Public support to undertakings for environmental protection and for new technologies

by Lorenzo Rodio Nico* and Andrea Signorino Barbat** 

ABSTRACT: The paper scrutinizes the evolving role of the state in reshaping economic paradigms to harmonize with environmental preservation, concurrently reigniting economic vigor, on a comprehensive exploration of the multifaceted interplay between state intervention, economic resurgence, and environmental sustainability. Central to this discourse is the notion of state aid as a dynamic force, not merely as a financial support mechanism but as a disciplined catalyst across the trinomial dimensions of environment, climate, and energy. This perspective unveils state intervention as a multifunctional tool capable of steering economic revival while nurturing environmental imperatives. Advocating for agility and adaptability in aid disbursement regulations the promotion of flexible criteria to navigate the ever-evolving economic and environmental landscapes becomes fundamental. By intertwining technological innovation and environmental preservation, the study posits them as inseparable facets essential for sustainable progress and the pivotal role of state aid in fostering groundbreaking technologies while nurturing a circular economy ethos. It delineates the transformation of the state from a conventional “market fixer” to a proactive development promoter, signaling a profound reconfiguration of state intervention. This holistic blueprint seeks to intertwine environmental consciousness with economic resurgence, charting a course towards a sustainable future that harmonizes economic vitality with environmental guardianship.

SUMMARY: 1. The return of the State of the economy for the protection of the environment with a view to relaunching the economy. – 2. The prospect of state aid as a disciplining trend with multiple functions. The trinomial environment, climate, energy. – 3. Make the rules on granting aid more flexible. – 4. Interconnections between disciplines: aid for the development of new technologies and the circular economy. – 5. From the State as “market fixer” to the State as development promoter. – 6. Towards a systemic approach to environmental/technological issues. – 7. The overall picture in Latin America. – 8. The evolution of the issue in Uruguay.

1. Public action in the economy seems to be directed towards overcoming economic functionalism toaddress the activities of enterprises not only towards profit but also towards the pursuit of common goals.

In this context, technological innovation becomes a key factor for the promotion of development in environmental terms, especially in «inclusive systems with open and accountable political and legal institutions», open systems towards organizational/institutional forms that govern socio-economic phenomena, as opposed to «closed» and «authoritarian» ones that, for example, «exploit resources without redistributing them and thus, in terms of economic development, create situations of inefficiency»[1].

The innovative perspective is directed towards interventions of a structural nature, such as infrastructure, together with those of a specific nature such as system reforms or the implementation of specific sectors (economic incentives, support for start-ups, as well as direct interventions, etc.).

The current economic programming is facilitating this process, enabling the disentanglement of certain regulatory and operational criticalities in several areas that are inherent both to development and environmental issues and to the guarantee of sociality and, finally, to the proper management of public finances.

In this regard, even the process of flexibilization of State aid regulations becomes one of the qualifying elements of the neo-interventionismin the economy: indeed, not an abdication of the general rules for the protection of competition, which remain as a founding principle of the European Union itself, but an action for economic development – as prefigured by Article 107, §3, TFEU itself when it provides for exceptions, precisely for development  – and for the implementation of the principle of economic, social and territorial cohesion.

The “ductility” of State aid, indeed, places the States before very significant responsibilities, especially in the context of the application of the recently amended regulation on exemptions from prior notification[2], which, as is well known, among potentially compatible horizontal aid,those for development, innovation, and the environment[3].

2. In the perspective of state aid law, business support for environmental protection and innovation perfectly matches the indicated design line: it is an approach that could be defined as a paradigm of a new environmental legal order.

The prospect of an initiative that looks at the environment as a priority intervention factor in the European context can be seen, for example, in the sixth amendment of the temporary framework on state aid, which complements the already articulated temporary framework with a section devoted precisely to economic incentives for companies in the environmental field (which expired in December 2022)[4].

An assessment of compatibility is envisaged based on the assumption of «do not significant harm» provided by art. 17 of Regulation (EU) 2020/852[5], that it is considered to be a preventive criterion of a systemic nature involving, among other things, the healthiness of the environment and the sustainability of economic initiative.

This is an underlying assessment element for all economic initiatives undertaken within the framework of European programming, as set out in the Recovery and Resilience Framework: a framework covering the impact on six environmental objectives such as climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, circular economy, pollution prevention and reduction, and protection and restoration of biodiversity and the ecosystem. This can be regarded as a range of protective shields covering «each and every measure»[6] adopted by states in the provision of aid to undertakings.

The same prior procedure also applies to measures undertaken in the context of cohesion policy initiatives, as laid down in the Common Provisions Regulation[7].

The criterion must also be included by the managing authorities in the framework of the investments foreseen for the ESF+.

A disciplinary trend that continues with the regulations contained in the Guidelines on State aid in favor of the climate, the environment and energy[8], which represent a further operational tool to allow for the development of new environmentally compatible energy technologies, as well as intervening on a long-standing issue such as that of harmful environmental subsidies, which are hardly justifiable on an environmental level[9].

The criterion of compatibility is contained in Article 107(3)(c) concerning aid provided to support the development of specific economic activities in the internal market under conditions that do not affect trade between Member States.

