The European Commission has adopted a new State Aid Framework in support of the Clean Industry Pact (CISAF), enabling Member States to promote clean energy development, industrial decarbonisation, and clean technologies.

CISAF sets the conditions under which Member States can provide support for certain investments and objectives in line with EU state aid rules. Under the framework, the Commission will approve aid schemes introduced by Member States to support clean industry, allowing for the rapid deployment of individual aid.

CISAF will remain in effect until 31 December 2030, providing long-term predictability for Member States and businesses. The new framework replaces the Temporary Crisis and Transition Framework, which had been in place since 2022.

The framework simplifies state aid rules in five key areas:

• Deployment of renewable energy and low-carbon fuels;

• Temporary relief from electricity prices for energy-intensive users to ensure a transition to lower electricity costs;

• Decarbonisation of existing industrial facilities;

• Development of production capacities for clean technologies in the EU; and

• Risk mitigation for investments in clean energy, decarbonisation, clean technologies, energy infrastructure projects, and circular economy projects.

Specifically, the framework enables:

Accelerated deployment of clean energy.
The new framework covers support for both renewable energy and low-carbon fuels. Renewables are crucial for achieving the decarbonisation goals of the Clean Industry Pact. CISAF introduces simplified procedures to enable the fast rollout of renewable energy schemes. Low-carbon fuels, such as blue and green hydrogen, also play a key role in reducing emissions and supporting the transition in hard-to-abate sectors where more efficient or cost-effective options are not yet available.

For direct price support schemes for renewables, a provision ensures that aid must be designed to avoid unduly distorting market functioning, particularly by preserving operational incentives and price signals. Beneficiaries should not be incentivized to offer their production below marginal costs or receive aid during periods when the market value of production is negative.

New rules on flexibility measures and capacity mechanisms give Member States additional tools to integrate variable renewable electricity sources (e.g., wind and solar) into energy supply, while ensuring consumers benefit from reliable electricity. CISAF defines a capacity mechanism, under which Member States pay electricity suppliers to maintain backup capacity, potentially eligible for accelerated approval. Other projects will be assessed under the Guidelines on State aid for climate, environmental protection, and energy (CEEAG).

Support for electricity costs of energy-intensive users.
Member States may support electricity prices for companies in sectors that are heavily exposed to international trade and highly dependent on electricity for production. This allows Member States to reduce electricity costs for these users, who face higher prices compared to competitors in regions with less ambitious climate policies. In return, companies receiving price support will be required to invest in decarbonisation.

Flexible investment support for all decarbonisation or energy efficiency technologies.
The framework enables support for a broad range of decarbonisation technologies, such as electrification, hydrogen, biomass, and carbon capture and storage (CCS).

Support can be granted based on:

• Pre-defined aid amounts (for support up to EUR 200 million);

• Funding gaps; or

• Competitive bidding processes.

Support for clean technology production capacity.
The framework allows Member States to support investments in new manufacturing capacities for:

• All manufacturing projects related to technologies covered by the Net-Zero Industry Act, under aid schemes; and

• Individual manufacturing projects in net-zero technologies when necessary to prevent such investments from being diverted away from Europe.

Support is also possible for the production and processing of critical raw materials necessary for clean technologies.

To ensure regional cohesion across Europe, Member States may offer higher support for projects in less advantaged regions as identified in regional aid maps.

Additionally, the framework enables Member States to stimulate demand for clean technology products by offering tax incentives—such as allowing companies to deduct clean technology investment costs more rapidly from taxable income.

Risk-reduction measures for private investments supporting the Clean Industry Pact

Public and private investment must work hand-in-hand to drive the transition to a decarbonised economy. Member States may take measures to reduce risks for private investments in projects covered by the framework, including those related to energy infrastructure and the circular economy. Support may come in the form of equity, loans, and/or guarantees provided to a special fund or special-purpose vehicle (SPV) managing a portfolio of eligible projects.

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Context

EU state aid rules exist to prevent situations where a company gains an unfair competitive advantage through government support.

Other state aid rules related to the Clean Industry Pact (e.g., CEEAG) remain in force and can be used by Member States for different and more complex measures. Member States may also continue applying aid measures under the General Block Exemption Regulation (GBER) without notifying the Commission.

The Commission conducted consultations with Member States and stakeholders on the draft state aid framework. A previous survey gathered insights on the use of the Temporary Crisis and Transition Framework. All responses were taken into account in finalising the framework.

Detailed information about this consultation and the responses received is available online.

An overview of support options under the Clean Industry Deal State Aid Framework is available here.