State aid: Commission approves €46.5 million Hungarian investment aid to Toray’s lithium-ion battery separator film plant

The European Commission has found Hungary’s €46.5 million investment aid to the chemical company Toray for a new battery separator film plant in the Közép-Dunántúl (Central Transdanubia) region to be in line with EU State aid rules. The aid will contribute to the region’s development whilst preserving competition.

The €46.5 million investment aid granted by Hungary will support Toray’s €397 million investment in a new production plant for lithium-ion battery separator films (“BSF”) in the Közép-Dunántúl (Central Transdanubia) region of Hungary. BSF are a key component of lithium-ion batteries, used in consumer electronics, energy storage systems and electric vehicles. They function as the separator of the two major building blocks of a battery, preventing short circuits while allowing the movements of ions.

The project, which started in 2019 and is planned to be completed in 2023, is expected to create nearly 200 direct jobs. The production plant is located in Közép-Dunántúl (Central Transdanubia), an area eligible for regional aid under Art. 107(3)(a) of the Treaty on the functioning of the European Union. It will be Toray’s first plant for the production of BSF in Europe.

The Commission assessed the aid measure under the Guidelines on Regional State Aid for 2014-2020, which enable Member States to support economic development and employment in the EU’s less developed regions and to foster regional cohesion in the Single Market.

The Commission found that:

• without the public funding, the project would not have been carried out in Hungary or any other EU country;
• the aid is limited to the minimum necessary to trigger the investment in Hungary;
• the investment aid will contribute to job creation as well as to the economic development and to the competitiveness of a disadvantaged region.

The Commission concluded that the positive effects of the project on regional development clearly outweigh any distortion of competition brought about by the State aid.

Background

The aid had to be notified to the Commission for individual assessment and clearance because the amount of aid exceeds the applicable notification threshold envisaged by the General Block Exemption Regulation and thus gives rise to a higher risk of distorting competition and trade between Member States.

An aid measure must meet the following conditions under the Guidelines on Regional State Aid for 2014-2020:

• The aid must have a real “incentive effect”, in other words, it must effectively encourage the beneficiary to invest in a specific region;
• The aid must be kept to the minimum necessary to attract the investment to the disadvantaged region;
• The aid must not have undue negative effects, such as the creation of excess capacity in a declining market;
• The aid must not exceed the regional aid ceiling applicable to the region in question;
• The aid must not directly cause the relocation of existing or closed down activities from elsewhere in the EU to the aided establishment; and
• The aid must not divert investment away from another region in the EU, which has the same, or lower, level of economic development than the region where the aided investment takes place.

To support the development of a competitive manufacturing value chain in Europe with sustainable battery cells at its core, the Commission launched the European Battery Alliance in October 2017. This initiative seeks to capitalise on the job, growth and investment potential of batteries. One year on from the launch of the European Battery Alliance, there is already tangible progress in the creation of a European battery production industry.

The non-confidential version of the decision will be made available under the case number SA.54226 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 State Aid Weekly e-News.