European Commission Adopts New State Aid Framework To Support Clean Industry

Background

On 25 June 2025, the European Commission adopted the CISAF, a revised State Aid framework intended to support Europe's transition towards a net-zero industrial base. The CISAF forms part of the broader Clean Industrial Deal agenda and will remain in force until 31 December 2030.

The Clean Industrial Deal, adopted by the European Commission in February 2025, outlines a set of measures relating to decarbonisation and the competitiveness of European industry. The initiative focuses on areas such as access to affordable energy, the increased demand and supply of clean technologies, investment, circular economy models, skills, and job creation across the EU.

The CISAF introduces conditions under which Member States may grant State aid to private and public investments linked to renewable energy, industrial decarbonisation and clean technology manufacturing. The framework aims at supporting the green transition and streamlining procedural provisions as well as introducing options for non-competitive allocations in key sectors and instruments to reduce investment risks.

For businesses and investors operating in sectors such as clean energy, electrification, low-carbon manufacturing, or the production of net-zero technologies, the CISAF introduces a revised framework according to which Member States may grant State aid within the EU. Its purpose is to expand the scope of eligible activities and to set out the compliance requirements that apply to such support.

The new framework

The CISAF introduces provisions on State Aid procedures intended to facilitate the quick roll-out of renewable energy schemes and a range of decarbonisation technologies, including electrification, hydrogen, biomass, carbon capture, utilisation and storage.

It covers five main areas of State aid:

• Roll-out of renewable energy and low-carbon fuels, including investments in renewable energy production (e.g. wind, solar, biomass), renewable fuels of non-biological origin (RFNBO's), recycled carbon fuels, low-carbon hydrogen, synthetic fuels, and dedicated storage for these fuels and for electricity or heat;
• temporary electricity price relief for energy-intensive users, subject to conditions that recipients invest in green transition measures that reduce energy system costs in the medium to long term;
• decarbonisation of existing production facilities through investments that significantly reduce greenhouse gas emissions or lead to substantial energy efficiency improvements;
• support for clean technology manufacturing capacity in the EU, covering projects that expand production of technologies such as batteries, heat pumps, solar components, and electrolysers; and
• instruments aimed at de-risking private investments in clean energy, decarbonisation, clean tech, energy infrastructure projects, and circular economy projects.

The CISAF permits a range of support mechanisms, including direct grants, tax incentives, subsidised loans, and guarantees. Aid may be provided either through competitive bidding procedures or through individually notified schemes, subject to requirements of transparency, proportionality, and necessity.

The CISAF replaces the Temporary Crisis and Transition Framework ("TCTF") which was introduced in response to the economic effects of Russia's invasion of Ukraine. The TCTF allowed for three types of aid for companies affected by the crisis;

• Fixed amounts of State aid;
• liquidity support through subsidised state guarantees or loans at favourable interest rates; or
• compensation for increased energy costs, i.e. for higher gas and electricity costs, especially for energy-intensive users.

The CISAF incorporates certain instruments from the TCTF that relate to the green transition adapting them for application in a longer-term context. Whereas the TCTF allowed general support for companies affected by the energy crisis, the CISAF is more focused on aid for future-oriented investments in green transition projects.

Conditions for granting aid

Aiming to make State aid more targeted and proportionate, the CISAF introduces compatibility conditions that apply when Member States grant aid. According to the CISAF, aid must be necessary, meaning that it must be critical to trigger the investment. It must also be proportionate and therefore limited to the actual funding gap - the difference between the investment's expected cost and its anticipated return without public support, which means aid must be limited to what is necessary to make the investment economically viable without distorting competition.

The framework permits higher aid intensities in economically disadvantaged regions, in line with existing EU regional aid rules. For large-scale projects, Member States may require beneficiaries to meet additional conditions, such as requirements for environmental performance or long-term commitments to remain in the region.

In cases where an investment might otherwise take place outside the EU, the framework allows the granting of so-called "matching aid" to align with foreign subsidies. This form of support must be carefully justified, particularly where large companies are involved.

Implications for businesses

The CISAF sets out parameters and processes that companies should consider when seeking public support for decarbonisation, renewable energy, or clean tech investments. Projects that were not eligible for support under previous frameworks may now qualify, provided they meet the CISAF's criteria.

Companies considering investments in new energy infrastructure, retrofitting industrial plants, or clean-tech production facilities may benefit from state aid as a result of the new CISAF, and thus, they should explore the opportunities as part of their financing strategy. In particular, multinational companies evaluating where to locate new projects within the EU may find that the CISAF is a decisive factor in investment planning.

The availability of aid will depend on the implementation of national schemes and the scope of eligible activities covered by those schemes.

Plesner comments

The CISAF represents a shift in the EU's approach to green industrial policy, aiming to provide a clearer legal pathway to secure public funding for projects that contribute to the Union's climate and energy goals.

While the CISAF has generally been welcomed as part of the EU's broader green industrial policy, several critical points have been raised. The European Environmental Bureau has warned that the CISAF leaves loopholes that could allow aid towards fossil gas and unproven technologies such as carbon capture and storage, also pointing out that the electricity subsidies are not green-targeted, as these subsidies apply regardless of whether the electricity is generated from clean or fossil sources. By contrast, industry organisations stress that the CISAF is too restrictive, arguing that energy-intensive sectors in Europe continue to face persistently higher energy costs than competitors in the United States or China, leaving Europe's industrial competitiveness at risk. While the CISAF is intended to provide relief from high energy prices and support the use of clean electricity, stakeholders argue that the effectiveness of these measures is undermined by many restrictions and conditionalities that limit their practical applicability.

As the practical availability of aid will ultimately depend on how Member States implement national schemes, companies should be well advised to monitor developments in Denmark and across the EU to identify opportunities and assess whether specific projects may qualify.