This is a proposition in the wake of policies to implement the European green economy project sealed with the expansion of energy, climate, and environmental protection measures towards new technologies: low-emission mobility infrastructures, devices for improving the energy performance of buildings, restoration of natural habitats and ecosystems, and so on.

This is the application of the criterion of compensatory justification that balances the potential harm to competition with the advantage that the economy would receive in terms of development even if aid is present. Therefore, the aid in question would bring positive results for society by being sustainable without harming future generations, it would trigger an incentive mechanism consisting in changing behavior to develop economic activities that respect the ecosystem, and it would contribute to the process of harmonization of the environmental protection discipline in Europe.

3. As mentioned above, this is a process that concerns all the new European dimension of planning regarding the economic and production dynamics of the third millennium, in a process, which has just begun, of (re)constructing supranational integration itself, which seemed to have been swallowed up by the inertia and selfish positions typical of the phase that from Maastricht to the pandemic crisis.

In general, green investments find a very significant space in an even broader sphere if one considers the regulations that facilitate a plurality of investments aimed at supporting companies in the phase of the transformation of the economy in a “green key”.

Making the state aid discipline flexible is a complex task but at the same time necessary to make a general guideline operative that allows «the achievement of predefined policy objectives»[10] including, precisely, incentive systems.

If one looks at the guidelines and individual frameworks adopted in the last two years, one understands how the current phase is aimed at regulating a wide range of disciplinary fields that should, over time, make the adoption of State aid to undertakings more flexible, ranging from risk financing aid to environmental protection aid, from InvestEU-funded aid to electricity and gas aid[11], from support to innovative companies to maritime companies and so on.

The policy for the flexibilization of state aid also provides for the possibility of supporting insolvent SMEs to obtain financing in order to give them a second chance, facilitating access to credit, incentives for the transformation of activities in terms of environmental reconversion, improving access to finance through loan guarantees to help SMEs face the challenges posed by the globalization of the economy and climate change, which is a privileged field of application of Economic Law[12]. To make the action contained in the SBA effective, the financial instruments envisaged in the Competitiveness and Innovation Program also play a significant role in fostering venture capital investments and providing forms of guarantee for SMEs.

4. The guidelines on state aid for environmental protection find a regulatory link, one might say complementary, with those on aid for technology development.

The two disciplinary apparatuses, although autonomous, are mutually functional insofar as new technologies turn out to be crucial in the production of energy from renewable sources with a significant increase in public incentives for research: a common trait, therefore, with respect to the symbiotic approach between environmental protection and the development of new technologies.

After all, the Commission has been favoring the granting of aid to enterprises for research, development, and employment since the first block exemption regulation, a trend that is confirmed with the approval of subsequent regulations and the adoption of singular legislation dedicated to the framework on the granting of aid.

These types of aid are closely linked to the aids for research in new technologies considered to be as a generator of incentive effect, which, as is well known, is a positive factor in assessing the compatibility of aid.

This is one of the reason why with the Communication No. 414/2022[13] the Commission provided guidelines about the simplification of procedures for granting state aid for research, development, and innovation.

Among the conditions that must be met for aid to be considered compatible, merely recalling the most relevant, are: the “incentive effect” (point 41)[14] which «occurs where the aid changes the behavior of an undertaking in such a way that it engages in additional activities, which it would not carry out or it would carry out in a restricted or different manner without the aid»^[15] (point 42).

Moreover, «for notifiable individual aid, Member States must demonstrate to the Commission that the aid has an incentive effect and therefore need to provide clear evidence that the aid has a positive impact on the decision of the undertaking to pursue R&D&I activities» (point 46);the R&D&I activity which must take place following the granting of the aid: so the Commission considers that if the «start of works takes place before the aid application is submitted […] the project will not be eligible for aid» (point 43);tangible development occurs that the market alone cannot provide, for example to remedy a market failure that affects the CSR activity or investment in question (point 59)^[16].

The incentive effect constitutes, as is well known, one of the elements that, so to speak, can make State aid to undertakings compatible: although aid is an instrument considered, in principle (although not in an absolute sense), to be negative as economic support for undertakings, if it produces an effect that generates economic development for the European economy, it can be considered to be positive[17].

In addition, a modification of the General Block Exemption Regulation (GBER)^[18] introduced new definitions for aid for research and development and innovation[19]. It is specified, for example, that aid for industrial research «in any area, technology, industry or sector (including, but not limited to, digital industries and technologies, such as for example super-computing, quantum technologies, block chain technologies, artificial intelligence, cyber security, big data and cloud or edge technologies)»may be exempt from notification.

Not only that, but the extension of exemptions affects and concerns new environmentally friendly technologies for example in terms of the possibility of cumulating of certain aids that fulfill both purposes.

This can be considered as one of the results of the evolution of the market consequent to the Green New Deal[20] or the provisions in the regulation governing RePowerEU, which represents the new frontier in the possible combination of pro-environmental support measures from the perspective of the circular economy.

It also outlines several actions to be taken into consideration to address risks to the resilience of supply chains, risks to the physical and cyber security of critical infrastructures, risks related to technology security and technology leakage, and risks of economic dependencies or economic coercion.

These initiatives align with the new framework for strengthening Europe’s semiconductor ecosystem^[21], allowing Member States to provide support through state aid, if it complies with State aid rules under Articles 107 and 108 of the Treaty on the Functioning of the European Union (TFEU).

