Subject: Discrimination in support fund for the public transport sector
Portugal has set up an extraordinary fund to support the public transport sector. It aims to ease the pressure generated by higher fuel prices throughout the EU and the impact of the COVID-19 pandemic. For the fifth time since 2021, the Portuguese Government has allowed heavy passenger vehicles to apply for support (taxis were also eligible in the first four phases), but has excluded companies operating in the autonomous regions of the Azores and Madeira. Their exclusion only exacerbates the inequality they experience as outermost regions (Article 349 TFEU).
The support in question is granted via the Portuguese Environmental Fund. The fund itself is financed through own resources, EU funding (the recovery and resilience plan) and ETS auctions, to which the two regions’ companies also contribute. Businesses operating in the regions are not eligible, however.
1. Is the Commission aware of this situation? If so, how does the Commission view the exclusion?
2. Given that the Environmental Fund is allocated EU funding, does the Commission intend to take steps to put an end to this discrimination and ensure that climate and digital goals can be achieved in the two regions?
Submitted:6.6.2023
Answer given by Executive Vice-President Vestager on behalf of the European Commission (3 August 2023)
To enable Member States to use the full flexibility foreseen under state aid rules to support the economy in the context of the COVID- 19 outbreak, the Commission adopted, on 19 March 2020, the state aid COVID-19 Temporary Framework (1).
In addition, to enable Member States to mitigate the impact of the economic crisis following Russia’s invasion of Ukraine, among others regarding the resulting increase in fuel prices, the Commission adopted a specific Temporary Crisis Framewor k (2) on 23 March 2022.
In this regard, it is for the Member States to decide if they wish to grant state aid under those Frameworks and to notify the measures they consider necessary to achieve the above-mentioned objectives.
In this context, Portugal has notified to the Commission several measures applying territorial exclusions, which the Commission has approved.
The Commission has, for instance, approved aid to undertakings located in the Portuguese continental territory, with the exclusion of Madeira and Azores (3) as well as aid to undertakings located exclusively in Azores (4), since those measures complied with the requirements laid down in the respective Frameworks.
Insofar as the use of Emissions Trading System (ETS) auction revenues as financing source of the Fund is concerned, new rules apply since 5 June 2023 whereby Member States must spend all revenues on selected climate, energy and social purposes listed in the ETS Directive.
The Commission ensures compliance by assessing the objective of the measures. The use of ETS auction revenues for measures encouraging a shift to public transport is an eligible purpose.
1 ∙ ⸱ https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020XC0320(03)&from=EN.
2 ∙ ⸱ ‘Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia’ https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52022XC0324(10)&from=EN. The Temporary Crisis Framework was replaced, on 9 March 2023, by the Temporary Crisis and Transition Framework, which aims at fostering support measures in sectors which are key for the transition to a net-zero economy, in line with the Green Deal Industrial Plan (‘Temporary Crisis and Transition Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia’ https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52023XC0317(01)). 3 ∙ ⸱ Commission Decision in case SA.103207 — Portugal — TCF: Extraordinary and exceptional support for the undertakings of road freight transport for hire or reward,
available at https://ec.europa.eu/competition/state_aid/cases1/202227/SA_103207_30A4A981-0000-CF6E-B2A4-09DD34E23A64_55_1.pdf . 4 ∙ ⸱ Commission Decision in case SA.102334 — Portugal — COVID-19: Aid to passengers transport sector in Azores for 2022, available at
https://ec.europa.eu/competition/state_aid/cases1/202215/SA_102334_9093FF7F-0000-C460-82DF-D6237AB4B66D_26_1.pdf.
| | ) The Cohesion policy funds are financing the Environmental Fund but not the extraordinary fund to support the public transport sector.