Spain CISAF: Catalonia Zero-Emission Manufacturing Aid Scheme

Brussels, 26.3.2026 C(2026) 1934 final

PUBLIC VERSION This document is made available for information purposes only.

Subject: State Aid SA.121547 (2025/N) – Spain CISAF: Aid scheme for the manufacture of products and components of zero-emission industrial technologies (Catalonia)

Excellency,

1. PROCEDURE (1) By electronic notification of 21 December 2025, Spain notified an aid scheme to support investment projects to ensure sufficient manufacturing capacity in clean technologies (the ‘measure’) under the Clean Industrial Deal State Aid Framework ( ) (‘CISAF’). The Commission requested additional information on 13 January, 1 17 and 26 February and 4 March 2026, which Spain submitted on 28 January, 24 February and 10 March 2026. (2) Spain exceptionally agrees to waive its rights deriving from Article 342 of the Treaty on the Functioning of the European Union (‘TFEU’), in conjunction with Article 3 of Regulation 1/1958 ( ) and to have this Decision adopted and notified 2 in English.

() Communication from the Commission on the Framework for State aid measures to support the Clean 1 Industrial Deal (CISAF) (OJ C, C/2025/3602, 4.7.2025, ELI: http://data.europa.eu/eli/C/2025/3602/oj). () Regulation No 1 determining the languages to be used by the European Economic Community (OJ 17, 2 6.10.1958, p. 385). Excmo. Sr. José Manuel Albares Bueno Ministro de Asuntos Exteriores y de Cooperación Plaza de la Provincia, 1 280714 Madrid ESPAÑA

EUROPEAN COMMISSION

1. DESCRIPTION OF THE MEASURE 2.1. Context and general objective of the measure

(3) Spain considers that, as outlined by the Commission in its Communication on the Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation (‘Clean Industrial Deal’) ( ), investments are needed to ensure sufficient 3 manufacturing capacity of clean technologies. The Spanish authorities submit that strengthening the industrial base in the region of Catalonia is necessary to maintain and consolidate the economic and social welfare model, in light of the significant role played by the industrial sector in productivity and competitiveness, as well as in supporting technological progress, quality employment and social cohesion. In this context, an industrial policy targeting priority sectors requires public support to ensure that the industrial transition encompasses both the deployment and the manufacturing of clean technologies in Catalonia. In line with the CISAF, the region of Catalonia therefore intends to set up a measure to incentivise investments in this field, which would contribute to investments throughout the Union.

2.2. Legal basis

(4) The legal basis of the measure is the draft Order approving the regulatory provisions governing the aid scheme for the manufacture of products and components of zero-emission industrial technologies (the ‘draft Order’). (5) The Spanish authorities confirm that the draft Order will be adopted only after the Commission’s decision approving the measure.

2.3. Type and form of aid

(6) The measure provides aid in the form of direct grants.

2.4. Administration of the measure

(7) The granting authority of the aid scheme is the Directorate General of Industry of the Department of Business and Labour of the Catalan region. The administering authority is the Sub-Directorate of Industrial Investment of the Department of Business and Labour. (8) Based on Article 2(1) of the draft Order, the aid scheme is designed to be implemented through open calls for applications on a non-competitive basis.

2.5. Budget and duration of the measure

(9) The estimated budget of the measure is EUR 50 million, financed through the general budget of Catalonia’s regional government. (10) Aid may be granted under the measure as from its entry into force, which will occur after the notification of the Commission’s decision approving the measure, until no later than 31 December 2030.

() COM(2025) 85 final. 3

2.6. Beneficiaries

(11) The beneficiaries of the measure are small and medium-sized enterprises (‘SMEs’) ( ) and large enterprises, duly constituted and registered within the 4 relevant register of any Member State ( ) carrying out an activity within one of the 5 sectors listed in Annex III to the draft Order ( ). 6 (12) The beneficiaries shall carry out the investments defined in recital (15). In order to be eligible, beneficiaries must submit evidence confirming that the investment project will be carried out in the region of Catalonia ( ). 7 (13) The Spanish authorities confirm that beneficiaries are not undertakings in difficulty ( ). Furthermore, beneficiaries must not be subject to an outstanding 8 recovery order following a previous decision of the Commission declaring aid to the beneficiary unlawful and incompatible with the internal market. (14) Additionally, and among other eligibility conditions, entities are not eligible for beneficiary status if they fall under any of the circumstances set out in Article 13 of Spain's General Law 38/2003 of 17 November 2003 on Subsidies ( ), or if they 9 are not up to date with their tax obligations to the Catalonia’s regional government and the State, and with their obligations to the Spanish social security system ( ). 10