This support aims to encourage the establishment of necessary design capabilities for microprocessors.It must be highlighted that this strategy constitutes a further step towards the achievement of common objectives, considering the close interrelationship between the development of technologies and the green transition also through a substantial financial allocation once again made available by the European Union budget.

5. Supranational decisions provide a preliminary solution to address the issue by creating more flexible regulations[22] for granting state aid for research and development and innovation^[23].

The Commission’s increasing focus on technological development can be seen in two interrelated aspects.

First, all the technologies mentioned in the communications fall into the category of “frontier technologies”^[24], exceeding the legislature’s ability to adapt and set specific standards. Regulation can sometimes hinder technological progress, especially regarding mainstream adoption.

For example, frontier technologies are particularly significant to guarantee the develop and use of innovative solutions to reduce the human impact on climate change and create clean energy production systems.

From this point of view, incentives for innovative start-ups represent the point of conjunction between the demands of environmental protection and the prospect of technological innovation in terms of economic development[25].

Second, technology development, especially in frontier technologies, can have a positive impact on endogenous growth^[26], which refers to long-term economic growth driven by internal forces within the economic system, particularly those governing opportunities and incentives for creating technological knowledge^[27].

While this aspect is often criticized, it underscores the importance of state aid in the technology sector.

The results show how R&D intensity, its interaction with distance to the technology frontier and the technology gap can positively or negatively influence some factors (Total Factor Productivity – TFP^[28]) of Gross Domestic Product growth^[29].

This illustrates the role that the European Union is assigning to state aid. State aid serves as a tool to safeguard^[30] the European market and encourage innovation and production^[31]. This role signifies a departure from the previous function of state aid as a “market fixer”^[32], a role that characterized aid for over a decade after the 2008 crisis. The goal now is to ensure greater economic resilience among member states.

In this sense, therefore, the transition towards the transformation of the economy from an environmental/developmental perspective represents the key to understanding a possible global strategy of the European economy, with significant repercussions also at the geopolitical level[33].

It is evident that while progress is being made, the timeframe for achieving concrete European market independence is increasingly constrained, particularly as foreign players maintain a significant lead in both production and development across most technology sectors.

6. Business support for technological development is one of the factors that can help reduce climate risks and, at the same time, make companies competitive in the global scenario.

The energy and climate emergency, for example, promises to change production and consumption patterns through a common policy that can potentially contribute to changing the modus vivendi of future generations, as well as naturally reshaping the geopolitics of the years to come.

Combining environmental protection with energy production is a strategic factor from the point of view of technology development and implementation: the planning of the economy for “environmental purposes” therefore broadens the scope of the legislator by opening regulatory spaces based on the environmental sustainability of economic initiatives.

In a certain sense, the effects of the crises have contributed to a change in sensitivity towards environmental issues and the world view of the consequences of human action in the future considering the inseparable correlation between the indivisibility of risks and collective destinies[34].

It can be understood how the approach that pervades the “new wave” of European and State planning is aimed at a policy that goes beyond functionalism and places the business dimension in a different view, in which the role of the State in the economy takes on a value that is not exclusively profit-oriented but looks to values and pursues common objectives, for the individual and communities.

The regulation of the economy in function of the protection of the environment and the ecosystem refers to sectors such as alternative energy sources, areas of public intervention such as sustainable infrastructure, the system of economic incentives to companies and production activities, and so on.

The environmental “variable” overbearingly affirmed in the wake of the pandemic – but announced well before its explosion by the European Green Deal and other political initiatives such as the 2008 climate-energy package and the 2013 European environment programme – “renews”, so to speak, public intervention in the economy, placing it in the perspective of the Developmental State. Among the most significant characteristics of this type of State is the provision of actions to foster development and the strengthening of the State, which does not only correct market failures, but, in fact, programmes by “taking risks”, implementing its strategic capacity and combining economic growth and social development. It consists of a theoretical-operational mode that would entrust the State with fundamental tasks in historical processes without the logic of profit maximization. The principle of the prevalence of economic growth would be replaced by the logic of the development of collective, social and economic welfare through, inter alia, public control of finance, cooperation with trade unions in industrial relations, and the promotion of development initiatives through economic incentives to enterprises.

7. The situation in Latin America with regard to the role of the state is somewhat different from that in the European Union, as protectionism is still in place and the presence of the state is considered essential to guarantee economic and social aspects.

In some countries, the concept of state intervention is even seen as necessary, including subsidies to the population in the areas of energy, transport, food, etc., and even direct subsidies without compensation. The case of Argentina is emblematic, where the new government is trying to put an end to uncompensated subsidies and intermediaries in the supply of food and other goods, which, among other factors, have contributed to the inexplicable quasi-insolvency of a country of extreme economic and cultural wealth.

Brazil also has subsidies, and in certain countries, such as Venezuela, the state intervenes in all productive activities with a protagonism that is at least disproportionate compared to international trends.

However, some countries, such as Colombia, Ecuador, Peru, which have overcome their political ups and downs, and Uruguay, a country that happens to be an island in the middle of a troubled South American continent due to its economic, social and political stability, are trying to promote economic sustainability, in particular through the so-called Benefit and Collective Interest Companies, or BICs.

