The European Commission has granted State aid approval for an award of €53m (£45m) public funding to install a network of electric vehicle charging points in Romania following a notification by the Romanian Government, thus allowing the Romanian authorities to support this activity beyond the levels already authorised across Europe under the State aid block exemptions.
In approving the measure, the European Commission acknowledged the contribution of this initiative towards the European Union's plans to make the continent of Europe climate neutral by 2050, an objective which will require a 90% reduction in transport emissions. The decision will be of interest to Governments looking to introduce measures to support the transformation of the automotive sector and also to Local Authorities taking action to address the climate emergency in their specific territories.
The European Commission's decision to approve the €53m (£45m) public funding as compatible State aid recognises that the potential distortion of this initiative is outweighed by its contribution to the common interest objective of reducing harmful emissions. European Commissioner for Competition and Executive Vice-President, Margrethe Vestager, praised the initiative for contributing to "the fight against global warming" and stated that it shall "reduce harmful car emissions and improve the health of citizens".
The measure will involve the award of grants to stimulate investments into electric and hybrid vehicle recharging stations in urban, sub-urban and rural areas across Romania. In delivering the scheme between 2020 and 2025, the Romanian Government shall run an open competition for interested economic operators to apply for grants. Applicants which meet the Romanian Government's criteria may be awarded grants, which are recognised to constitute State aid.
Although the European Commission has yet to publish full details of the approval, including its rationale and the conditions applied to the measure, the reason for notifying such measures is that they fall outside or go beyond that which is authorised already under State aid block exemptions. Depending on the nature of EV charging point support contemplated in any particular case, there is a lot that can lawfully be done already without needing to notify the European Commission and obtain prior approval.
This State aid approval for the Romanian scheme should be seen alongside recent European Commission decisions to support the uptake of electric vehicles and support the transformation of the sector no a pan-European basis. This includes approval for a €3.5bn award of aid for a seven Member State consortium's proposal to undertake specific interventions to support the development of battery capacity and the approval of €36m to LG Chem to build an electric vehicle battery plant in Poland.
It is also part of a wider move across the public sector to invest in measures which address climate change. Many Local Authorities in the UK (and municipalities around the World) have already declared a "climate emergency" and are now actively exploring ways to compliantly use public funding to support environmentally friendly measures. Likewise, the UK Government is also supporting actions to use public funding to address climate change and reduce transport emissions, for example through a £50m fund to create an all electric bus transport system which was announced in early February 2020.
With the UK poised to announce an increase in public funding for regeneration and infrastructure projects, State aid law compliance has taken on increased significance. Although the UK exited the European Union at 11pm on 31 January 2020, EU State aid law continues to apply to public funding committed during the transitional period which started upon the UK's departure from the EU on 31 January 2020 and shall continue in force, until at least 31 December 2020.
Once the transition period ends, the Government has announced that a new UK State aid regime will enter into force, which is expected to have similarities to the existing EU framework but importantly will be enforced not by the European Commission but by the UK's Competition & Markets Authority.
DWF Law LLP is a leading Public Sector adviser, with exceptional expertise in State aid law matters and experience providing legal advice to electric vehicle projects, including installation of charging infrastructure and inward investment initiatives. As an international legal services business, we are able to draw upon a team of leading experts, in our UK, Brussels and other international offices, who have extensive experience in this area, including working within the UK Government on high profile awards of public funding, defending projects from recovery, and helping draft block exemptions.