2.7. Sectorial and regional scope of the measure

(15) Based on Article 11 of the draft Order, the measure aims at incentivising investment projects that add manufacturing capacity for: (a) the production, including with secondary raw materials, of the final products listed in Annex II to the CISAF; and/or (b) the production, including with secondary raw materials, of the main specific components listed in Annex II to the CISAF; and/or

() The Spanish authorities confirmed that SMEs are defined in accordance with the Commission 4 Recommendation concerning the definition of micro, small and medium-sized enterprise (OJ L 124, 20.5.2003, p. 36). () For the purposes of this measure, the Spanish authorities confirmed that applicant undertakings are not 5 required to be registered, have their headquarters or principal activity located in Spain. () Annex III of the draft Order lists the eligible sectors using the Catalan Classification of Economic 6 Activities. This essentially concerns applicants involved in industrial activities. () This requirement applies uniformly to all applicants, regardless of their registered headquarters or 7 country of origin. () As defined under the Communication from the Commission – Guidelines on State aid for rescuing and 8 restructuring non-financial undertakings in difficulty (OJ C 249, 31.7.2014, p. 1). () Ley 38/2003, de 17 de noviembre, General de Subvenciones, «BOE» núm. 276, de 18/11/2003, 9 available at https://www.boe.es/buscar/act.php?id=BOE-A-2003-20977. Article 13 lays down the requirements to obtain the status of beneficiary. Article 13(2) lays down exclusions, for instance ineligibility of persons that have been convicted of a series of criminal offences such as bribery, or persons that have not paid their taxes or social security contributions. () According to the draft Order, debts that have been deferred, paid in instalments or whose enforcement 10 is suspended are considered to meet the requirement of being up to date with obligations.

(c) the production of the related critical raw materials ( ) necessary for the production of the final products or main specific components as defined in points (a) and (b) of this recital. (16) The measure applies to the territory of Catalonia.

2.8. Eligible expenditure, aid intensities

(17) Eligible costs are all investment costs into tangible and intangible assets required for the production or recovery of the products, components and raw materials listed in recital (15). (18) Based on Article 11(3) of the draft Order, intangible assets must: 1) remain associated with the area concerned and must not be transferred to other areas; 2) be used primarily in the relevant production facility receiving the aid; 3) be amortisable; 4) be purchased under market conditions from third parties unrelated to the buyer; 5) be included in the assets of the undertaking that receives the aid and remain associated with the project for which the aid is awarded for at least five years (or three years for SMEs). (19) Based on Article 4(3) of the draft Order, the aid intensity cannot exceed 15 % of the eligible costs and the aid amount cannot exceed EUR 150 million per project. However, for investments in assisted areas in Catalonia, designated in the applicable regional aid map for Spain ( ) in accordance with Article 107(3), 12 point (c), TFEU (‘c’ areas), the aid intensity can be increased to 20 % of the eligible costs and the overall aid amount cannot exceed EUR 200 million per project. Also based on Article 4(3) of the draft Order, for investments made by small enterprises, those aid intensities can be further increased by 20 percentage points and for those investments made by medium-sized enterprises, those aid intensities can be increased by 10 percentage points. (20) Based on Article 4(6) of the draft Order, these maximum aid amounts shall not be circumvented by artificially splitting up the aided projects.

() As listed in Annex II to Commission Regulation (EU) 2024/1252 of 11 April 2024 establishing a 11 framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1724 and (EU) 2019/1020 (OJ L, 2024/1252, 3.5.2024, p. 1). () Commission Decision of 17 March 2022 in case SA.100859 – Regional aid map for Spain 12 (1 January 2022 – 31 December 2027) (OJ C 324, 26.8.2022, p. 1) as amended by Commission Decision of 9 March 2023 in case SA.106039 - Amendment to the Regional aid map for Spain (1 January 2022 – 31 December 2027) - increased aid intensities for territories identified for support from the JTF (OJ C 102, 17.3.2023, p. 1), by Commission Decision of 13 December 2023 in case SA.109336 (2023/N) – Amendment to the Regional aid map for Spain (1 January 2022 – 31 December 2027) for the period 1 January 2024 to 31 December 2027 (mid-term review)(OJ C 1894, 1.3.2024, p. 1) and by Commission Decision of 26 July 2024 in case SA.114955 (2024/N) – Amendment to the regional aid map for Spain (1 January 2022 - 31 December 2027) - increased aid intensities for investments covered by the STEP (OJ C 4907, 6.8.2024, p. 1).

