FEAD position on the draft for a new State aid General Block Exemption Regulation

FEAD, the European Waste Management Association, representing the private waste and resource management industry across Europe, welcomes a revision of the General Block Exemption Regulation (GBER) to adapt it to relevant policy priorities. In this context, FEAD stresses the need to further adapt the GBER to the EU´s circularity objectives. On the one hand, the Clean Industrial Deal aims to position the EU as the global leader in the circular economy by 2030 — a goal that demands significant investments and which is currently jeopardised by the deep crisis plastic recyclers are facing. On the other hand, the current aspirational goal of 35 billion cubic meters (bcm) of biomethane by 2030 must still be converted into a binding production target to ensure long-term demand visibility for the waste management and industrial sectors. The GBER revisions offers an opportunity to further support the achievement of these EU circularity goals.

Currently, in particular plastic recycling activities are facing severe difficulties manifesting in the form of: high energy costs and market volatility, price imbalance between recycled and primary raw materials, unfair competition from low-cost imports, including a perceived lack of transparency about their composition, nature, and quality, and a mismatch between existing recycling capacity and the still limited demand for recycled content. These are undermining its competitiveness and long-term viability and therefore it is crucial that the GBER extends to include in its scope also operating aid for sorting and recycling waste management infrastructure. Moreover, incentive schemes for biogas and biomethane production also require extension beyond the initial investment phase to ensure continuity. To achieve this, aid into circular economy infrastructure should be generally deemed to have an incentive effect as per Article 8(4) GBER.

FEAD therefore advocates for the following changes in the GBER framework:

1. The GBER should extend its scope to include also operating aid for sorting, recycling and biogas and biomethane production from waste. This is needed for the following cases:

• Sorting and recycling must be generally eligible for aid to reduce exposure to high energy prices under the GBER (e.g. reductions from electricity levies or other measures). Manufacturing industries included in the CEEAG can benefit from reduced energy levies while the recycling industry producing recycled materials for manufacturing are excluded. Virgin and recycled materials are in direct competition for the production of raw materials. With the last changes to the NACE codes, only the last plastic recycling step has been made eligible under the CEEAG, which is a positive development but remains insufficient to cover previous steps in the waste management value chain as well as other material flows, where needed.  

• The GBER must cover aid to support existing recycling capacities by bridging the price gap between virgin/new and domestically recycled materials, where needed. In certain cases, virgin raw materials are today cheaper than recycled raw materials because the negative externalities of the production and use of virgin materials are not fully incorporated into their price (e.g. in the case of plastic). In addition, the European plastic recycling sector is heavily affected by uncontrolled imports of recycled materials with uncertain origin and conditions. This gives virgin raw materials and imported recyclates an advantage on the market in relation to domestically recycled ones, at the cost of the environment and climate. Member States should be able to support existing European recyclers by providing temporary exploitation subsidies until EU recycled content targets kick in, mirror clauses and made in Europe are in place and/or the market for recyclates has become a sustainable business model.

• The GBER must ensure operational continuity for waste-derived biogas and biomethane production plants which risk being unable to continue operating without incentives. It is fundamental to ensure that producers have stable and adequate revenues to cover production costs beyond the initial investments period and to strengthen demand for biomethane and, at the same time, guarantee producers certain and sufficient revenues to cover production costs. The GBER framework should specifically encourage the repowering, revamping, and hybridization of existing generation assets to increase their efficiency.

• Increase aid levels in Art. 65 GBER. The decreased aid levels in GBER Art. 65 fail to take account of the economic difficulties facing the recycling sector. The current GBER allows for a maximum aid rate of 40% of the eligible base (total expenditure minus the cost of the counterfactual scenario). Under these rules, it was possible to secure funding at a rate of between 20% and 30% of the total project cost for industrial projects, and between 20 and 25% for major industrial projects. Whilst the new proposal allows for a maximum rate of 15% of the total project cost, with an additional 10% for small projects where the grant does not exceed €2.5 million, these proposals are at odds with the current economic climate in the recycling sector, where industrial projects are struggling to turn a profit. Against this background, we suggest to:
• Increase the base rate from 15% to 25% (maximum grant) whilst retaining the 10% bonus for small projects;
• Raise the ceiling for small projects to €5 million.

• The GBER Art. 65 should not exclude aid for waste recovery operations to generate energy nor disposal activities for hazardous waste. This is needed to cover operating aid for waste-derived biogas and biomethane production plants as indicated above, but also to ensure investments in waste incineration, where needed, for both hazardous and non-hazardous waste, as well as safe disposal options for hazardous waste.
  • For the case of non-hazardous waste, data reflects many countries, in particular eastern and southern ones, having a lack of alternatives to landfilling to treat their residual and non-recyclable waste with energy recovery. Closing this gap is essential and requires urgent action, especially because environmental permitting procedures in the region are often extremely slow — in some cases lasting up to 12 years — which severely delays investment cycles and undermines the ability to meet EU waste and circular economy targets.
  • For hazardous waste, disposal options remain essential to protect human health and the environment by destroying such hazardous waste. This is in line with zero pollution objectives and complementary to high-quality recycling.

• The GBER should consider aid into circular economy infrastructure to be generally deemed to have an incentive effect as per Article 8(4).

FEAD, the European Waste Management Association, represents the entire waste management value chain, from collection and sorting to recycling, energy recovery, and final disposal. It brings together the private waste and resource management industry across Europe through its 21 national member associations and associate members, which collectively represent over 3,000 companies. Together, the sector provides more than 500,000 local jobs and fuels €5 billion in investments into the economy every year. For more information, please contact: info@fead.be