Welcome Welcome Regional Aid Block Exemption Regional Aid Block Exemption De Minimis Regulation De Minimis Regulation Scottish Property Support Scheme Scottish Property Support Scheme Renewable Energy Renewable Energy Research and Development and Innovation Framework Research and Development and Innovation Framework General Block Exemption General Block Exemption Draft Environmental Guidelines Draft Environmental Guidelines

The European Commission have simplified the procedure for notifying regional aid schemes
with a new block exemption Regulation for regional investment aid (aid which promotes the
economic development of disadvantaged regions).  Regional aid can be granted in areas
eligible for regional aid (assisted areas), as set out in the UK regional aid map for 2007-13.

Member States will no longer have to notify transparent regional investment aid schemes to
the Commission in advance if they fulfil the conditions set out in the Regulation (based on
the 2007 Regional Aid Guidelines).

As of 1 January 2007 the Commission has adopted a new and more generous de minimis
block exemption regulation, which exempts Member States from the obligation to notify the
Commission of smaller amounts of public funding given specifically as de minimis aid.

Under the new regulation de minimis aid of up to €200,000 may be granted, from all public
sources, to a particular recipient over 3 fiscal years. The new regulation now also includes
scope to provide de minimis aid for the marketing and processing of agricultural products
and the road transport sector, although specific restrictions apply to the latter sector. 

Member State administrative requirements regarding the granting of de minimis aid and rules
regarding cumulation with other State aid in respect of the same project also apply. The State
Aid Unit is happy to provide further guidance as required.

The Scottish Property Support Scheme, allows the Enterprise Networks and Local Authorities
to support the development of new or existing premises and buildings for commercial purposes
by the private sector, where market failure exists ie. where the cost of development exceeds the
end market value, or where risk-aversion prevents developers from investing in a project.  The
scheme has been extended under the regional aid and SME block exemptions and is valid until
2013.

Both speculative and bespoke developments are potentially eligible for support under the scheme
and assistance can be given in various forms, including grants, subsidised loans and rent guarantees.
Aid given must be toward specific eligible costs and must be the minimum necessary for the project
to proceed. For more information, contact the State Aid Unit.

The Renewables Obligation for Renewable Technologies scheme requires all electricity suppliers
in the UK to ensure that a proportion of electricity supplied be produced from renewable sources
of energy. While this scheme brought forward more than 850MW of operational projects in
Scotland, the vast majority of these projects (98%) were wind based, this was largely due to
the high costs related to other renewable energy sources such as solar, wave and tidal, thermal
and biomass.

As the scheme did not provide enough incentive for such projects with high energy potential,
changes were needed to encourage electricity generation from these alternative sources.

In March 2007, the European Commission approved an amendment to the scheme, allowing
increased support in proportion to the higher costs of production from these sources. The scheme
will now help developers tap in to Scotland's natural resources and play a significant role in
reducing Scottish carbon and greenhouse gas emissions.

As of 1 January 2007 the Commission has adopted a new Framework for State aid for
Research and Development and Innovation, designed to help stimulate levels of R&D&I
within the EU. 

As per the previous Framework the Commission divides projects into three categories,
fundamental research, industrial research and experimental development, with permissible
State aid intensities based on the proximity of the project to market and the status of the
aid recipient. Whilst regional bonuses for projects have been removed, the new Framework
also includes significant new scope to award aid for R&D&I, particularly in favour of SMEs. 

Specifically for SMEs, aid for 'young innovative enterprises' of a one-off payment of up to
€1 million outside of assisted areas; aid for the loan of highly qualified personnel; and aid for
innovation advisory and innovation support services.  Plus scope to provide support to
companies of all sizes for process and organisational innovation in services, and innovation
clusters.  Another welcome aspect is the greater scope for public support to research
organisations for technology transfer activities.

One of the main reforms proposed in the State Aid Action Plan was the creation of a general
or 'super' block exemption, bringing together the existing block exemptions - SME, Training,
Employment and regional aid and now including scope from the environmental, research and
development and innovation, and risk capital frameworks, into a single consolidated block
exemption.

The Commission see this as a positive step, allowing them to focus on the more distortive aids,
while relieving Member State public authorities of the need to notify multiple schemes to achieve
their policy objectives. Scottish stakeholders comments on the first draft of the Commission
consultation on the general block exemption, were sent to DTI in June 2007 to be incorporated
into the UK response.

Further to the Environmental questionnaire issued August 2005, the Commission has now
published draft community guidelines for State aid for Environmental Protection. As you know
the current environmental guidelines expire at the end of 2007 and therefore this is a valuable
opportunity to have a say and hopefully further influence the contents of the new guidelines.

It can be seen from the draft guidelines that the Commission has noted our comments of 2005
regarding the increase of aid intensities. Other areas where changes are proposed are similar to
other recently revised State aid guidelines, for example the recently issued draft General Block
Exemption (GBE). As with the GBE, the Commission has also included new and additional
reporting and monitoring requirements in the environmental guidelines which require Member
States to publish the full text of all final aid schemes on the internet and notify to the
Commission of these details.

The draft guidelines also advise that some eligible costs are calculated differently. In the past
eligible costs were confined strictly to the extra investment costs necessary to meet environmental
objectives. However, within the draft guidelines the way the eligible investment costs are calculated
can be affected by the type of the environmental project.

Finally, there has been changes to the thresholds for notifying certain types of aid and at part 4.1
the Commission advises that it wishes to carry out more detailed assessments of certain individual
cases and goes on to provide a list of conditions as guidance.