2.9. Incentive effect

(21) Based on Article 11(5) of the draft Order, beneficiaries must apply for aid before the start of works ( ) and must provide the information required in Annex III to 13 the CISAF ( ). 14 (22) The Spanish authorities confirm that, before granting the aid and on the basis of the information provided by the beneficiary as set out in Annex III to the CISAF ( ), 15 the granting authority will verify the concrete risk that the investment will not be carried out in the European Economic Area (‘EEA’) in the absence of aid.

2.10. Own contribution

(23) Based on Article 6(3) of the draft Order, beneficiaries must provide a financial contribution of at least 25 % of the eligible costs, through own resources or by external financing, in a form that is free of any public support ( ). 16

2.11. Maintenance of the investment for a minimum period after its completion and relocation

(24) Based on Article 13(1)(p) of the draft Order, the beneficiaries must commit to maintain the investments in the area concerned for at least five years, or three years for SMEs, after the completion of the investment. The Spanish authorities have confirmed that such a commitment should not prevent the replacement of plant or equipment that has become outdated or broken within this period, provided that the economic activity is retained in the area concerned for the minimum period. However, no further aid can be awarded to replace that plant or equipment. (25) Based on Article 6(3)(f) of the draft Order, aid cannot be granted to facilitate the relocation ( ) of production activities within the EEA. For this purpose, 17

() Article 11(5) of the draft Order cross-refers to the definition contained in point 15(l) CISAF: ‘start of 13 works’ means either the start of construction works on the investment or the first firm commitment to order equipment or other commitment that makes the investment irreversible. Land purchase and preparatory works for obtaining permits, carrying out preliminary feasibility studies or project certification reports shall not be considered as start of works. () The requirements set out in Annex III to the CISAF for aid under section 6.1 of the CISAF are 14 reproduced accordingly in Annex VI to the draft Order. ) Notably including a short explanation of the need for aid and its impact on the investment decision or (15 location decision. This must include an explanation of the alternative investment or location decision if aid is not granted. () This is not the case for example for subsidised loans, public equity-capital loans or public participations 16 which do not meet the market investor principle, State guarantees containing elements of aid, or public support granted within the scope of the de minimis rule. Funding by the European Investment Bank and/or the European Investment Fund (at own risk and from own resources) for the investment project, up to 12.5 % of the eligible costs, will be accepted as financial contribution for the purpose of this recital. () Article 6(3) of the draft Order reproduces the definition contained in point 15 (j) CISAF: ‘relocation’ 17 means a transfer of the same or a similar activity or part thereof from an establishment in one contracting party to the EEA Agreement (‘initial establishment’) to the establishment in which the aided investment takes place in another contracting party to the EEA Agreement (‘aided establishment’). There is a transfer if the product or service in the initial and in the aided establishments serves at least partly the same purposes and meets the demands or needs of the same type of customers and jobs are lost in the same or similar activity in one of the initial establishments of the aid beneficiary in the EEA.

beneficiaries must confirm that, in the two years preceding the aid application, no relocation has taken place to the establishment in which the aided investment is to take place and commit not to carry out such relocation up to a period of two years after completion of the investment. (26) The Spanish authorities confirmed that aid under the measure cannot be conditioned on the relocation of an activity as such condition would be harmful to the internal market.

2.12. Compliance with relevant provisions of Union law

(27) The Spanish authorities confirmed that the proposed measure does not by itself, or by the conditions attached to it or by its financing method constitute a non- severable violation of Union law.

2.13. Effects on competition and trade

(28) The Spanish authorities consider that, given the need to enhance European manufacturing capacity for net-zero technologies and their key components, the lack of funding available on the market to finance these investments ( ) and the 18 conditions attached to the aid measure (such as applying an open, transparent and non-competitive project selection procedure, using objective and publicly known criteria for application verification, and inserting penalties for non-compliance), the negative effects on competition and trade will be limited to the minimum.

