EU Commission approves €350m state aid for Concrete Chemicals’ synthetic aviation fuel

The European Commission has approved, under EU State aid rules, a €350 million German measure to support Concrete Chemicals GmbH in the production of synthetic aviation fuels. The measure will contribute to the achievement of the European Green Deal and the ReFuelEU Aviation  targets.

The German measure

Germany notified to the Commission a €350 million measure to support Concrete Chemicals as one of the first projects in the EU to produce of synthetic aviation fuels (‘Power-to-liquids (PtL) kerosene’) at scale. This innovative project will use electricity, renewable hydrogen, as well as biogenic carbon dioxide (CO₂) captured from a cement plant. It will also integrate different technologies such as electrolysers and complex chemical reactors (e.g., reverse water-gas shift and Fischer-Tropsch synthesis).

PtL-kerosene produced by the project will qualify as renewable fuel of non-biological origin (RFNBO) as the energy content of PtL-kerosene will come from renewable sources. In addition, as by-product, the project will produce 6,500 tonnes of renewable naphtha (PtL-naphtha) per year that can be used as feedstock to produce various plastic products.

The aid will take the form of a direct grant and will support the construction and installation of the plant in Rüdersdorf, Germany. The plant, with a capacity of approximately 30,000 tonnes of PtL-kerosene per year, is expected to start producing PtL-kerosene in 2028.

The project is expected to deliver lifecycle greenhouse emissions savings of 90% compared to fossil kerosene and fossil naphtha.

The Commission’s assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU, which enables Member States to support the development of certain economic activities subject to certain conditions, and the Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’), which allow Member States to support measures reducing or removing CO₂ emissions.The Commission found that:

• The measure facilitates the development of an economic activity, namely the production of synthetic aviation fuels, in particular renewable synthetic aviation fuels. At the same time, it supports the objectives of EU policy initiatives, such as the European Green Deal and the ReFuelEU Aviation.
• The aid has an ‘incentive effect’, as the beneficiary would not carry out the investments without the public support.
• The measure is necessary and appropriate to promote the production of synthetic aviation fuels. In addition, it is proportionate, as the level of the aid corresponds to the effective financing needs.
• The measure has sufficient safeguards to ensure that undue distortions of competition are limited. In particular, if the project turns out to be very successful, generating extra net revenues, the beneficiary will return to Germany part of the aid received (claw-back mechanism). Moreover, the beneficiary will disseminate the technical know-how gained through the project.
• The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU.

On this basis, the Commission approved the German measure under EU State aid rules.

Background

The 2022 CEEAG provide guidance on how the Commission will assesses the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU.

With the European Green Deal Communication in 2019, the Commission set an objective of net zero emissions of greenhouse gases in 2050 that is enshrined in the European Climate Law. In force since July 2021, the law also introduced the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030. Through the adoption of the ‘Fit for 55′ legislative proposals, the EU has in place legally binding climate targets covering all key sectors in the economy.

ReFuelEU Aviation, adopted in October 2023, promotes the use of sustainable aviation fuels to decrease aviation CO₂ emissions by ensuring that aviation fuel suppliers make available to aircraft operators at Union airports sustainable aviation fuels, that is fuels which have lower lifecycle CO₂ emissions compared to fossil fuel kerosene.

The non-confidential version of the decision will be made available under the case number SA.106395 in the State aid register on the DG competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.