In Uruguay, for example, the Law on Benefit and Collective Interest Companies (BIC, Spanish acronym) was enacted on 23 July 2021.

Uruguay is the fourth country in Latin America to pass a law, number 19969, which recognises companies whose purpose, in addition to generating economic profit, is to have a positive impact on the environment and society. 

These are companies that seek to solve environmental and social problems through the development of their economic activities. Previously, this depended on the goodwill of the company owner, i.e. on individual initiatives. 

8. According to the Law no.19969, BIC companies or trusts can be those that decide to create themselves as such, as well as those that already exist and decide to adopt the regime of the Law.

In order to adopt the BIC regime, the companies or trusts must include in their bylaws or founding contracts, the objective of generating a positive and verifiable social and environmental impact, in addition to the requirements of the applicable regulations.

Legislative Decree no. 136/022 of April 2022 adds that BIC companies must clearly and precisely define the activity to be developed and the objective of the benefits they intend to achieve, and must direct their actions to generate economic, social and environmental impacts that are measurable and verifiable.

Likewise, the benefit must include at least one social and environmental objective in addition to the profit motive, always within the framework of compliance with environmentally sustainable management.

The activities linked to the objectives referred to in the previous paragraph must be developed within the framework of a strategic plan focused on the profit objective, which must be drawn up and approved by the competent body of the company.

Article 3 of the Decree contains some interesting definitions:

      a) Sustainable management: A permanent and continuous process consisting of a structured set of principles, rules, processes and activities aimed at achieving the objectives of the policy of environmental sustainability of the company and the conservation of the natural heritage.

   b) Positive impact: This is the result aimed at improving the well-being of people and/or the environment, which is measurable and verifiable over time, and which is generated by one or more actions directly undertaken by the BIC company.

   c) Social objectives: These are quantifiable objectives aimed at improving, in whole or in part, the well-being of the population by solving or reducing the impact of a problem caused by nature or by third parties outside the BIC company.

   d) Environmental objectives: These are objectives aimed at ensuring the existence of healthy, viable and functioning ecosystems through the prevention, protection and restoration of the environment and its components. The conservation and sustainable use of natural resources in a responsible manner, consistent with respect for the fundamental rights of individuals.

With regard to control and transparency, it is established that, without prejudice to the accountability and information obligations imposed by other regulations, administrators and trustees shall draw up an annual report in which they accredit the measures taken to achieve the positive social and environmental impact foreseen in their founding contract or statutes. The information requirements to be included in the annual report and the publicity mechanisms shall be established by regulation.

The annual report shall be publicly available. It shall be submitted within a maximum period of six months after the end of each financial year to the body or authority determined by regulation.

The regulation has determined that the State’s Internal Audit Office shall be the competent body with which the annual reports of companies and trusts of collective benefit and interest (BIC) shall be registered. The aforementioned registration does not imply any pronouncement on the content or compliance of the company or trust with the triple impact.

The State’s Internal Audit Office shall have the following powers:

   1) To receive and register the annual report.

   2) To issue the certificate of registration of the annual report.

   3) It may ex officio promote the disqualification before the competent judge in accordance with article 10 of the decree.

   4) To request a technical opinion on the contents of the annual report from any public or private body or institution that it considers competent or suitable to give an opinion or advice.

 5) Notify the competent body of any non-conformities detected, in accordance with the applicable legal framework.

Article 10 of the Decree, on disqualification, establishes that the BIC company category shall be lost in the following cases:

a)if the company voluntarily decides to do so at a shareholders’ meeting

b) for failure to comply with the obligations assumed in application of the law and the provisions of the decree.

In case b), the disqualification may be promoted ex officio by theState’s Internal Audit Office or by any partner or third party who can prove a direct personal and legitimate interest before the competent judge, who will declare the disqualification by means of an ordinary judicial procedure.

In other words, the State participates in the registration and control of the necessary obligations and conditions, but does not participate in the process of developing the objectives of this type of BIC companies and trusts.

It is clearly a role for the State to cooperate with the important objectives of social and environmental impact, going beyond the traditional interventionist role or the exclusive pursuit of economic objectives.

The new law opens up the possibility of making a voluntary and permanent commitment, visible in the name of the BIC company itself and easily identifiable by consumers, suppliers and society in general.   This commitment has no counterpart on the part of the State. The law does not grant any tax or other benefits.

What it does have is an impact on consumers who are interested in solving problems that affect society. They are reassured that they are buying products or services from a company that has as part of its corporate purpose, the solution to these problems.  The year 2023 closed with more than a thousand Certified B Companies in Latin America, fifteen in Uruguay, and the celebration of ten years of Sistema B in Latin America.

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[1] See Clarich, Istituzioni, nuove tecnologie e sviluppo economico, Napoli, 2017, pp. 18-19.

[2] Commission Regulation (EU) 2023/1315 of 23 June 2023 amending Regulation (EU) No 651/2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty and Regulation (EU) 2022/2473 declaring certain categories of aid to undertakings active in the production, processing and marketing of fishery and aquaculture products compatible with the internal market in application of Articles 107 and 108 of the Treaty.

