regulation. They define how EU Member States can grant aid for projects related to environmental protection, climate change mitigation and in the energy sector. The CEEAG were updated in February 2022 with significant changes, in particular the incorporation of public support to projects that promote the reduction and removal of greenhouse gas emissions.
The objective is to promote the environmental, climate and energy transition while preventing distortions of competition within the EU’s internal market. The CEEAG encompasses a wide range of projects, including but not limited to:
- Renewable energy initiatives
- Energy intensive industries transition to lower GHG emissions
- Energy efficiency enhancements
- Low-carbon transportation
- Carbon capture storage / utilisation (CCU and CCS)
- Green infrastructure development
- Climate change adaptation and mitigation strategies.
The CEEAG apply to State aid only, meaning public funding granted by Member States to companies for specific projects in various industries that promote the environmental, climate and energy transition. Hence, it is the Member States who propose and design public funding measures in support of such projects that fall under the CEEAG regulation, according to their national strategies. The European Commission oversees the coordination and management of CEEAG. It supervises, guides, and validates the measures put forth by Member States, ensuring their compliance with the CEEAG. In particular, all CEEAG State aid measures above circa 30 M€ per company per project must be individually notified to the European Commission (DG Competition). The companies can receive the first grant instalment only after the European Commission gives its clearance.
The process for securing public funding under the CEEAG starts with the project application at national level, following the publication of a dedicated call for projects where the national authority publishes the eligibility and evaluation criteria. Detailed information on upcoming calls for projects is country-specific. Then, the national authority undertakes a thorough evaluation of the proposals and selects the most competitive projects. Selected proposals with large State aid amounts are then passed on to the European Commission for a detailed assessment along the criteria laid out in the CEEAG (State aid notification). The Commission, after its review, decides on whether the proposal merits approval. If it obtains the Commission’s clearance, the project promoter finalises a funding agreement with the national authorities. With the agreement in place, the project enters its implementation phase. Throughout this stage, project promoters are mandated to periodically update both the national authorities and the European Commission on their progress and any significant developments.
While the CEEAG eligibility and compatibility criteria vary depending on the project, they typically revolve around the following axes:
- Compatibility with EU climate objectives: Ensure the project’s alignment with the EU’s green transition ambitions.
- Necessity and proportionality: The State aid must be necessary to implement the project, and the aid amount must be limited to the minimum needed for carrying out the aided project (funding gap approach).
- Incentive effect: State aid should induce the beneficiary to change its behaviour, to engage in additional economic activity or in more environmentally-friendly economic activity, which it would not carry out without the aid or would carry out in a restricted or different manner.
- Preservation of competition: State aid must not provide disproportionate or unfair advantages to the beneficiary over its competitors.
european economics has an important track record for projects supported under CEEAG State aid: we supported 19 projects, of which 15 successfully secured €6.8 billions in public funding. We have extensive experience with the new CCEAG of 2022 and we can capitalise on it to support our clients who target large State aid amounts for projects that promote the environmental, climate and energy transition.