State aid for a greener future: navigating the EU's Clean Industrial Deal State Aid Framework

Background of the CISAF

The EC has set ambitious goals to accelerate the rollout of renewable energy, promote industrial decarbonisation and ensure sufficient production capacity for clean technologies. However, Member States are not free to distribute subsidies at their discretion to achieve these goals. Instead, they must notify state aid measures to the EC, which then assesses their compatibility with the internal market.

Against this backdrop, the CISAF sets out simplified criteria that the EC will apply when assessing state aid measures proposed by Member States to contribute to the objectives of the Clean Industrial Deal. The tools provided by the CISAF complement existing state aid rules, which remain in force. Most notable among these are the Climate, Environmental and Energy Aid Guidelines (CEEAG), as well as the General Block Exemption Regulation.

The Commission will prioritise certain cases and aims to take a decision within six weeks after receiving a complete notification.

Who will benefit?

The CISAF covers a wide range of aid for beneficiaries investing in the rollout of clean energy and the decarbonisation of industrial processes. The following sectors are among those that will benefit:

• Producers of Renewable Fuels of Non-Biological Origin (RFNBOs): This includes producers of green hydrogen, who may receive state aid for investments in production and storage facilities, as well as in electricity and thermal storage. Aid may be granted through competitive bidding processes or administratively and may take the form of investment aid schemes or direct price support schemes, such as contracts for difference and feed-in premiums.
• Energy-intensive users: Companies in sectors such as chemicals, metals or cement may benefit from aid in the form of temporary electricity price relief for certain investments. Member States may grant reductions from the wholesale electricity price for a specified share of electricity consumption. Eligible investment activities include the development of renewable energy production capacities, energy storage solutions or electrolysers.
• Other beneficiaries: These may include companies engaged in the production of low-carbon fuels as specified in Directive (EU) 2024/1788, providers of non-fossil flexible capacities, and those involved in carbon capture and storage (CCS) or carbon capture and utilisation (CCU).

Member States may also provide aid to incentivise the acquisition or leasing of clean technology equipment and to reduce the risk of private investments, for example by offering state loans or guarantees. In this context, they may choose to incentivise private investments in energy infrastructure within the framework of a legal or natural monopoly, or in projects supporting the circular economy.

Potential stumbling blocks for applicants

In practice, several criteria may pose challenges for companies applying for subsidies:

• Incentive effect: Beneficiaries are only eligible for state aid if there is an incentive effect. This is generally presumed when the start of works on the project or activity occurs only after a written aid application has been submitted. However, aid may still be considered to have an incentive effect even if works began before the application, under certain conditions.
• Cumulation rules: Many beneficiaries seek to combine different forms of state aid. Aid under the CISAF can be cumulated with other state aid or de minimis aid, or combined with centrally managed EU funds, as long as these measures concern different identifiable eligible costs. Cumulation for the same eligible costs, whether partially or fully overlapping, is also possible, provided the total aid does not exceed the highest support intensity or amount applicable under any of the relevant conditions.
• Timely implementation: Under the CISAF, the eligible investment activity must begin operation within a certain period from the granting of the aid, unless the beneficiary can demonstrate to the Member State that a longer timeline is justified for technical reasons.

These requirements should be carefully considered by companies seeking to benefit from state aid measures granted under the CISAF to ensure compliance and maximise their chances of receiving support. In addition, the maximum aid intensity and amounts must be evaluated from a commercial perspective, especially when parallel funding schemes exist that were granted outside the scope of the CISAF.

authors: Bernd Rajal, Patrick Barabas