What an IPCEI is and what are its objectives?
Important Projects of Common European Interest (IPCEIs) are cross-border, cutting-edge innovation and infrastructure projects, which aim to bring together the public and private sectors. They are designed to overcome major or systemic market failures in strategic value chains.
IPCEIs should contribute significantly to the achievement of EU strategies, including the European Green Deal and the Digital Strategy. Furthermore, they should generate positive spill-over effects for the benefit of the EU economy and its citizens at large. In other words, they should contribute to sustainable economic growth, job creation, competitiveness, etc.
The requirements to be met are:
- Contribute to the common objectives of the European Union.
- Demonstrably overcome major market failures.
- Involve at least four Member States, unless a smaller number is exceptionally justified by the nature of the project.
- Be designed in a transparent and inclusive manner, so as to give all Member States a real opportunity to participate.
- Produce concrete positive spill-over effects for the benefit of the EU economy and society beyond the Member States and participating companies.
- Have significant co-financing from the companies that will receive State aid.
- Avoid negative environmental impacts due to non-compliance with the no significant harm principle.
- Eligible costs are: feasibility studies, instrumentation and equipment costs; acquisition (or construction) costs of buildings, infrastructure and land, costs of other materials; costs of obtaining, validating and defending patents; personnel and administrative costs, among others.
How support for an IPCEI is granted
IPCEIs are a state aid scheme to support R&D&I activity established by the European Commission (EC). Funding is granted through State aid, in accordance with EU rules, from the national budget, which must be notified to Brussels for assessment and, if necessary, approval.
For aid granted to an IPCEI to be considered compatible with the internal market, it must meet the following criteria:
- Proportionality. It does not disproportionately distort competition.
- Necessity. It must help a consortium having difficulties in launching a project, which without public support, would not see the light of day.
- Adequacy. The support should only cover the funding gap (up to and including 100%) and not go beyond ensuring sufficient viability of the project.
How is an IPCEI prepared?
The application process to participate in an IPCEI has different steps and negotiations between the Member States and the European Commission.
First, Member States identify a market failure and raise the possibility of establishing an IPCEI to cover it. Each Member State launches national Expressions of Interest (EOI) and calls for applications to which those interested in joining the IPCEI can apply.
The competent authorities in the Member States review the proposals received and select the best proposals to be part of the project. The phase between pre-notification and notification is used to evaluate the submitted projects and clarify any outstanding issues. As for the notification phase, it can be relatively short. This allows the Commission to finalise its assessment and take the appropriate decision.
Finally, the assessment of IPCEIs is carried out by the European Commission’s Directorate-General for Competition, which must have analysed the project’s compliance with the Criteria for the analysis of the compatibility of aid with the internal market set out in EC Communication C (2021) 8481 of 25/11/2021.
What are the rules?
In 2014, the European Commission adopted a specific communication on state aid rules for IPCEIs, setting out the criteria to be taken into account for the assessment of state aid to promote the implementation of IPCEIs.
In November 2021, the EC published a revision, which entered into force on 1st January 2022 and which sets out the criteria for the Commission to assess Member States’ support for IPCEIs.
In particular, the revised Communication:
- Further strengthens the European and open character of IPCEIs by stating that IPCEIs should normally involve at least four Member States (previously, only two were necessary) and by requiring that IPCEIs are designed in a transparent and inclusive manner.
- Facilitates the participation of small and medium-sized enterprises (SMEs) in IPCEIs and enhances the benefits of their participation through specific facilities for assessing the compatibility of SME support, such as the possibility for smaller companies to have a more limited own contribution to projects than otherwise required.
- It aligns its objectives with current EU priorities.