2.14. Cumulation

(29) Based on Article 7 of the draft Order, aid under the measure shall not be cumulated with any other non-repayable aid granted by the authority mentioned in recital (7) and with its own funds, if this aid is applied to the same costs or project. However, in other cases, aid granted under the measure can be cumulated with any other State aid or de minimis aid, or combined with centrally managed EU funds, under the conditions of point 38 CISAF, i.e.: (a) when the measures concern different identifiable eligible costs; (b) when the measures concern the same eligible costs, partly or fully overlapping, provided that the cumulation does not lead the aid to exceed the highest aid intensity or amount applicable under any of the relevant conditions; (c) when the aid is cumulated with any other State aid without identifiable eligible costs.

2.15. Monitoring and reporting

(30) The Spanish authorities confirm their commitment to respect the monitoring and reporting obligations laid down in section 9 of the CISAF, including the obligation to publish relevant information on any individual aid above EUR 100 000 ( ) 19 granted under the measure on the comprehensive State aid website or Commission’s IT tool within 6 months from the moment of granting.

() When announcing the Green Deal, the Commission estimated that ‘additional investments of over 18 €620 billion annually will be needed to meet the objectives of the Green Deal and RepowerEU. By far the greatest part of these will have to come from private funding’. () Referring to information required in Annex III to Commission Regulation (EU) No 651/2014 of 19 17 June 2014.

(31) The Spanish authorities must ensure that detailed records regarding the granting of aid provided for by the CISAF are maintained. Such records will contain all information necessary to establish that the necessary conditions have been observed, will be maintained for 10 years from the date of granting of the aid and will be provided to the Commission upon request.

1. ASSESSMENT OF THE MEASURE 3.1. Lawfulness of the measure

(32) By notifying the measure before putting it into effect and by postponing the adoption of the draft Order so that aid can only be granted after the notification of the Commission’s decision approving the measure (recital (10)), the Spanish authorities have respected their obligations under Article 108(3) TFEU.

3.2. Existence of State aid

(33) For a measure to be categorised as aid within the meaning of Article 107(1) TFEU, all the conditions set out in that provision must be fulfilled. First, the measure must be imputable to the State and financed through State resources. Second, it must confer an advantage on its recipients. Third, that advantage must be selective in nature. Fourth, the measure must distort or threaten to distort competition and affect trade between Member States. (34) The measure is imputable to the State since it is administered by the Sub- Directorate of Industrial Investment of the Department of Business and Labour of the Catalan region (recital (7)), and it is based on the draft Order referred to in recital (4). It is financed through State resources, as it is financed by the general budget of the Catalonia’s regional government (recital (9)). (35) The measure confers an advantage on its beneficiaries in the form of direct grants (recital (6)), which they would not have under normal market conditions. (36) The advantage granted by the measure is selective, since it is awarded only to undertakings carrying out the investments described in recital (15) while other undertakings in a comparable legal and factual situation within the same sector or other sectors (considering that all economic operators should, in principle, cover their own costs) are not eligible for aid and thus will not receive the same advantage (recital (16)). It is also selective since it only favours the production of certain goods, namely those listed in recital (15). (37) The measure is liable to distort competition, since it strengthens the competitive position of its beneficiaries. It also affects trade between Member States, since those beneficiaries are active in sectors in which intra-Union trade exists. (38) In view of the above, the Commission concludes that the measure constitutes aid within the meaning of Article 107(1) TFEU. The Spanish authorities do not contest that conclusion.

3.3. Compatibility

(39) Since the measure involves aid within the meaning of Article 107(1) TFEU, it is necessary to consider whether that measure is compatible with the internal market.

(40) Pursuant to Article 107(3), point (c), TFEU, the Commission can declare compatible with the internal market ‘aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’. As the objective of the measure is to ensure sufficient manufacturing capacity in clean technologies, the Commission will examine the measure under Article 107(3)(c) TFEU, in the light of Sections 3 and 6.1 of the CISAF. (41) According to point 16 of the CISAF, ‘the Commission may consider compatible with the internal market State aid to facilitate the development of certain economic activities or of certain economic areas (positive condition), where such aid does not adversely affect trading conditions to an extent contrary to the common interest (negative condition)’. To that end, the Commission analyses the following elements.

