Low Carbon Infrastructure Transition Programme: state aid rules

The Low Carbon Infrastructure Transition Programme (LCITP) is a Scottish Government led initiative. This scheme operates under Commission Regulation (EC) No 651/2014 of 17th June 2014 declaring certain categories of aid compatible with the common market in application of Articles 107 and 108 of the Treaty (General Block Exemption Regulation) as published in the Official Journal of the European Union (26th June 2014 - L 187/1). The main aim of the LCITP is to support the development of substantive private, public and community low-carbon infrastructure projects across Scotland.

State Aid registration

The Low Carbon Infrastructure Transition Programme 20 March 2015 – 31 December 2020: Scheme reference number: SA.41844

Support for:
SMEs is covered under Articles 21-22; aid for research and development projects is covered under Article 251; and aid for Environmental protection is covered under Articles 36-49 of the General Block Exemption Regulation.

The legal basis of the scheme:
Any award to low carbon infrastructure projects will be made under: Section 153 of the Environmental Protection Act 1990.

Eligibility

The LCITP is a collaboration between the Scottish Government, Scottish Enterprise, Highlands & Islands Enterprise, Scottish Futures Trust and sector specialists. This intervention will focus on supporting the acceleration of projects to develop investment grade business cases allowing them to secure existing streams of public and private capital finance. There is no automatic entitlement to support from the LCITP. Support will be offered through a range of mechanisms including project development, expert advice and funding (where applicable), based on the LCITP's Assessment Panel's conclusions at Case Conference of the quality of the evidence provided by the proposed project in its application. All applications are considered through a rigorous due diligence appraisal process.

1Under the LCITP, 'research and development' relates to feasibility work conducted at the catalyst phase of a project.

General Provisions

Level of Aid

The level of aid available will depend on whether the applicant is a Large, Small or Medium Sized Enterprise, as defined by the European Commission. Small and Medium Sized Enterprises are undertakings fulfilling the criteria laid down in Annex 1 to the General Block Exemption Regulation.

European Commission SME definition (Annex 1)

Commission regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty

Undertakings not fulfilling the criteria are Large Enterprises.

Large Enterprises

Where the applicant is a Large Enterprise, additional conditions will be applied to ensure that the aid has an incentive effect. The applicant must provide documentation which establishes one or more of the following:

A material increase in either:

1. the size or scope of the project/activity due to the aid
2. the total amount spent by the beneficiary on the project/activity due to the aid
3. the speed of completion of the project/activity, as a result of the aid

EU Commission Returns

The Low Carbon Infrastructure Transition Programme is required to provide annual returns to the European Commission detailing aid provided under this scheme, and to maintain detailed records regarding individual aid provided under the scheme. Such records must contain all information necessary to establish that the conditions laid down in the Regulation are fulfilled. This includes information on the status of any undertaking whose entitlement to aid or a bonus depends on its status as an SME, information on the incentive effect of the aid, and information making it possible to establish the precise amount of eligible costs for the purpose of applying the Regulation. Records must be maintained for 10 years from the date on which the last aid was granted under the scheme, in this case until at least 31 December 2032. The information which must be provided to the Low Carbon Infrastructure Transition Programme / retained by the aid recipient will be set out in the Offer of Grant.

Aid Intensities

SME aid

SMEs' access to finance (risk finance aid (Art. 21) and aid for start-ups (Art. 22)) shall not exceed 50% of the eligible costs.

Aid for research and development projects (Art. 25)

Feasibility studies (Art. 25(2)(d))

• the maximum aid intensity allowed shall not exceed 50% of the eligible costs. It may be increased, up to a maximum aid intensity of 70% of the eligible costs for SMEs

Aid for Environmental protection

Investment aid enabling undertakings to go beyond Union standards for environmental protection or increase the level of environmental protection in the absence of Union standards (Art. 36)

• the maximum aid intensity allowed shall not exceed 40% of the eligible costs. It may be increased, up to a maximum aid intensity of 60% of the eligible costs for SMEs.