[3] The European Council, acting on a proposal from the Commission, adopted the Europe 2020 strategy, the basic idea of which was to set a number of targets to be achieved over the course of the decade: from increasing employment to combating climate change, from promoting education and research to combating poverty and social exclusion. The Europe 2020 strategy was conceived a decade ago as an exit plan from the recession that began in 2008. An economic crisis that, in addition to producing economic and social damage, had made evident certain limitations and contradictions in the continental economy.

[4] Communication from the Commission, Sixth Amendment to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak and amendment to the Annex to the Communication from the Commission to the Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance, (2021/C 473/01).

[5] Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088.

[6] European Commission, Commission Notice Technical guidance on the application of ‘do no significant harm’ under the Recovery and Resilience Facility Regulation, (2021/C 58/01), point 2.1.

[7]Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy.

[8] Communication from the Commission, Guidelines on State aid for climate, environmental protection and energy 2022 (2022/C 80/01)

[9] See Bergonzini, Green economy e agevolazioni fiscali: i sussidi ambientali, in Bergonzini, Luchena, Le tasse non sono per tutti. L’ambivalenza delle agevolazioni fiscali. Quanto tolgono allo Stato, quanto danno ai cittadini?, Milano, 2020, p. 59 ss.

[10] See Ammannati, Governance e regolazione attraverso reti, in Ammannati, Bilancia (a cura di), Governance dell’economia e integrazione europea, II, Governance multilivello regolazione e reti, Milano, 2008, p. 185.

[11] Regulation (UE) 2021/523 of the European Parliament and of the Council of24 March 2021 establishing the InvestEU Program and amending Regulation (EU) 2015/1017.

[12] See Condon, Sinha, Therole of international economic law in addressing climate change, in WTO Publications, 2014, Geneva, 117 ss., availableat https://www.wto.org/english/res_e/booksp_e/cmark_chap8_e.pdf.

[13] Communication from the Commission Framework for State aid for research and development and innovation 2022/C 414/01, C/2022/7388, 28.10.2022.

[14] There have been numerous State aid cases showing and underlining the importance of the incentive effect and how it is necessary to grant an economic aid: Court of Justice, Veejaam and Espo, C-470/20, 15 december 2022; Court of First Instance (Fifth Chamber), Kronoply GmbH & Co. KG v Commission of the European Communities, T-162/06, 14 January 2009; European Commission, Decision State aid SA.39078 – 2019/C (ex 2014/N), 20 March 2020; European Commission, Decision State Aid SA.46874 (2017/N) France – Project for an ocean energy farm in Normandy [2019] OJ C 14;  European Commission, Decision of 4 July 2006 Ford Genk, C 40/2005; European Commission, Decision of 4 April 2007 General Motors Antwerp, C 14/2006.

[15] See Judgment of the Court of Justice, HGA and Others v. Commission, Joined Cases C-630/11 P to C-633/11 P, ECLI:EU:C:2013:387.

[16] See point 63 of the Communication No. 414/2022 about the elements that the Commission must take into consideration and in particular:

«(a)      knowledge spillovers: level of knowledge dissemination envisaged; specificity of the knowledge created; availability of IPR protection; degree of complementarity with other products and services;

(b)       imperfect and asymmetric information: level of risk and complexity of R&D&I activities; need for external finance; characteristics of the aid beneficiary regarding access to external finance;

(c)        coordination failures: number of collaborating undertakings; intensity of collaboration; diverging interests among collaborating partners; problems in designing contracts; problems to coordinate collaboration».

Moreover, under section 3.2.5.1.1. «Effects on product markets» is stated that «110.State aid for R&D&I can hamper competition in innovation processes and product markets in three ways, namely by distorting the competitive entry and exit process, by distorting dynamic investment incentives and by creating or maintaining market power».

[17] Luchena, Il divieto di concessione degli aiuti di Stato alle imprese e l’intervento pubblico nell’economia, in Bani, Di Porto, Luchena, Scotti, op. cit., p. 185; Verouden, EU State Aid Control: The Quest for Effectiveness, European State Aid Law Quarterly, 14(4), 2015, p. 459 ss.; Nicolaides, The Incentive Effect of State Aid: Its Meaning, Measurement, Pitfalls and Application, in World Competition, Vol. 32(4), 2009, p. 579 ss.; Nicolaides, Incentive Effect: Is State Aid Necessary when Investment Is Unnecessary?,inEuropean State Aid Law Quarterly, Vol. 7(2), 2008, p. 230 ss.

[18] Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty.

[19] Commission Regulation (EU) 2023/1315 of 23 June 2023 amending Regulation (EU) No 651/2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty and Regulation (EU) 2022/2473 declaring certain categories of aid to undertakings active in the production, processing and marketing of fishery and aquaculture products compatible with the internal market in application of Articles 107 and 108 of the Treaty.