3.3.1. Positive condition: the aid must facilitate the development of an economic activity

(42) According to point 17 of the CISAF, ‘[a]s regards the positive condition that the aid facilitates the development of certain economic activities or areas, the Commission considers that aid under this Communication aims at incentivising investments and activities in certain sectors that contribute to the objectives defined in the Clean Industrial Deal Communication, thereby facilitating the development of specific economic activities, namely those falling within the scope of the relevant sections of this Communication’. 3.3.1.1. Objective of ensuring sufficient manufacturing capacity in clean technologies (43) As outlined by the Clean Industrial Deal Communication, investments are needed to further accelerate the roll-out of renewable energy, to deploy industrial decarbonisation, and to ensure sufficient manufacturing capacity of clean technologies. The need to enhance European manufacturing capacity for net-zero technologies and their key components is also recognised by the Net Zero Industry Act (‘NZIA’) ( ), which already addresses certain barriers to scaling up production 20 in Europe. Similarly, the Critical Raw Materials Act ( ) acknowledges the need to 21 strengthen all stages of the European critical raw materials value chain, and to diversify the imports to reduce strategic dependencies, to improve capacity to monitor and mitigate risks of disruptions to the supply of critical raw materials, while also improving circularity and sustainability, with the aim of creating a strong, resilient, and sustainable value chain for critical raw materials in Europe. While the NZIA seeks to increase the competitiveness of the net-zero technology sector, attract investments, and improve market access for clean technologies in the EU, certain investments into clean technologies can require additional support to

() Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on 20 establishing a framework of measures for strengthening Europe’s net-zero technology manufacturing ecosystem, OJ L, 2024/1735, 28.6.2024. () Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 21 establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1724 and (EU) 2019/1020, OJ L, 2024/1252, 3.5.2024.

make sure that capacity is increased in the Union, thereby allowing the acceleration of the net-zero transition and increasing European resilience in this area. (44) The report prepared by Enrico Letta, ‘Much more than a Market’ ( ), concludes 22 that further private and public investments are required in the framework of a long- term competitive industrial strategy to improve EU competitiveness in a changing global context. Along similar lines, the report prepared by Mario Draghi ( ) 23 identifies a fundamental competitiveness gap of Europe vis-à-vis other world regions and underlines the importance of a joint plan for, amongst others, the Union competitiveness and the need to reduce dependencies from third countries in key technology areas. (45) In that regard, the Commission notes that Spain intends to set up a measure to incentivise investments for the relevant clean technologies listed in recital (15). The measure falls within the scope of Section 6 of the CISAF, covering aid to ensure sufficient manufacturing capacity in clean technologies. Therefore, in line with the presumption enshrined in point 17 of the CISAF, the Commission considers that the measure aims at ensuring sufficient manufacturing capacity in clean technologies. Since the categories of investments that it aims to incentivise, as described in recital (15), correspond to those listed in letters (a) to (c) of point 160 of the CISAF, the measure complies with that point as well. (46) The Commission also notes that aid is granted under the measure on the basis of a scheme with an estimated budget (recital (9)). Therefore, the measure complies with point 164 of the CISAF. (47) In addition, according to point 170 of the CISAF, to ensure that the investment makes a real and sustained contribution to the objective of ensuring sufficient manufacturing capacity in clean technologies, the investment must be maintained in the area concerned for at least five years for large enterprises and three years for SMEs after its completion (recital (24)). That obligation does not prevent the replacement of plant or equipment that has become outdated or broken within this period, provided that the economic activity is retained in the area concerned for the minimum period. However, aid under the measure may not be awarded to replace such plant or equipment. (48) The Commission notes that, under the measure, the beneficiaries must commit to maintain the investments in the area concerned for at least five years or, three years for SMEs, after the completion of the investment and that aid under the measure cannot be awarded to replace plant or equipment that has become outdated or broken (recital (24)). Therefore, the measure complies with point 170 of the CISAF. (49) Finally, aid under the measure can be granted until 31 December 2030 at the latest (recital (10)). Therefore, the measure complies with point 216 of the CISAF.

() Enrico Letta: ‘Much more than a market: Speed, Security, Solidarity - Empowering the Single Market 22 to deliver a sustainable future and prosperity for all EU Citizens’, April 2024, https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico- letta.pdf. () Mario Draghi: ‘The future of European competitiveness’, 9 September 2024, 23 https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en.

