Think Railways

The European Commission has opened an in-depth investigation to examine whether the public financing of a test centre for high-speed trains and related equipment (the Centro de Ensayos de Alta Tecnología Ferroviaria, CEATF) near Malaga in Spain is compatible with EU state aid rules. Under Spain's current plans, the project costs of €358.6 million would be fully financed by the EU Regional Development Fund (ERDF) and Spain. At this stage, the Commission has doubts that the project pursues a genuine objective of common interest. The opening of an in-depth investigation gives interested parties an opportunity to submit comments and does not prejudge the outcome of the investigation.

In September 2013 the Spanish authorities notified to the Commission plans to support the construction of a railroad circuit where producers could test high-speed trains and related equipment at up to 520 km/h. The plans foresee that public funding would fully cover the investment costs of €358.6 million. The biggest portion of the funding would come from the ERDF with the remainder contributed from the Spanish budget.

The Commission assessed the project under its state aid rules for Research, Development and Innovation (R&D&I) activities, which allow public support for R&D&I projects and research infrastructures. The initial investigation has revealed that demand for such a railway test centre seems low and public opposition, especially on environmental grounds, appears quite strong. It is therefore doubtful that the project would further an objective of common interest. The Commission also has concerns that the measure might give a selective advantage to CEATF as compared to other high speed railway testing facilities in the EU that operate without state support.

Moreover, the information provided by Spain so far is not sufficient to verify if the CEATF infrastructure would be effectively available to all potential users in the EU under open and non-discriminatory terms. The current projections also indicate that the project will remain vastly loss making, and it is doubtful that the public financing of the CEATF project will incentivise the private investors to complement the financing with private funding and share the risks of the project. The lack of any involvement of private investors implies that the maximum aid intensity, i.e. the proportion of the eligible investment costs, under the state aid rules on public support for the research infrastructure may not be respected.

The opening of an in-depth investigation enables the Commission to gather detailed information on the issues which raise doubts.

The CEATF would be built near Malaga in the region of Andalucia in Spain. It would have the purpose of allowing research on high-speed rail technology, approval and tuning of mobile rail equipment, infrastructure and superstructure elements. A public tender organised by the Spanish government in 2013 to select an operator of the centre for 25 year failed as no bidder expressed their interest.

In 2014 the Commission adopted new state aid rules applicable to aid measures by Member States in support of research, development and innovation (R&D&I) activities, which came into force in July 2014. The rules require, in particular, that the project pursues a demonstrated objective of common interest and addresses a genuine market failure. Moreover, the public support must be necessary to induce the beneficiary to change its behaviour regarding the financing of the project (incentive effect), and limited to the minimum necessary to implement the project. In particular, when aid is to support research infrastructures (i.e. facilities, resources and related services that are used by the scientific community to conduct research in their respective fields), the public support for their construction must be limited to a maximum 60% of the eligible costs.