Commission approves EUR742 million Czech State aid scheme to support sustainable forest management

The European Commission has approved, under EU State aid rules, a €742 million (CZK 17.4 billion) Czech scheme to support sustainable forest management. The measure will contribute to the achievement of the objectives of the Common agricultural policy by strengthening forest environmental protection.

The Czech measure

Czechia notified the Commission of its plans to support the forestry sector in Czechia with the aim of: (i) implementing sustainable forest management techniques, (ii) promoting the growth of forests, and (iii) adapting forests to climate change. The scheme, with a budget of around €742 million (CZK 17.4 billion), will run until 31 December 2028.

Under the scheme, the aid will take the form of direct grants to small, medium and large forest owners and other entities with similar rights and obligations, including State-owned entities. In particular, the direct grants will support: (i) operations designed to prevent the soil erosion on deforested stands; (ii) the protection of forest biodiversity; and (iii) the protection of the structure and composition of forest soil. Eligible beneficiaries will receive an aid amount equal to around €0.18 (CZK 4.22) per day per hectare of forest land. This amount will cover up to 100% of the eligible costs.

The Commission’s assessment 

The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU’) , which allows Member States to support the development of certain economic activities under certain conditions, and under the 2022 Guidelines for State aid in the agricultural and forestry sectors and in rural areas (‘2022 Agricultural Guidelines’).

The Commission found that:

• The measure facilitates the development of an economic activity, namely sustainable forest management.
• The scheme is necessary and appropriate to ensure that forests owners develop sustainable management techniques and that forests are resilient to climate change. It therefore supports the general objective of the Common Agricultural Policy of strengthening environmental protection, including biodiversity, and contributes to achieving the EU environmental and climate-related objectives.
• The aid will have an ‘incentive effect’ as the beneficiaries would not carry out the investments without the public support.
• The aid is proportionate, as it is limited to the minimum necessary and will have a limited impact on competition and trade between Member States.
• 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 Czech scheme under EU State aid rules.

Background

The 2022 Agricultural Guidelines provide guidance on how the Commission will assess the compatibility of aid measures in the sector, which are subject to the notification requirement, under Article 107(3)(c) TFEU. The Guidelines create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support and contribute, among other things, to the objectives of the Common Agricultural Policy. The 2022 Agricultural Guidelines aim to help Member States design national measures and meet national and EU’s goals at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The non-confidential version of today’s decision will be made available under the case number SA.103979 in the State aid register on the Commission’s 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.