EU decides: No green strings attached on cash to virus-hit firms

European Commission Vice-President Margrethe Vestager gives a press conference on the EU's Industrial Strategy in Brussels, Belgium, 10 March 2020. [EPA-EFE/STEPHANIE LECOCQ]

Large companies receiving emergency cash during the COVID-19 crisis will have to report on how they use taxpayer money but won’t be obliged to spend on greening their operations, under new EU rules published yesterday (8 May).

The European Commission unveiled on Friday evening its updated state aid rules applicable to firms receiving government support during the COVID-19 crisis.

The emergency rules will apply until the end of 2020 and covers recapitalisation aid disbursed by national governments to support companies in urgent need of liquidity.

“As the crisis evolves, many businesses will also need capital to stay afloat,” said Margrethe Vestager, the EU’s competition commissioner in charge of policing state aid.

The Commission suspended its normally-strict state aid rules in mid-March, approving so far more than €1.9 trillion worth of national schemes during the pandemic.

Under the EU’s updated regime, support will come “with strings attached,” including a ban on dividends and bonus payments to managers of companies receiving financial support, Vestager said.

But there will be no specific green requirements – only an obligation to report on how taxpayer money is used for the green and digital transitions.

“For public transparency, large companies also have to report on the use of aid received and compliance with their responsibilities linked to the green and digital transitions,” Vestager said.

“Member states are free to design national measures in line with additional policy objectives, such as further enabling the green and digital transformation of their economies,” the Commission said in a statement.

There is currently no obligation on EU governments to impose green conditions on bailout cash offered to ailing companies.

While some member states have decided to impose green conditions on support to troubled firms, others have not. Air France for instance was told to cancel domestic flights that come in competition with rail under the terms of a bailout deal agreed last week with the French government.

Campaigners said they will use the new transparency rules to scrutinise how companies use taxpayer cash.

“Recipients have to show how aid will be aligned with green objectives, so we’ll be watching what they submit,” said Andrew Murphy from green campaign group Transport & Environment.

Germany accounts for 52% of the total aid approved by the European Commission so far, prompting concerns that countries with the deepest pockets are getting an unfair advantage from the EU single market during the crisis.

Commission President Ursula von der Leyen has acknowledged those risks, saying the “huge differences” in aid to troubled firms risked deepening economic disparities within the 27-member bloc.

“We have to uphold European values and the need for a level playing field to be able to bounce back strongly from this crisis,” Vestager admitted.

“That’s also why much more is needed than state aid control. We need a European recovery plan that is green and digital and to the benefit of all European consumers.”

Questions remain over green aspects of EU recovery plan

EU leaders on Thursday (23 April) tasked the European Commission with drafting a trillion-euro “recovery fund” linked to the EU budget but didn’t specify how it will support the green transition they claim to be committed to.

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