The European Commission has approved, under EU State aid rules, a €1.2 billion Dutch scheme ('NIKI') to support companies in their efforts to reduce lifecycle greenhouse gas ('GHG') emissions. Lifecycle emissions are the overall emissions that are attributable to a product (or service) from raw material extraction and processing, to manufacturing of the product, transportation, and end-of-life management. The aid will be granted to those projects that overall provide the largest environmental benefit for the lowest cost to the taxpayer, looking at the entire product's lifecycle.
The NIKI scheme for the first time introduces competition between direct decarbonisation projects and resource efficiency and circularity projects in a State aid measure. Direct decarbonisation projects achieve emission reductions primarily by decarbonising the production processes, whereas resource efficiency and circularity projects achieve reductions primarily by using secondary or bio-based raw materials instead of primary or fossil-based raw materials. The scheme aims to contribute to the Netherlands' decarbonisation objectives, in line with the Political Guidelines of the European Commission for 2024-2029, which also call for a more circular and resilient economy.
The Dutch scheme
The NIKI scheme will be open to companies of all sizes active in the manufacturing sector, in waste management, and in remediation activities within the Netherlands. To be eligible, each project must be capable of realising lifecycle GHG emission reductions of at least 100,000 tonnes.
Supported projects will be selected and the aid amount will be established following an open and competitive bidding process, based on the lowest aid amount requested per tonne of CO2 equivalent abated. The scheme is technology neutral.
During the five-year duration of the NIKI scheme, the Dutch government plans to organise one bid round (tender) per year.
The Commission's assessment
The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU ('TFEU'), which enables Member States to support the development of certain economic activities subject to certain conditions, and the Guidelines on State aid for climate, environmental protection and energy 2022 ('CEEAG') .
This is the first State aid scheme bringing together projects under Sections 4.1 and 4.4 of the CEEAG, selected under a joint competitive bidding process. Section 4.1 covers aid for the reduction and removal of GHGs. Section 4.4 covers aid for resource efficiency and the transition to a circular economy.
The Commission found that:
- The scheme is necessary and appropriate to support the industrial decarbonisation of the sectors covered by the scheme.
- The scheme has an 'incentive effect', as the beneficiaries would not carry out the relevant investments without the public support.
- The Netherlands has put in place sufficient safeguards to ensure that the scheme has a limited impact on competition and trade within the EU.
In particular:
- Beneficiaries will be selected following an open, transparent, and non-discriminatory bidding process;
- Aid will be granted to companies implementing projects that achieve the highest CO2 equivalent abated per euro, which minimises public spending while incentivising climate-friendly investments;
- The scheme has a claw-back mechanism through which unexpected profits exceeding the beneficiary's projected returns may be partly recovered by the Netherlands.
- The aid will bring about positive effects, in particular on the environment, that outweigh possible negative effects in terms of distortions of competition.
On this basis, the Commission approved the Dutch scheme under EU State aid rules.
Background
The CEEAG provide guidance on how the Commission assesses the compatibility of aid measures for environmental protection, including climate protection, and energy, which are subject to the notification requirement under Article 107(3)(c) TFEU. The non-confidential version of the decision will be made available under the case number SA.103901 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News .
