EC Authorises Spanish 'Green' Car Producers Interest Rate Subsidies

by Ulrika Lomas, Tax-News.com, Brussels

01 April 2009

The European Commission has authorised, under EC Treaty state aid rules, a Spanish scheme allowing interest rate subsidies for the production of environmentally-friendly ('green') cars. The scheme will make it easier for producers to invest in products with environmental benefits, the development of which otherwise might have been hampered by the economic crisis.

The scheme meets the conditions laid down by the Commission’s temporary framework that gives member states additional possibilities for providing businesses with improved access to financing during the economic and financial crisis, as amended on February 25, 2009. In particular, the measure is limited in time and scope, takes into account the risk profile of the beneficiary and requires a significant environmental effort. They are therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid intended to remedy a serious disturbance in the economy of a member state.

Competition Commissioner Neelie Kroes said: "The measure will support the production of environmentally-friendly cars without unduly distorting competition. This will allow important investments for the future low carbon economy which could have been put on hold due to the financial and economic crisis. Good cooperation with the Spanish authorities, has allowed for a speedy assessment of the measure."

On March 6, 2009, Spain notified a temporary anti-crisis measure to the Commission. The scheme would allow subsidised loans to be granted only for investments in products that meet or go beyond future EU environmental product standards, in particular the standards for low emission vehicles (known as 'Euro 6'). The measure is open to the car and car component industry, informed the Commission’s release.

“Subsidised loans may be granted until December 31, 2009 with a maximum term of two years. The reduction in the interest rate may not exceed 50% for small and medium-sized enterprises (SMEs) and 25% for large businesses, in relation to the reference rate, and must take into account the enterprise's risk profile when the loan is granted. The measure applies only to businesses that were not in difficulty on July 1 2008, that is, before the crisis. Lastly, the monitoring reports to be produced by the Spanish authorities must include additional information, in particular the environmental benefits of the measure.”

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