Aid for early adaptation to future Union standards (Art. 37)

• the maximum aid intensity allowed shall not exceed 20% of the eligible costs. It may be increased, up to a maximum aid intensity of 40% of the eligible costs for SMEs

Investment aid for energy efficiency measures (Art. 38)

• the maximum aid intensity allowed shall not exceed 30% of the eligible costs. It may be increased, up to a maximum aid intensity of 50% of the eligible costs for SMEs

Investment aid for energy efficiency projects in buildings (Art. 39)

• up to a national maximum full annual aid amount of £7 million GBP

Investment aid for high-efficiency cogeneration (Art. 40)

• the maximum aid intensity allowed shall not exceed 45% of the eligible costs. It may be increased, up to a maximum aid intensity of 65% of the eligible costs for SMEs

Investment aid for the promotion of energy from renewable energy sources (Art. 41)

• up to a national maximum full annual aid amount of £10 million GBP. It may be increased, up to a maximum aid intensity top up of 20% of the eligible costs for SMEs

Investment aid for energy efficient district heating and cooling (Art. 46)

• the maximum aid intensity allowed shall not exceed 45% of the eligible costs. It may be increased, up to a maximum aid intensity of 65% of the eligible costs for SMEs

Investment aid for waste recycling and re-utilisation (Art. 47)

• the maximum aid intensity allowed shall not exceed 35% of the eligible costs. It may be increased, up to a maximum aid intensity of 55% of the eligible costs for SMEs.

Investment aid for energy infrastructure (Art. 48)

• 100% and £45 million GBP per recipient/per investment project

Aid for environmental studies (Art. 49) (under the terms of the LCITP, this will not include provision of finance to support the carrying out of Environmental Impact Assessments (EIAs))

• the maximum aid intensity allowed shall not exceed 50% of the eligible costs. It may be increased, up to a maximum aid intensity of 70% of the eligible costs for SMEs

Eligible Costs are as follows:

For project development support to bring the project to the point of investment readiness. This may include financial assistance to procure external consultants to provide technical advice, legal advice or project management services provided. However, this is provided that the services are not a continuous or periodic activity nor relate to the undertaking's usual operating costs, such as routine tax consultancy services, regular legal services or advertising.

Exclusions

1. Export Aid

The General Block Exemption Regulation and this scheme do not apply to the following:

• aid to export-related activities, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current costs linked to export activity
• aid contingent upon the use of domestic over imported goods

These types of aid are not allowed under any European regulations.

2. Sectoral

This scheme applies to all sectors of the economy. Aid favouring activities in the processing and marketing of agricultural products is allowable, unless the aid is aimed at directly influencing the price or quantity of primary production i.e.

• the amount of the aid is fixed on the basis of the price or quantity of such products purchased from primary producers or put on the market by the undertakings concerned
• the aid is conditional on being partly or entirely passed on to primary producers

Agricultural product means products listed in Annex 1 to the Treaty (except fishery and aquaculture products), cork products, and products intended to imitate or substitute milk and milk products.

3. Recovery of Illegal Aid / Undertakings in Difficulty

The following are explicitly excluded from this scheme:

• payment of aid in favour of an undertaking which is subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the common market; and
• aid to undertakings in difficulty, defined as follows:
  • a) In the case of a limited liability company, where more than half of its registered capital has disappeared and more than one quarter of that capital has been lost over the preceding 12 months; or
  • b) In the case of a company where at least some members have unlimited liability for the debt of the company, where more than half its capital as shown in the company accounts has disappeared and more than one quarter of that capital has been lost over the preceding 12 months; or
  • c) Whatever, the type of company concerned, when it fulfils the criteria under its domestic law for being the subject of collective insolvency proceedings.
  • d) An SME which has been incorporated for less than 3 years shall not be considered, for the purposes of this scheme, to be in difficulty unless point (c) applies.

Cumulation of Aid

Aid provided under the scheme may be cumulated with other forms of aid in relation to the same eligible costs only within the aid intensity limits for this scheme. Therefore, if the maximum aid intensity is determined to be 60%, then the total of Scottish Government, ERDF / ESF and other public funding made available to the project or activity cannot exceed this level. De Minimis aid cannot be used to "top up" the aid awarded under this or any other scheme, in respect of the same eligible costs.