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State Aid Modernisation Compatibility assessment and revision of State aid guidelines

State Aid Modernisation Compatibility assessment and revision of State aid guidelines. Humbert DRABBE Director Directorate H DG Competition. 1. Scope of the review. Two key proposals. Identification and definition of key assessment criteria

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State Aid Modernisation Compatibility assessment and revision of State aid guidelines

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  1. State Aid ModernisationCompatibility assessment andrevision of State aid guidelines Humbert DRABBE Director Directorate H DG Competition

  2. 1. Scope of the review

  3. Two key proposals Identification and definition of key assessment criteria Horizontal approach to ensure a consistent approach Building on existing best practices (e.g. broadband) Revision and streamlining of State aid guidelines, to make them consistent with these criteria: 1st stage: Regional aid, R&D&I, Environmental aid, Risk capital, Broadband (+aviation, R&R) 2nd stage: other guidelines to be progressively aligned

  4. Scope of future compatibility assessment An assessment which first ensures that certain key criteria are met: Incentive effect, market failure, aid limited to the minimum Speedier treatment of well-designed measure, otherwise, more thorough analysis Extended scope of the GBER A substantive analysis of aid measures so as to focus the enforcement on potentially distortive aid, including schemes

  5. Possible review of guidelines' scopes So as to increase the predictability of the assessment process and bring them in line with EU 2020; for instance: Risk capital: possible extension to debt finance (combined with equity or alone), and to established innovative and growth-oriented SMEs Environmental aid: coverage of energy infrastructures? R&D&I: better coverage of demonstration projects and R&D infrastructure Broadband: ultra-fast networks (even in urban areas)

  6. 2. Key assessment criteria for the analysis of compatibility

  7. Key assessment criteria

  8. Key assessment criteria

  9. 3. Revision of the guidelines – first orientations

  10. Risk capital guidelines Possible extension to debt finance (combined with equity or alone), and to established innovative and growth-oriented SMEs Better targeting SME access to finance failure by defining presumed equity gaps specific to each development stage (market gaps defined per debt/equity finance and per development stage) Ensuring an incentive effect by tailoring a public-private investment ratio to each development stage (less private participation in more risky seed stages and more private participation in expansion or growth stages)

  11. R&D&I guidelines Better coverage of demonstration projects and R&D infrastructure Promote well-designed schemes with high returns for R&D Redirecting R&D towards the areas most in need of public investment (prevent crowding out private investments and disruption of market incentives to innovate) Better targeting of the instrument (e.g. repayable advances for projects close to the market and for liquidity needs) Open access to promote dissemination of knowledge and prevent undue market power

  12. Regional aid guidelines Better targeting of aid via new maps Demonstration that aided project is part of a coherent regional development strategy Substantive assessment of all large investment projects Verification of the incentive effect and limitation of the aid to the actual needs Focus aid for large projects towards the least developed areas ("a" regions) Possible identification of structural overcapacities

  13. Environmental aid guidelines Possible extension of the scope of the EAG to better reflect the EU 2020 objectives (energy infrastructures, all low carbon sources of energy). Ensuring that the State Aid does not undermine regulatory measures and market mechanisms (evaluation of alternative/complementary instruments; supply obligations for biofuels) Review the need for full compensation of operating costs (e.g. review need for sheltering renewable energy schemes from market evolution) Better ex-ante guidance on the cost calculation for a simpler assessment

  14. Broadband guidelines Align the Guidelines with the EU 2020 digital agenda targets: allow aid for ultra-fast networks (even in urban areas) under strong pro-competitive conditions; Introduce the concept of "step change" to avoid crowding out of private investment and to support technologies adequate for low density areas; Increased transparency requirements; Clarification, simplification, ease of administrative burden

  15. 4. Conclusion

  16. A key pillar of State aid modernisation 1. through the design of measures, ensure that the aid is spent efficiently, and that distortions of competition remain limited • Betterscoping of guidelines to reflect EU2020 • Focus on efficiency of the aid (e.g. limited to the minumum, leveragingprivate capital) 2. consolidate the approach, focus the enforcement on main distortive aspects of State aid • Coherentapproach applicable to all categories of aid • Prevention of mostdistortiveaidthroughfilters and throughreinforcedanalysis of negativeeffects 3. provide guidance & clearer rules for national administrations and aid granting authorities • Guidance on upfrontcriteria, and on whatneeds to bedemonstrated

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