The European Commission, on Tuesday, January 8, announced that it has approved a €902M German measure to support Northvolt, a Swedish battery manufacturer, in the construction of a plant for the production of batteries for electric vehicles.
This move aligns with the Green Deal Industrial Plan and aims to promote the transition towards a net-zero economy.
German measure to support Sweden’s Northvolt
This aid was approved under the State Aid Temporary Crisis and Transition Framework, adopted by the Commission on March 9, 2023, and amended on November 20, 2023, to support green transition measures and reduce fuel dependencies.
Under this German measure, Northvolt will receive financial support for constructing an advanced and high-efficiency electric vehicle battery production plant.
The plant will be located in the city of Heide and is expected to have an annual capacity of 60 GWh. This capacity will enable the production of approximately 800,000 to 1 million electric vehicles per year, depending on the battery size.
The plant is scheduled to begin production in 2026 and reach full capacity by 2029.
Germany’s aid package consists of a direct grant of €700M and a guarantee of €202M.
This financial support is crucial to ensure that Northvolt establishes the production plant in Germany instead of the United States, where similar support was being offered.
Commission’s assessment and approval
The Commission found that the German measure is in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Crisis and Transition Framework, particularly Section 2.8.
This provision empowers Member States to support increased investments in sectors crucial for the shift towards a net-zero economy.
The Commission’s assessment highlights several key findings that support the approval of the German measure:
The production of batteries for electric vehicles is considered a strategic investment with significant importance for the transition towards a net-zero economy.
The fact that the project is located in Heide, a disadvantaged area, according to Germany’s regional aid map, further strengthens the support case. Without the aid, Northvolt would have chosen to establish the plant outside the European Economic Area (EEA), demonstrating the incentive effect of the measure.
Northvolt aims to build the world’s most environmentally friendly battery by significantly reducing CO2 emissions throughout the battery’s lifecycle, including recycling at the end of its life.
The use of fossil-free energy in the production process and a circular design, which includes recycling battery cell materials, contribute to reducing the carbon footprint.
The Commission’s assessment concludes that the German measure will have a limited impact on competition and trade within the European Union.
“The aid is proportionate and limited to the minimum necessary to trigger the investment in Europe: it does not make the investment in Germany more profitable than the investment in the United States. It will also not exceed the amount of the subsidy that Northvolt could demonstrably receive for the equivalent investment in the United States,” says the Commission.
The German aid will be granted by December 31, 2025, ensuring compliance with the established timeframe. This aligns with the Temporary Crisis and Transition Framework, which provides support until then.
Read the orginal article: https://siliconcanals.com/news/european-commission-grants-902m-german-state-measure/