[20] The Green New Deal (European Commission, The European Green Deal, COM(2019) 640 final, Brussels, 11 December 2019) is one of the most important initiatives on the behalf of the European Commission. Is a matter of fact that the Green Deal is influencing other economic choices that the Commission is taking. For example, the General Block Exemption Regulation (GBER) has been amended (Commission Regulation (EU) 2023/1315 of 23 June 2023 amending Regulation (EU) No 651/2014 – “Green Deal GBER amendment”) by the Commission together with the Temporary Crisis and Transition Framework (European Commission, Amendment to the Temporary Crisis and Transition Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia C/2023/8045, 21.11.2023) to facilitate and speed up support for the EU’s states green and digital transitions and grant support for the Green Deal and the Green Deal Industrial Plan (European Commission, A Green Deal Industrial Plan for the Net-Zero Age, Brussels, 1.2.2023 COM(2023) 62 final). On the Green New Deal and its correlation with economic development see ex multis: Almeida, Kolinjivadi, Ferrando, Roy, Herrera, Gonçalves, Van Hecken, The “Greening” of Empire: The European Green Deal as the EU first agenda, in Political Geography, Vol. 105, p. 2023;  Bruch, Ringel, Knodt, Clean Energy in the European Green Deal: Perspectives of European Stakeholders, in  Knodt, Kemmerzell, (eds), Handbook of Energy Governance in Europe, Cham, 2022; Borghesi, Vergalli, The European Green Deal, Energy Transition and Decarbonization, in Environ. Resource Econ., Iss. 83, 2022, pp. 1–3,;Cavaliere, Il Green Deal, cit., 2022; Chiti, Beyond Market Regulation: Ecosystems’ Sustainability and its Relevance in the European Green Deal, in RivistadellaRegolazionedeimercati, Iss. 2, 2022, p. 468 ss.; Schunz, The ‘European Green Deal’ – a paradigm shift? Transformations in the European Union’s sustainability meta-discourse, in Political Research Exchange, Vol. 4(1), 2022; Bevilacqua, From sustainable development to Green New Deal, in Ius Publicum Network review, n. 1, 2021; Dobbs, Gravey, Petetin, Driving the European Green Deal in Turbulent Times, in Politics and Governance, n. 9(3), 2021, p. 316 ss.; Wolf, Teitge, Mielke et al., The European Green Deal — More Than Climate Neutrality, in Intereconomics, Iss. 56, , 2021, p. 99ss.; Lee-Makiyama, The EU Green Deal and Its Industrial and Political Significance, European Centre for International Political Economy, 2021; Skjærseth, Towards a European Green Deal: The evolution of EU climate and energy policy mixes, in Int Environ Agreements, Iss. 21, 2021, p. 25ss.; Sikora, European Green Deal – legal and financial challenges of the climate change, in ERA Forum, n. 21, 2021, p. 681 ss.; Mastini, Kallis, Hickel, A Green New Deal without growth?, in Ecological Economics, Vol. 179, 2021; Elkerbout, Egenhofer, Núñez Ferrer, Catuti, Kustova, Rizos, The European Green Deal After Corona: Implications for EU climate policy, Brussels: CEPS, 2020; Pettifor, The  Case  for  the  Green  New  Deal, London-New  York, 2019; Cavaliere, Il progetto Green New Deal e gli incentive verdi: è tuttooroquellocheluccica?, in DirittoPubblicoEuropeo – Rassegna Online, n. 13(1), 2020; Claeys, Tagliapietra, Zachmann, How to make the European Green Deal work, in Bruegel Policy Contribution, Iss. 14, 2019.

[21] Regulation (Eu) 2023/1781 of the European Parliament and of the Council of 13 September 2023, establishing a framework of measures for strengthening Europe’s semiconductor ecosystem and amending Regulation (EU) 2021/694 (Chips Act) 18.9.2023, point 41.

[22] See the Temporary Crisis Framework adopted on 23 March 2022 and the following modification that enables Member States to a more flexible use of State aid to support the economy in the context of Russia’s war against Ukraine (Communication from the Commission, Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (2022/C 131 I/01), 23.03.2022; Communication from the Commission, Temporary Crisis and Transition Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (2023/C 101/03), 17.03.2023 and Communication from the Commission, Amendment to the Temporary Crisis and Transition Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (C/2023/1188), 21.11.2023). Also, the new amendment to the GBER (Commission Regulation (EU) 2023/1315 of 23 June 2023 amending Regulation (EU) No 651/2014) gives Member States more state aid flexibility in sectors necessary for climate neutrality. On this topic see ex multis Giosa, Assessing the Use of the State Aid Covid Temporary Framework with Regard to the Healthcare and Media Sector, in Journal of European Competition Law & Practice, Vol. 14(5), 2023, p. 274 ss.; Hanny, Wagner, Buhl, Heffron, Körner, Schöpf, Weibelzahl, On the progress in flexibility and grid charges in light of the energy transition: The case of Germany, in Energy Policy, Vol. 165, 2022; Cseres, Reyna, EU State Aid Law and Consumer Protection: An Unsettled Relationship in Times of Crisis, in Journal of European Competition Law & Practice, Vol. 12(8), 2021, p. 617 ss.; Maczkovics, How Flexible Should State Aid Control Be in Times of Crisis?, inEuropean State Aid Law Quarterly, Vol. 19(3), 2020, p. 271 ss.; Fernández, A Critical Analysis on the European Union’s Measures to Overcome the Economic Impact of the COVID-19 Pandemic, in European Papers, Vol. 5(3), 2020, p. 1399 ss.; Canepa, Dai salvataggi ai creditideteriorati: la complessaapplicazionedelleregolesugliaiuti di Statofraflessibilità e rigidità, in Riv. trim. dir. econ., n. 3, 2016, p. 258 ss.

