Brussels says Portuguese plans to support the purchase of low-emission buses for public infrastructure in urban areas are in line with European Union (EU) State aid rules.

The European Commission (EC) noted the measure contributes to reducing CO2 emissions while limiting distortions of competition in the Single Market.

"This measure will help to improve air quality in Portugal and is aligned with Europe's objective to reduce emissions," said Competition Policy Commissioner, Margrethe Vestager.

"It supports the transition towards greener public transportation in urban areas without distorting competition."

In June 2016, Portugal notified a EUR60m (US$66m) scheme aiming to support the replacement of old conventionally propelled buses with new low-emission vehicles and related refuelling/recharging infrastructure.

This is expected to lead to a reduction of greenhouse gas emissions for each bus of at least 15% compared to current European standards (i.e. Euro VI).

The measure will be open to all green technologies currently available – (i) compressed natural gas or liquid natural gas buses, (ii) electric or hybrid buses, and (iii) hydrogen buses.

The Portuguese government will support 85% of the eligible costs through funding from the EU Cohesion Fund. Bus operators will bear the remainder.

The Commission assessed the aid for the acquisition of low-emission buses under its 2014 Guidelines on State aid for environmental protection and energy.

The Commission found low-emission buses had a slow uptake in Portugal, given their high costs compared to conventional vehicles.

As a result, private operators are reluctant to invest in refuelling/recharging infrastructure for such low-emission buses, in turn making it harder for operators to switch to low-emissions.

"In line with the Guidelines, public support is therefore justified," said an EC statement. "It is needed to incentivise bus operators to acquire low-emission buses that go beyond the current European standards.

"Moreover, the aid is limited and proportionate, as the beneficiaries will be selected through an open tender process.

"The beneficiaries of the scheme are the transport operators and transport authorities responsible for carrying out urban passenger transport in Portugal."

The Commission assessed the aid to refuelling/recharging infrastructure directly under the Treaty on the Functioning of the European Union, which allows Member States to support the development of certain economic activities, in this case improving energy efficiency, in line with EU energy and climate goals.

The support was found to only alleviate the extra cost related to the set-up of the refuelling/recharging equipment. The Commission considered the public funding appropriate, because of the risk of running such infrastructure, in particular in view of the currently low uptake of low emission buses in Portugal.

The Commission concluded the project's contribution to EU environmental goals clearly outweighs any potential distortion of competition brought about by the public financing.

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