New State aid framework supporting the Clean Industrial Deal

On 25 June 2025 the European Commission (Commission) adopted the Clean Industrial Deal State Aid Framework (CISAF) (see also the Commission's press release). The CISAF is a way of supporting the Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation (Clean Industrial Deal). The aim of the Clean Industrial Deal is to reach net zero emissions in the EU by 2050 while at the same time making the EU more competitive (more on the Clean Industrial Deal in Noerr Insights). By simplifying and in some cases relaxing the EU State aid rules to date, the CISAF will allow for the necessary investments by Member States in the future.

The CISAF initially applies until the end of 2030 and replaces the Temporary Crisis and Transition Framework (TCTF). The TCTF was adopted in the wake of Russia’s invasion of Ukraine to enable the Member States to support affected economic sectors (such as energy-intensive companies). Starting from 25 June 2025, the CISAF now also applies to the State aid applied for under the TCTF.

I. Simplified State aid rules to achieve the Clean Industrial Deal targets

To achieve the Clean Industrial Deal targets the Commission believes investment is needed especially to

• accelerate the rollout of renewable energy;
• drive forward the decarbonisation of industry; and
• ensure sufficient clean tech manufacturing capacity in the EU.

The Commission sets out in the CISAF how to design state support for these purposes in compliance with State aid rules. The CISAF mainly provides for the creation of State aid schemes by the Member States, but in some cases also individual aid (specifically to ensure sufficient manufacturing capacity in clean technologies).

The CISAF contains specific rules on State aid in the following main areas:

1. Accelerating the rollout of clean energy and support for electricity costs

a. Aid for the rollout of clean energy

By accelerating the rollout of renewable energy and using more low-carbon fuels (such as blue and green hydrogen) the Commission aims to become less dependent on third countries, cut energy costs and achieve net zero emissions. The CISAF sets out State aid programmes in the Member States for the following purposes:

• Investment in generating energy from renewable sources;
• Investment in storing renewable fuels;
• Investment in electricity and heat storage;
• Investment in the production of low-carbon fuels;
• Investment in the production of renewable fuels; and
• Investment in the storage of low-carbon fuels.

State aid for these purposes can be granted in any form such as direct grants, guarantees or tax advantages. Except for electricity and heat storage, the aid can also be granted in the form of a direct price support scheme (such as contracts for difference or feed-in premiums). Support from the Member States may be up to 100% of the total investment costs or net costs.

b. Aid to support electricity costs for energy-intensive companies

In addition, aid may be granted to promote (i) non-fossil electricity flexibility (such as through demand-response or storage to meet flexibility needs in the electricity sector) and (ii) capacity mechanisms in the form of a strategic reserve or a market-wide central buyer mechanism with central procurement. Other forms of capacity mechanisms may also continue to be approved under the existing Guidelines on State aid for climate, environmental protection and energy (CEEAG).

The CISAF also enables an industrial electricity price to be introduced for sectors with a particularly high risk of companies relocating to third countries due to high electricity costs or where high electricity costs deter companies from electrifying their production processes.

2. Industrial decarbonisation

In addition, under the CISAF Member States may also grant aid to investment projects that contribute either to a significant reduction of greenhouse gas emissions or to a significant reduction of energy consumption in industrial activities. Industrial activities are activities carried out in industrial installations and involving the production of tangible final and intermediate goods at scale.

Aid for industrial decarbonisation may only be given in the form of direct grants, repayable advances, loans, guarantees or tax advantages. The amount of aid may be determined by means of aid intensity (percentage of total investment costs), calculation of a funding gap or a competitive bidding process.

3. Ensuring sufficient clean tech manufacturing capacity

Under the CISAF, aid can also be granted for investment projects to create sufficient production capacity for clean technologies. This applies to all stages of the value chain – the scheme covers (i) manufacturing clean final products (such as batteries and solar-thermal systems), (ii) manufacturing main specific components (such as heat pumps or ammonia crackers) and (iii) manufacturing new or recovered related critical raw materials necessary for the production of the above products.

Granted in the context of a State aid scheme the aid may cover up to 55% of the total investment costs of a project and may not exceed €350 million. Aid can also be granted as so-called ad hoc aid (individual aid independent of an aid scheme). The amount of the ad hoc aid is determined by the amount of subsidy that the beneficiary could receive for an equivalent investment in a third country ("matching aid"). However, the amount is limited to the amount that is necessary so that the investment is made within the European Economic Area.

In a recommendation published on 2 July 2025, the Commission also suggests that Member States grant aid in this area in the form of tax credits.

Finally: Not only manufacturers of clean technologies, but also their users can benefit from aid. The purchase and leasing of equipment for clean technologies (such as batteries or equipment for the power supply of electric vehicles) can be subsidised through accelerated depreciation.

4. Specific Innovation Fund projects

The above investments can be granted aid on simplified terms if the project has already received a positive assessment under the Innovation Fund. The aid may only be given in the form of direct grants, repayable advances, loans, guarantees or tax advantages.

5. Incentivising private investments

Finally, Member States may encourage private investors to invest in these areas by granting aid in the form of equity, loans and/or guarantees for a fund or special purpose vehicle. This is intended to incentivise private investors. The aid per individual project cannot exceed €250 million or 25% of the total financing volume of the fund or special purpose vehicle.

II. Outlook

The CISAF and related Member State support measures are likely to be of great interest to companies in energy-intensive industries and all companies in the clean energy sector (including users of “clean technologies”). This is because the CISAF is intended to make it easier for these companies to obtain support and, thanks to its relatively long term until the end of 2030, to offer them planning security. The hope is that the Commission’s expectations of the CISAF will be realised in practice as fast as possible. This is likely to depend not least on the Member States, which will have to set up the aid schemes provided for by the CISAF.

Projects that do not meet the CISAF conditions can still access aid under the existing parallel EU State aid rules, such as the CEEAG or the General Block Exemption Regulation.

Companies in the sectors concerned would therefore be well advised to timely look into possible state support for their investments. As the CISAF shows once again, State aid will remain an important means of implementing the EU’s climate policy goals for the foreseeable future.

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