3.3.1.2. Incentive effect (50) According to point 18 of the CISAF, ‘State aid needs to have an incentive effect, meaning that it induces the beneficiary to undertake an investment or activity that it would not undertake, or would carry out in a restricted or different manner, absent the aid. Unless specified otherwise in this Communication, an incentive effect is presumed where the start of works on the project or activity only takes place after a written aid application by the beneficiary to the competent authorities’. Accordingly, under point 165 of the CISAF, ‘beneficiaries must apply for aid before the start of works and must provide the required information indicated in Annex III to this Communication to the Member State’. (51) Under the measure, works on an individual investment can start only after submitting the application form for aid (recital (21)). Furthermore, beneficiaries must provide the information required in Annex III of the CISAF. Therefore, the measure complies with points 18 and 165 of the CISAF. (52) According to point 171 of the CISAF, ‘before granting the aid and on the basis of the information provided by the beneficiary as indicated in Annex III to this Communication, the granting authority must verify the concrete risks of the investment not taking place within the EEA’. (53) The measure provides that the aid application will include all information required by Annex III of the CISAF. This includes a short description of the investment and a short explanation of the need for aid and its impact on the investment decision or location decision, including an explanation of the alternative investment or location decision if aid is not granted. The measure further provides that, before granting the aid and on the basis of the information provided by the beneficiaries in Annex III of the CISAF, the granting authority will verify the concrete risk that the investment will not be carried out in the EEA in the absence of aid (recital (22)). Therefore, the measure complies with point 171 of the CISAF. 3.3.1.3. Compliance with relevant provisions of Union law (54) According to point 20 of the CISAF, ‘if the supported project or activity, or the aid measure or the conditions attached to it, including its financing method when it forms an integral part of the measure, entail a violation of relevant Union law, the aid cannot be declared compatible with the internal market’. (55) The Commission has no indications of any possible breach of Union law that would prevent the notified measure from being declared compatible with the internal market, as also confirmed by the Spanish authorities (recital (27)). Therefore, the measure complies with point 20 of the CISAF. 3.3.1.4. Conclusion on the compliance with the positive condition (56) Based on the assessment in recitals (42) to (55), the Commission considers that the measure pursues the objective of ensuring sufficient manufacturing capacity in clean technologies, has an incentive effect and complies with the relevant provisions of Union law. Therefore, the measure facilitates the development of certain economic activities, thus it complies with the positive condition enshrined in point 16 of the CISAF.

3.3.2. Negative condition: the aid does not adversely affect trading conditions to an extent contrary to the common interest

(57) According to point 25 of the CISAF, ‘[a]s regards the second (negative) condition under Article 107(3), point (c), of the Treaty, to ensure that the aid does not unduly affect trading conditions to an extent contrary to the common interest, the Commission assesses the necessity, appropriateness and proportionality of the aid, verifies that undue negative effects on competition and trade are avoided and that the conditions on monitoring and reporting in section 9 are complied with’. 3.3.2.1. Need for State intervention and appropriateness of the measure (58) According to point 26 of the CISAF, ‘any aid must be necessary, meaning that it must be targeted towards a situation where it can bring about a material development that the market alone cannot deliver, for example by remedying market failures in relation to the projects for which the aid is awarded. In view of the need to accelerate the eligible investments and activities under this Communication, the Commission considers that the market alone would not be able to sufficiently deliver the necessary level of investments or activities within the timeline necessary to achieve a clean, just and competitive transition. The Commission therefore presumes that measures falling within the scope of this Communication and complying with all conditions in the applicable sections are necessary’. (59) The measure aims at incentivising investment projects that add manufacturing capacity for the relevant clean technologies listed in recital (15). Therefore, in line with the presumption enshrined in point 26 of the CISAF, there is a need for State intervention. (60) According to point 27 of the CISAF, ‘public financial support may be required to incentivise necessary additional investments and […] other policy instruments alone are not sufficient to achieve its goals. The Commission therefore presumes that State aid within the scope of this Communication is, in principle, an appropriate measure to incentivise the investments and activities eligible for aid provided all applicable conditions in the relevant sections are complied with. In addition, the choice of the aid instrument should be appropriate to the objective that the aid measure aims to achieve and likely to generate the least distortion of trade and competition. Provided that Member States comply with the conditions under this Communication, the Commission presumes that the aid instrument is also appropriate’. In addition, according to point 31 of the CISAF, ‘aid under this Communication can be granted in any form, including direct grants, tax advantages including tax credits and accelerated depreciation, subsidised interest rates on new loans or guarantees on new loans’. (61) Aid under the measure will be granted in the form of direct grants (recital (6)). Therefore, in line with the presumption enshrined in point 27 of the CISAF, the aid is considered to be an appropriate instrument to achieve the objectives of the measure. For the same reason, the measure complies also with point 31 of the CISAF.