[23] See Bruzzone, Boccaccio, Infrastructure Financing and State Aid Control: The Potential for a Virtuous relationship, in Nascimbene, Di Pascale (eds.), The Modernisation of State Aid for Economic and Social Development, Berlin, 2018.

[24] Researching and developing frontier technologies can lead to technological frontier. Countries «close to the frontier feature the highest share of R&D innovators» (Hölzl, Janger, Distance to the frontier and the perception of innovation barriers across European countries, in Research Policy, 43(4), 2014, p. 715; Acemoglu, Aghion, Zilibott, Distance to Frontier, Selection, and Economic Growth, in Journal of the European Economic Association, 2006, 4(1). Moreover «the economic performance of a country varies according to its proximity to the technological frontier, demanding a set of policies with different intensities, according to their position» (Rocha Andrade, Cardenas, Dias Lopes, Oliveira, Fernandes, The Impact of R&D Investments on Performance of Firms in Different Degrees of Proximity to the Technological Frontier, in Economics Bulletin, vol. 38(2), 2018, p. 1160; Aghion, Howitt, The Economics of Growth, Cambridge, Massachusetts, 2009; Aghion, Bechtold, Cassar, Herz, The Causal Effects of Competition on Innovation: Experimental Evidence, in The Journal of Law, Economics, and Organization, Vol. 34(2), 2018, p. 162 ss.; Aghion, Howitt, Prantl, Patent rights, product market reforms, and innovation, in Journal of Economic Growth, 20(3), 2015, p. 223 ss.; Aghion, A. Festré, Schumpeterian growth theory, Schumpeter, and growth policy design, in Journal of Evolutionary Economics, Berlin, vol. 27(1), 2017, p. 25 ss.. With an opposite effect, a retreat of the technological frontier can lead to a country’s productivity slowdown (Tang, Wang, Technological frontier, technical efficiency and the post-2000 productivity slowdown in Canada, in Structural Change and Economic Dynamics, Vol. 55, 2020, p. 23).

[25] Leendertse, van Rijnsoever, Eveleens, The sustainable start-up paradox: Predicting the business and climate performance of start-ups, in Bus Strat Env, n. 30, 2021, p. 1019 ss.; Hoogendoorn, van der Zwan, Thurik, Goal heterogeneity at start-up: are greener start-ups more innovative?, in Research Policy, Vol. 49(10), 2020; Bergset, Fichter, Green start-ups – a new typology for sustainable entrepreneurship and innovation research, in Journal of Innovation Management, n. 3, 2015, p. 118 ss.; Schaltegger, Wagner, Sustainable Entrepreneurship and Sustainability Innovation: Categories and Interactions, in Business Strategy and the Environment, n. 20, 2012, p. 222 ss.; Schiederig, Tietze, Herstatt, Green innovation in technology and innovation management – an exploratory literature review: Green innovation in technology and innovation management, in RD Manag., 42, 2012, p. 180 ss.; Gibbs, Sustainability Entrepreneurs, Ecopreneurs and the Development of a Sustainable Economy, in Greener Management International, n. 55, 2009, p. 63 ss.

[26] See Howitt, Endogenous Growth Theory, in The New Palgrave Dictionary of Economics, London, 2018, p. 3632 ss.; Aghion, Harris, Howitt,Vickers, Competition, imitation and growth with step-by-step innovation, in Review of Economic Studies 68, 2001, p. 467 ss.; Aghion, Howitt, Endogenous growth theory, Cambridge, MA: MIT Press, 1998; Grossman, Helpman, Innovation and growth in the global economy, Cambridge, MA: MIT Press, 1991.

[27] For example, the European Commission has recently approved an Important Project of Common European Interest (IPCEI) called “IPCEI ME/CT”. This project is designed to support research, innovation, and the initial industrial deployment of microelectronics and communication technologies across the entire value chain. Fourteen EU Member States will collectively provide up to €8.1 billion in public funding for this initiative. This decision is in line with the Commission’s Communication No. 528/2022(published on December 30, 2021), which outlines criteria for assessing the compatibility of State aid to promote the execution of important projects of common European interest. These rules allow Member States to bridge funding gaps when private initiatives supporting pioneering innovations fail to materialize due to the substantial risks involved. Simultaneously, they ensure that the entire EU economy benefits from subsidized investments while minimizing potential distortions of competition. The IPCEI ME/CT project is scheduled for completion by 2032 and builds upon the first IPCEI for microelectronics, which received Commission approval in December 2018. The Commission’s assessment has determined that IPCEI ME/CT aligns with the EU’s objectives for a more secure, resilient, and sovereign economy.

[28] See Madsen, Islam, Catching up to the technology frontier: the dichotomy between innovation and imitation, in The Canadian Journal of Economics, vol. 43, No. 4, November 2010, 1389-1411.

[29] See Lafuente, Acs, Sanders, et al., Correction to: The global technology frontier: productivity growth and the relevance of Kirznerian and Schumpeterian entrepreneurship, in Small Bus Econ, n. 56, 2021, p. 1783.

[30] Bassanini, Napolitano, Torchia, Gli investimenti in infrastrutture e l’intervento dello stato “promotore”, in Astrid -IRPA Working Paper-Policy Papers Series 3, 2021, p. 67.

