Renault Master commercial van

Renault will receive 20.5 million euros (US$27.9 million) from the European Commission to develop diesel-hybrid powertrains for commercial vans, as the EC broadens its search for ways to cut emissions throughout the continent.

The EC said earlier this week that it would provide 3.8 million euros in grants and the rest in loans. Renault will be working with Continental, Valeo and LMS International on the project and will earmark its Trafic and Master models for development of the new powertrain.

With about two million commercial vehicles sold each year in Europe, the EC wants to cut emissions "considerably" by helping fund emissions-reducing technology development from Renault, France's largest automaker. Among other European automakers pursuing diesel-hybrid technology to both reduce emissions and boost fuel economy on the private-vehicle front are UK's Land Rover and France's Peugeot. The European Union has been aggressively pursuing lower emissions standards and declared a mandate for fleetwide new-car emissions of to 95 grams per kilometer of CO2, a decline of about 30 percent, by the end of the decade. That result would correlate to about 59 miles per gallon, when using the slightly more generous European cycle. Check out the European Commission's press release below.
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State aid: Commission approves €20.5 million of aid to Renault for the development of diesel hybrid commercial vehicles

Brussels, 2 October 2013

State aid: Commission approves €20.5 million of aid to Renault for the development of diesel hybrid commercial vehicles
The European Commission has decided that the aid granted by France to the motor vehicle manufacturer Renault to help it conduct the 'HYDIVU' research and development programme complies with the EU rules on state aid. The aim of this project is to develop a diesel hybrid technology for vans. At the end of the project, Renault will equip the Trafic and Master ranges with a new hybrid engine. The diesel consumption and CO2 emissions for these two models will be reduced considerably. The state aid addresses a genuine market failure without giving rise to an undue distortion of competition.

Renault will receive €20.5 million in state aid: €3.8 million in grants, €3.4 million in repayable advances for industrial research and €13.1 million in repayable advances for experimental development.

Commission Vice-President in charge of competition policy, Joaquín Almunia, said: 'Almost 2 million commercial vehicles are sold each year in Europe. This project should result in a substantial reduction in their fuel consumption and CO2 emissions, thereby contributing to the EU's targets for innovation, the environment and energy security, without affecting competition'.

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 the aid remedied a genuine market failure and that it was both necessary and sufficient to spur Renault to carry out an R&D project that it would not otherwise have launched of its own volition.

This is the third state aid case approved by the Commission that seeks to support R&D activities for the development of a new system of hybrid engines. However, the specific feature of the aid to Renault is that it is aimed at commercial vehicles, whereas the previous aid concerned passenger cars: in July 2013, the Commission approved aid to Valeo to conduct the 'ESSENCYELE' project (see IP/13/703) (petrol hybrid engine) and aid to PSA for the '50CO2Cars' project (diesel hybrid engine) (see IP/17/757).

Background
Historically, in Europe commercial vehicles have been derived from passenger vehicles. They share the same overall configuration (front-wheel drive, transversely mounted front engine, monocoque structure), the same engines and the same transmission systems. In terms of R&D, vehicle manufacturers are therefore generally happy to 'adapt' for commercial vehicles the innovations previously developed for cars, which limits the risks of technological failure but leads to a sub-optimal result because the adapted technologies are not a perfect fit for the operating constraints of commercial vehicles: not enough power to drive the heavier and less aerodynamic vehicles, which have to carry heavy loads over long distances (motorway). By contrast, with HYDIVU, Renault will develop a hybrid engine specifically designed and optimised overall for commercial vehicles.

Renault will carry out the HYDIVU project in collaboration with three other companies (Continental, Valeo and LMS International) and a research body (IFPEN). For those partners which benefit from state aid, the grants for the ESSENCYELE project are compatible with a French R&D aid scheme (case SA.32466) which complies with the criteria of a regulation exempting certain categories of aid from prior authorisation by the Commission (see IP/08/1110 and MEMO/08/482).

The non-confidential version of today's decision will be made available under case number SA.34668 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.