3.3.2.2. Aid not granted to undertakings in difficulty and under recovery order (62) According to point 28 of the CISAF, ‘[a]id under this Communication will in principle not be granted to undertakings in difficulty to ensure that only viable undertakings receive aid’. (63) Aid under the measure may not be granted to undertakings in difficulty (recital (14)). Therefore, the measure complies with point 28 of the CISAF. (64) Aid under the measure may not be granted to undertakings subject to an outstanding recovery order following a previous decision of the Commission declaring aid to the beneficiary unlawful and incompatible with the internal market (recital (13)). Therefore, the measure complies with point 33 of the CISAF. 3.3.2.3. Proportionality of the aid and eligible costs (65) According to point 29 of the CISAF, ‘[a]id is considered to be proportionate if the amount per beneficiary is limited to the minimum necessary to carry out the aided project or activity. […] The relevant sections of this Communication allow Member States to determine aid amounts administratively based on maximum aid intensities or by reference to the funding gap in line with the specific conditions provided in the applicable section’. (66) Since aid under the measure is intended to ensure sufficient manufacturing capacity in clean technologies, Spain has determined the aid amounts and aid intensities based on the maximum aid amounts and intensities provided in points 167 and 168 of the CISAF (recital (19)). In addition, Spain confirmed that it will ensure that these maximum aid amounts are not circumvented by artificially splitting up the aided projects (recital (20)). Therefore, the measure is proportionate and complies with points 29, 167 and 168 of the CISAF. (67) According to point 166 of the CISAF, ‘the eligible costs of the investment project supported by the aid are all investment costs in tangible (such as land, buildings, plant, equipment, machinery) and intangible assets (such as patent rights, licences, know-how or other intellectual property) required for the production or recovery of the goods listed in point 160 of the CISAF. Intangible assets must: i) remain associated with the area concerned and must not be transferred to other areas; ii) be used primarily in the relevant production facility receiving the aid; iii) be amortisable; iv) be purchased under market conditions from third parties unrelated to the buyer; v) be included in the assets of the undertaking that receives the aid; and vi) remain associated with the project for which the aid is awarded for at least five years (or three years for SMEs)’. (68) The measure establishes that the eligible costs (recital (17)) are those in tangible and intangible assets required for the production or recovery of the goods listed in recital (15). Furthermore, investments in intangible assets comply with the requirements set out in point 166, second sentence, of the CISAF. Therefore, the measure complies with point 166 of the CISAF. (69) According to point 169 of the CISAF, ‘to ensure that the investment is viable, the Member State must ensure that the aid beneficiary provides a financial contribution