[31] SeeMazzucato, Lo Stato innovatore, Bari-Roma, 2018; Luchena, Una nuova politica per gli aiuti di Stato? Gli aiuti istantanei nel contesto dell’emergenza Covid-19 tra coerenza d’insieme e profili inediti, in Di Porto, Bani (eds.), Concorrenza e Mercato Covid-19: Aiuti di Stato e diritto della concorrenza, vol. 26-27, Milano, 2020, p. 35; Zatti, L’impatto delle misure adottate in conseguenza dell’emergenza epidemiologica da COVID-19 sulle politiche a sostegno dell’innovazione tecnologica: prime riflessioni in tema di aiuti di Stato, in Di Porto, Bani (eds), supra, p. 197 ss.

[32] See Canepa, Il difficile equilibrio fra concorrenza ed aiuti di Stato nella crisi: ruolo e scelte della Commissione nel settore bancario, in Amministrazioneincammino.luiss.it, 15 luglio 2016; Marcucci, Aiuti di Stato e stabilità finanziaria. Il ruolo della Commissione europea nel quadro normativo europeo sulla gestione delle crisi bancarie, in Chitti, Santoro (eds.), L’unione bancaria europea, Pisa, 2017; Lanoo, Napoli, Bank State Aid in the financialcrisis. Fragmentation or level playing field?, in ceps.eu, Bruxelles, 29 ottobre 2010; De Benedictis, La tutela del risparmio in Italia, tra crisi sistemiche e aiuti di Stato: il bail in tra diritto europeo e Costituzione italiana, in Federalismi.it, n. 18, 2017; Adler, Kavanagh, Ugryumov, State Aid to banks in the Financial crisis: the past and the future, in Journ. Comp. Law & Practice, 2010.

[33] See McGreevy, Chia, Sustainability transitioning in a developmental state: an analysis of Singapore’s climate change mitigation and adaptation policies, in Climate and Development, 2023; Kalinowski, The politics of climate change in a neo-developmental state: The case of South Korea, International Political Science Review, n. 42(1), 2021, p. 48 ss.; Harrell, The Eco-developmental State and the Environmental Kuznets Curve, in Esarey, Haddad, Lewis, Harrell (edited by), Greening East Asia: The Rise of the Eco-developmental State, Seattle, 2020, p. 241 ss.; Whittaker, Sturgeon, Okita, Zhu, Compressed Development: Time and Timing in Economic and Social Development, Oxford, 2020, p. 185 ss.; Bresser-Pereira, Models of the developmental state, in CEPAL Review, n. 128, 2019; Meckling, The developmental state in global regulation: Economic change and climate policy, in European Journal of International Relations, n. 24(1), 2018, p. 58 ss.; Regeni, Auktor, The Developmental State in the 21st Century: calling for a New Social Contract, in DeutschesInstitut für Entwicklungspolitik (DIE) Discussion Paper, n. 5, 2017, spec. 12 ss.; Mazzucato, The Green Entrepreneurial State, in SPRU Working Paper Series (SWPS), n. 28, 2015, p. 1 ss.; Dent, Renewable energy and East Asia’s new developmentalism: Towards a low carbon future?, in The Pacific Review, n. 25(5), 2012, p. 561 ss.; MacNeil, Paterson, Neoliberal climate policy: From market fetishism to the developmental state, in Environmental Politics, n. 21(2), 2012, p. 230 ss.; Wong, The Developmental State in Ecological Modernization and the Politics of Environmental Framings: The Case of Singapore and Implications for East Asia, in Nature and Culture, Vol. 7(1), 2012; Barrett,Climate treaties and “breakthrough” technologies, in American Economic Review, n. 96(2), 2006, p. 22 ss.; Broadbent, Jin, Chien, Yoo, Developmental States and Environmental Limits: Regime Response to Environmental Activism in Japan, Taiwan, South Korea and China, in EAI Working Paper SeriesVI, October 2006; Ó Riain, The Politics of High Tech Growth: Developmental Network States in the Global Economy, Cambridge, 2004; Johnson, The developmental State: odyssey of a concept, in Woo-Cumings (eds.), The Developmental State, Ithaca, 1999; Johnson, MITI and the Japanese Miracle, Stanford, 1982. On this specific matter it has been highlighted that the evolution of a developmental state into an eco-developmental state is part of this upward turn in environmental quality (Dinda, Environmental Kuznets Curve Hypothesis: A Survey, in Ecological Economics, n. 49, 2004, 431–55 and Kaika, Zervas, The Environmental Kuznets Curve (EKC) Theory—Part A: Concept, Causes and the CO2 Emissions Case, in Energy Policy, n. 62, 2013, p. 1392 ss.).

[34] See Habermas, La costellazione postnazionale. Mercato globale, nazioni, democrazia, Milan, 1999, p. 23.

Author

* Lorenzo Rodio Nico is Post-Doctoral Research Fellow, University of Bari “Aldo Moro”..

** Andrea Signorino Barbat is Prof & Academic Director, University of Montevideo, PhD in Private Law, University of Salamanca, Spain.

Although the work is the result of a joint effort, paragraphs 1, 2, 3, 4, 5, and 6 are attributed to Lorenzo Rodio Nico, paragraphs 7 and 8 to Andrea Signorino Barbat.