European Commission - Press release

State aid: Commission approves Italian scheme under Recovery and

Resilience Facility to support biomethane production
Brussels, 8 August 2022
The European Commission has approved, under EU State aid rules, an Italian scheme made available
through the Recovery and Resilience Facility ('RRF') to support the construction and the operation of
new or converted biomethane production plants. The measure is part of Italy's strategy to reduce
greenhouse gas emissions and to increase its share of renewable energies. The scheme will also
contribute to the objectives of the REPowerEU Plan to reduce dependence on Russian fossil fuels and
fast forward the green transition.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The Italian aid
scheme we have approved today will boost the EU's production of sustainable biomethane for use in
the transport and heating sectors, in line with the the REPowerEU Plan. The Italian aid measure,
which will be partly funded by the Recovery and Resilience Facility, will help Italy meet its emission
reduction targets, reduce its dependence on Russian fossil fuels and improve its security of gas
supply, while limiting possible distortions of competition.”
The Italian scheme
The scheme notified by Italy, which will run until 30 June 2026, will be partly funded by the RRF,
following the Commission's positive assessment of Italy's Recovery and Resilience Plan and its
adoption by the Council.
The scheme will support the production of sustainable biomethane to be injected into the national
gas grid for use in the transport and heating sectors. In particular, the measure is aimed at
promoting the construction and the operation of new or converted biomethane production plants in
Italy. In order to qualify for aid under the scheme, the biomethane production must comply with the
requirements set out in the EU Renewable Energy Directive. For biomethane to be used in the
transport sector specifically, only the production of advanced biomethane will qualify for aid, as it is
the most sustainable and environmentally friendly fuel, to help the EU achieve its climate and energy
objectives.
The aid will be granted, cumulatively, in the form of:
i. Investment grants, with a total budget of €1.7 billion, which will be paid at the end of the
construction phase to all supported projects. The aid amount per project will cover up to 40% of
the eligible investment costs.
ii. Incentive tariffs, with an estimate budget of €2.8 billion, to be paid during the operational phase
of the projects, for a 15-year period. The incentive tariffs, expressed in €/MWh, will be
determined in a competitive tender on a pay-as-bid principle. The support will cover the
difference between the incentive tariffs and the evolving gas prices, and will be paid out on a
monthly basis. In case of high gas price increases, a claw-back mechanism is in place so that
any amount exceeding the incentive tariffs will be paid back.
The projects will be selected through a transparent and non-discriminatory bidding process, where
beneficiaries will compete for the lowest amount of the incentive tariff needed for an individual
project to go ahead. The first call for projects will start as of 2022. In order to benefit from funding
through the RRF, the constructions or conversions of biomethane production plants should be
completed by 30 June 2026.
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 European Union (‘TFEU'), which enables EU countries 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.
The Commission found that:
 The scheme facilitates the development of certain economic activities, in particular the
production of sustainable biomethane.
The aid has an ‘incentive effect', as the beneficiaries would not carry out the investments in
sustainable biomethane production to the same extent without the public support.
The measure has a limited impact on competition and trade within the EU. In particular, it is
necessary and appropriate to reduce dependence on Russian fossil fuels and fast forward the
green transition. In addition, it is proportionate and any negative effect on competition and
trade in the EU will be limited in view of the size of the projects, the aid amounts and the
characteristics of the sector. Moreover, necessary safeguards limiting the aid to the minimum
will be in place, including a competitive bidding process for awarding the aid and a claw-back
mechanism in case of market price increases.
On this basis, the Commission approved the measure under EU State aid rules.
Background
All investments and reforms entailing State aid, also those included in national resilience and
recovery plans presented in the context of the RRF, must be notified to the Commission for prior
approval, unless covered by one of the State aid block-exemption rules.
The Commission assesses measures entailing State aid contained in the national recovery plans
presented in the context of the RRF as a matter of priority and has provided guidance and support to
Member States in the preparatory phases of the national plans, to facilitate the rapid deployment of
the RRF. At the same time, the Commission makes sure in its decision that the applicable State aid
rules are complied with, in order to preserve the level playing field in the Single Market and ensure
that the RRF funds are used in a way that minimises competition distortions and do not crowd out
private investment
The Guidelines on State aid for climate, environmental protection and energy 2022 provide guidance
on how the Commission will assess the compatibility of environmental protection, including climate
protection, and energy aid measures which are subject to the notification requirement under Article
107(3)(c) TFEU. The new guidelines, applicable as from January 2022, create a flexible, fit-for-
purpose enabling framework to help Member States provide the necessary support to reach the
Green Deal objectives in a targeted and cost-effective manner. The rules involve an alignment with
the important EU's objectives and targets set out in the European Green Deal and with other recent
regulatory changes in the energy and environmental areas and will cater for the increased
importance of climate protection.
For more information
The non-confidential version of the decision will be made available under the case number
SA.100704 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.
IP/22/4803

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