of at least 25 % of the eligible costs, through its own resources or by external financing, in a form that is free of any public support’. (70) In that regard, the Commission notes that the contribution of the beneficiary to finance the investment project under the measure must be at least 25 % of the eligible costs (recital (23)). Therefore, the measure complies with point 169 of the CISAF. 3.3.2.4. Avoidance of undue negative effects (71) According to point 35 of the CISAF, ‘in view of the objectives pursued by the measures falling within scope of this Communication, the Commission presumes that such measures will not result in any manifestly negative effects on competition and trade in as far as they comply with all conditions in the applicable sections’. Furthermore, according to point 36 of the CISAF, ‘[a]id granted under this Communication cannot be conditioned on the relocation of an activity as such conditions would be harmful to the internal market’. Accordingly, point 172 of the CISAF establishes that ‘the beneficiary has to: (a) confirm that in the two years preceding the application for aid, it has not carried out a relocation to the establishment in which the aided investment is to take place; and (b) commit not to carry out such relocation up to a period of two years after completion of the investment […]’. (72) The Commission notes that any negative effects of the measure will be limited to the minimum in view of the need to ensure sufficient manufacturing capacity in the clean technologies listed in recital (15), which enhance the European capacity for net-zero technologies and their key components. (73) Therefore, in line with the presumption in point 35 of the CISAF, as the measure complies with all the conditions of section 6.1 of the CISAF, the Commission considers that the measure will not result in any manifestly negative effects on competition and trade. (74) In addition, beneficiaries under the measure will have to (i) confirm that in the two years preceding the application for aid, they have not carried out a relocation to the establishment in which the aided investment is to take place; and (ii) commit not to carry out such relocation up to a period of two years after completion of the investment (recital (24)). The Spanish authorities also confirmed that aid granted under the measure cannot be conditioned on the relocation of an activity as such conditions would be harmful to the internal market (recital (25)). Therefore, the measure complies with points 36 and 172 of the CISAF. 3.3.2.5. Compatibility with monitoring and reporting rules and with cumulation rules (75) The monitoring and reporting requirements set out in Section 9 of the CISAF will be respected (recitals (30) and (31)). Therefore, the measure complies with points 212, 213 and 214 of the CISAF. (76) Aid under the measure shall not be cumulated with any other non-repayable aid granted by the authority mentioned in recital (7) and with its own funds, if this aid is applied to the same costs or project. In other cases, aid granted under the measure can be cumulated with any other aid or de minimis aid, or combined with centrally

managed EU funds, as long as those measures concern different identifiable costs or, if they relate to the same eligible costs, partly or fully overlapping, provided that such cumulation does not lead the aid to exceed the highest support intensity or amount applicable under any of the relevant conditions. Aid can be cumulated with any other State aid without identified eligible costs (recital (29)). Therefore, the measure complies with point 38 of the CISAF. 3.3.2.6. Balancing the positive and negative effects of the aid on the internal market (77) According to point 37 of the CISAF ‘the Commission has to balance the negative effects on competition and trading conditions of the aid measure with the positive effects of the planned aid on the supported economic activities, including its contribution to the clean, just and competitive transition and the Clean Industrial Deal objectives. Provided that the measures within the scope of this Communication comply with all conditions in the applicable sections, the Commission will find that the positive effects of the planned aid outweigh the negative effects on competition and trading conditions’. (78) When balancing the positive effects against the potential negative effects of the measure on the internal market, the Commission has taken due consideration of the fact that the measure facilitates the development of certain economic activities, namely the expansion of manufacturing capacity for the production of net-zero technologies and their main specific components, as well as the production of new or recovered related critical raw materials necessary for the production of the final products or main specific components. The Commission considers that the positive effects of the measure outweigh its potential negative effects on competition and trade, and that the measure is compatible with the internal market pursuant to Article 107(3), point (c), TFEU since it meets all the relevant conditions of Section 6.1 of the CISAF. Therefore, the measure complies with point 37 of the CISAF. 3.3.2.7. Conclusion on the compliance with the negative condition (79) Based on the assessment in recitals (57) to (78), the Commission considers that the State intervention is needed and that the measure is appropriate and proportional. The Commission also considers that any undue negative effects on competition and trade are avoided, and that the conditions on monitoring and reporting in section 9 of the CISAF are complied with. The Commission finally considers that the positive effects of the measure outweigh its potential negative effects on competition and trade. Therefore, the measure does not unduly affect trading conditions to an extent contrary to the common interest, thus it complies with the negative condition enshrined in point 25 of the CISAF.

3.3.3. Conclusion on the compatibility of the measure

(80) In view of the above, the Commission considers that the notified measure facilitates the development of certain economic activities without adversely affecting trading conditions to an extent contrary to the common interest. Therefore, the Commission considers that the measure is compatible with the internal market under Article 107(3), point (c), TFEU, in light of the conditions set out in Sections 3 and 6.1 of the CISAF.

1. CONCLUSION The Commission has accordingly decided not to raise objections to the aid on the grounds that it is compatible with the internal market pursuant to Article 107 (3), point (c), TFEU. If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site: https://competition- cases.ec.europa.eu/search?caseInstrument=SA. Your request should be sent electronically to the following address: European Commission, Directorate-General Competition State Aid Greffe B-1049 Brussels Stateaidgreffe@ec.europa.eu Yours faithfully,

For the Commission

Teresa RIBERA

Executive Vice-President