New EU state aid rules for sustainable land transport

With the adoption of new guidelines on state aid for land and multimodal transport (hereinafter: Transport Guidelines) and a block exemption regulation for aid in rail, inland waterway and multimodal transport (hereinafter: Transport Block Exemption Regulation), the European Commission has fundamentally modernised the EU state aid framework for sustainable modes of transport. The new rules entered into force on 30 March 2026 and replace the previously applicable guidelines on state aid to railway undertakings (hereinafter: Railway Guidelines) from 2008. 

Objectives of the new regulation

With the new regulatory package, the Commission is pursuing several interlinked objectives: 

The focus is on promoting a shift in transport from road to more sustainable modes, supporting the green and digital transition, and significantly simplifying state aid procedures. At the same time, effective protection against excessive distortions of competition in the internal market is to be ensured. 

Transport Guidelines: the Commission’s assessment criteria

The new transport guidelines set out the conditions under which State aid for land and multimodal transport, which must be notified to the Commission for approval, can be declared compatible with the internal market. They cover all modes of transport considered more sustainable than road transport, in particular rail transport, inland waterway transport and certain forms of multimodal transport, provided that these involve rail or inland waterways or combine land transport with short-sea shipping. 

A significant development is the extension of the scope of application (compared to the previous railway guidelines) beyond the traditional railway sector. The guidelines now specify, among other things 

• investment and operating aid for the development of infrastructure for rail and inland waterway transport, 
• aid for the establishment of new commercial transport links in rail and inland waterway transport, 
• compensation for the fulfilment of public service obligations in rail freight transport, and 
• aid to reduce external transport costs and to promote the interoperability of different national transport systems (e.g. aid for safer and more efficient operations across different national rail systems). 

The Commission intends to specifically improve access to finance for SMEs, small mid-cap companies and new market entrants. These entities are to be supported in particular when acquiring rail vehicles and inland waterway vessels. This is intended to counteract existing barriers to market entry and financing gaps in the sustainable transport sector. 

Transport Block Exemption Regulation: Significant procedural simplification for Member States

The Transport Guidelines are accompanied by the new Transport Block Exemption Regulation, which exempts certain categories of aid in rail, inland waterway and sustainable multimodal transport from the obligation to notify and obtain approval (see Article 108(3) TFEU) from the Commission. Member States will in future be able to implement such support measures immediately, provided that the conditions set out in the Regulation, which follow the structure of the General Block Exemption Regulation, are met. 

This procedural relief is intended to significantly reduce the administrative burden on public authorities and aid recipients. In terms of content, the categories of aid covered by the Transport Block Exemption Regulation and the provisions contained therein largely reflect the Transport Guidelines. The Transport Block Exemption Regulation applies until 31 December 2034, whilst the Transport Guidelines apply without a fixed expiry date. 

Context and Outlook

The new rules are based on a comprehensive evaluation of the previous Railway Guidelines and a public consultation process. They form part of the EU’s overarching strategy to strengthen competitiveness whilst achieving climate targets. This opens up a legally secure, flexible and significantly expanded scope for action for Member States and funding bodies, whilst businesses can benefit from more predictable framework conditions for investing in sustainable transport solutions.