European Commission approves aid of €43.65M granted by France to French Institute of Agro-Based Materials public private partnership for development of plant-based plastics, bio based paints

Elyse Blye

BRUSSELS , March 28, 2014 (press release) – The European Commission concluded that the aid granted by France to the IFMAS public‑private partnership for the development of plant-based plastics and bio‑based paints was in line with EU state aid rules. In particular, the Commission felt that the project would help to achieve EU targets in the area of science and the environment without unduly distorting competition in the European internal market.

Joaquín Almunia, the Commission Vice-President in charge of competition policy, said: 'The advances envisaged by this ambitious project would make it possible to substitute plant-based products, in particular plastics and paints, for those based on hydrocarbons, thereby reducing CO2 emissions. Public financing will help to implement a project whose scientific and environmental impact is indisputable.'

In 2013 France notified its plans to provide €43.65 million of aid in the form of a grant and a capital injection into SAS IFMAS, the start-up set up to manage the IFMAS IEED public‑private partnership (Institut d'Excellence en Énergies Décarbonées - institute of excellence in the field of low-carbon energy). The aim of this project is to develop plant-based plastics and bio-based paints using a procedure that replaces petroleum-based products with starch-based products. This procedure would allow a significant reduction (30-50 %) in greenhouse gas emissions.

The Commission examined the compatibility of the aid in relation to its Guidelines for state aid for research and development and innovation (R&D&I Guidelines, see IP/06/1600 and MEMO/06/441). It concluded that state aid was justified because of the existence of market failures. The aid would enable the results of the project to be disseminated widely, whether by scientific publications and training programmes or, more indirectly, by allowing new plant varieties to be identified and developed. In terms of public health, the technologies developed will enable certain harmful molecules (such as phthalates) to be replaced, while on the environmental front, they will make it possible to remediate soil contaminated by heavy metals by means of starch production. The Commission's investigation showed that the aid was both necessary and sufficient to spur SAS IFMAS to carry out an R&D project that it would not have launched of its own volition. Moreover, given the openness of the upstream technology markets and the limited market share that the beneficiary would have in them, any risk of distorting competition would be avoided.

Background

In the fields of plant-based plastics and bio-based paints, replacing petroleum-based products with starch-based products would allow a significant reduction (30-50 %) in greenhouse gas emissions.

Plastics currently represent an overall volume of more than 290 million tonnes per year and absorb 8-10 % of world oil production, and world demand for them is growing at between 5 % and 9 % per year.

Paints and coatings (41 million tonnes per year) use between 1 % and 5 % of world oil production and are growing at the rate of 10-15 % per year.

To develop this new 'green chemistry', the proposed R&D will cover the whole industry, from upstream (plants) to downstream (bio-based products). The areas of expertise of a large number of partners will be pooled to develop these plastics , paints and coatings, compounds, polymers, resins, functional molecules and additives (in addition to the technical devices, material resources, equipment, software, and technical, scientific and legal services needed to produce them). These innovative technologies will then be applied in the agriculture, chemistry and plastics sectors.

SAS IFMAS will be 50 % owned by the public sector and 50 % by five industrial partners in the plant-based chemicals and starch sectors. In addition to the universities behind its creation, IFMAS will work with other public research bodies and undertakings acting together in a consortium.

The non-confidential version of the decision will be made available under case number SA.37131 in the State Aid Register on the DG 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".

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