The European Commission has approved, under EU State aid rules, a €2.98 billion German scheme to promote green district heating based on renewable energy and waste heat. The measure will contribute to the implementation of Germany‘s National Energy and Climate Plan and to the EU's strategic objectives relating to the EU Green Deal, in particular the EU's 2050 climate neutrality target. The scheme, which will run until 30 August 2028, will be open to district heating network operators and operators not currently providing the mentioned service on the market. The aid will take the form of direct grants. The measure will support feasibility studies and transformation plans respectively for the construction and the decarbonisation of district heating networks. Under the scheme, district heating network operators will also be able to receive investment and operating aid for different purposes. The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU'), which enables EU countries to support the development of certain economic activities subject to certain conditions, under the 2022 Guidelines on State aid for climate, environmental protection and energy. The Commission found that: (i) the aid is necessary and appropriate for the decarbonisation of the district heating sector in Germany; (ii) the aid is proportionate and limited to the minimum necessary; and (iii) the positive effects of the aid outweigh any potential negative effects on competition and trade between Member States. On this basis, the Commission approved the German scheme under EU State aid rules. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €2.98 billion scheme will contribute to greening the district heating sector in Germany, by supporting the construction of more efficient district heating systems and the decarbonisation of existing ones. With this measure, Germany will be able to increase the share of renewable energy and waste heat in the heating sector, thereby considerably decreasing its emissions. The German aid measure we have approved today will contribute to achieving the EU Green Deal objectives and help Germany meet its environmental targets, while limiting possible distortions of competition.