#StateAid: Commission approves €60 million public support for environmentally friendly buses and related infrastructure in Portugal

Already a familiar sight in the North East of Scotland as a result of the EU funded H2 Aberdeen project which has seen a fleet of hydrogen fuel-cell buses operate throughout the City and its hinterland, the European Commission has approved Portuguese plans to support the purchase and use of low emission buses to be in accordance with TFEU treaty rules on State Aid.

Competition Commissioner Vestager stated: “This measure will help to improve air quality in Portugal and is aligned with Europe’s objective to reduce emissions. It supports the transition towards greener public transportation in urban areas without distorting competition.”

In June 2016, Portugal notified a €60 million scheme aiming to support the replacement of old conventionally propelled buses with new low-emission buses and related refuelling/recharging infrastructure.

The measure will be open to all green technologies currently available – (i) compressed natural gas or liquid natural gas buses, (ii) electric or hybrid buses, and (iii) hydrogen buses.

The Portuguese government will support 85% of the eligible costs through funding from the EU Cohesion Fund. Bus operators will bear the remainder.

The Commission assessed the aid for the acquisition of low-emission buses under its 2014 Guidelines on state aid for environmental protection and energy. The Commission found that low-emission buses had a low uptake in Portugal, given their high costs as compared to conventional buses.

As a result, private operators are reluctant to invest in refuelling/recharging infrastructure for such low-emission buses, in turn making it harder for bus operators to switch to low-emission buses.

In line with the Guidelines, the public support is therefore justified. It is needed to incentivise bus operators to acquire low-emission buses that go beyond the current European standards.

Moreover, the Commission found that the proposed state aid to be limited and proportionate, as the beneficiaries will be selected through an open tender process. The beneficiaries of the scheme are the transport operators and transport authorities responsible for carrying out urban passenger transport in Portugal.

The Commission assessed the aid to refuelling/recharging infrastructure directly under the Treaty on the Functioning of the European Union, which allows Member States to support the development of certain economic activities, in this case improving energy efficiency, in line with EU energy and climate goals.

The support was found to only alleviate the extra cost related to the set-up of the refuelling/recharging equipment.

The Commission considered the public funding appropriate, because of the risk of running such infrastructure, in particular in view of the currently low uptake of low emission buses in Portugal.

The Commission concluded that the project’s contribution to EU environmental goals clearly outweighs any potential distortion of competition brought about by the public financing.

The non-confidential version of the decision will be made available under the case number SA.45694 in the State Aid Register on the DG-Competition website shortly.