State aid is the term that refers to forms of public assistance, using taxpayer-funded resources, given to undertakings (public and private) on a discretionary basis, with the potential to distort competition and affect trade between member states of the European Union. The principles governing State aid are enshrined in the Treaty on the Functioning of the European Union, mainly in Articles 107-109. These provisions provide for a general prohibition on the use of State aid, subject to certain exceptions, the interpretation of which are largely the preserve of the European Commission, subject to the jurisprudence of the European Courts.
However, if an EU Member State has identified an area of market failure and feels that it is justified to provide an incentive effect in the form of State aid in a particular area, Member States must notify the Commission of proposed State aid in advance and seek the Commission’s advance approval before the aid can be paid. There are a few exceptions to the notification requirement, namely:
- If the measure falls within the General De Minimis Regulation which allows overall aid of less than 200,000 euros over 3 fiscal years.
- Agricultural de minimis aid to farmers of less than 20,000 euros over 3 fiscal years.
- Measures which are covered under a pre-existing approved Irish Scheme.
- Measures falling within the General Block Exemption Regulation.
State Aid approval was requested and received from the European Commission for the Forestry Programme 2014-2020 in 2014. The Forestry Programme is 100% State aid funded and is therefore required to fully comply with all relevant State Aid Guidelines, notably European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020 (2014/C 204/01), issued by the European Commission and applicable to the 2014-2020 programming period.
My Department's Afforestation Scheme is part of the Forestry Programme. In accordance with the relevant State aid provisions, the scheme terms & conditions set out that a fixed afforestation grant towards the costs, subject to the maximum laid down in the scheme documents, will be available to private land-holders, companies or public entities. Aid for the afforestation of state owned lands may be granted but only if the body managing such land is a private body or a municipality. Land owned and managed by public entities will not be eligible for payment of premiums.
It is expected that the European Commission will issue new State aid Guidelines for the next programming period (2021-2027). The first step of the consultation on the new State aid rules with the Member States has been initiated by the European Commission earlier this year and my Department is participating in this process. In consideration of the new national afforestation targets, all aspects of how forestry is grant aided will be under review during the coming years in preparation for the next Forestry Programme.