On 11 March, the European Commission launched a public consultation on its draft State aid Framework accompanying the Clean Industrial Deal (CISAF). Stakeholders have until 25 April to submit their comments. The CISAF will be adopted in the second quarter of 2025 and will apply until 31 December 2030. Rather than a complete revolution, the draft CISAF builds on existing State aid tools and precedents. It is also an attempt to “simplify” green State aid rules, and will likely de facto replace existing stricter rules.
Clean Industrial Deal instead of Green Deal
The Von der Leyen II Commission has replaced the Green Deal (the flagship initiative of the Von der Leyen I Commission) with the Clean Industrial Deal (see our previous blog post), thereby initiating a shift towards combining green objectives with a more pro-business approach aimed at boosting the competitiveness of the EU industry and turning decarbonisation into a growth driver for European industries.
The Clean Industrial Deal will be accompanied by a revised State aid framework, which will partly replace and partly complement the existing rules (see our previous blog post on what to expect from the Von der Leyen II Commission and Competition Commissioner Ribera on State aid policy), thereby both reflecting the changed policy priorities, and addressing criticisms previously directed at the existing “green State aid” rules.
From EEAG to CEEAG, from TCF to TCTF
There has been no shortage of legislative developments in the EU’s “green State aid” rules over the past five years. The Energy and Environmental Aid Guidelines (EEAG), in force since 2014, were replaced by the Climate, Energy and Environmental Aid Guidelines (CEEAG) at the beginning of 2022, as part of the broader “Green Deal” package of the Von der Leyen I Commission. Not only did the Guidelines almost double in length, but also new legal tests were introduced, with a focus on competitive tendering procedures (see our previous blog posts here and here). For some categories of aid, such as decarbonisation aid, the CEEAG even introduced a requirement to conduct a public consultation on the impact of the aid on competition. While the CEEAG placed a strong emphasis on the promotion of green energy generation and decarbonisation, they were also perceived as bureaucratic and led to lengthy (notification) procedures.
Following Russia’s invasion of Ukraine and its impact on the European energy markets, the European Commission introduced a Temporary Crisis Framework (TCF) in 2022, which included a number of provisions to further accelerate the shift to renewable energy generation and reduce dependence on fossil fuel imports, including from Russia (see our previous blog posts here and here). For a limited period of time (mostly until the end of 2025), these rules provided for temporary simplified State aid approval criteria. In 2023, also under the influence of the United States’ Inflation Reduction Act, the European Commission further developed the TCF into a “Temporary Crisis and Transition Framework” (TCTF), adding further provisions aimed at facilitating the EU’s industrial base in key technologies for the “green transition” and allowing, at least in theory, for more generous public support for renewable energy generation and decarbonisation (see our previous blog post). However, for all the relief it provided, the TCTF’s rules were still complex and often criticized for their insistence on competitive bidding processes, complex funding gap analysis and complicated rules requiring investments across different Member States or in “assisted areas” (e.g., in the case of matching aid).
From CEEAG/TCTF to CISAF?
The draft CISAF can be seen as the last evolution of the TCTF and will likely de facto replace the stricter CEEAG for several aid categories. By moving away from silo solutions, the CISAF aims to unlock investment (and State aid) opportunities for many investors and stakeholders. The draft CISAF sets out how Member States can design State aid measures for three key areas:
- the rollout of renewable energy (including production, storage and flexibility services);
- industrial decarbonisation (targeting greenhouse gas emission reductions and energy efficiency improvements, with further flexibility for projects under the Innovation Fund); and
- clean technologies (covering the whole supply chain of all equipment relevant to the transition to a net-zero economy, including inputs and raw materials, and aid as accelerated depreciation).
The CISAF also introduces the possibility of aid to de-risk investments by private investors in the same three areas, thereby broadening the range of potential aid recipients with a view to crowding in private investment. It also revises the so-called ‘matching aid’ programme for aid to clean technologies to further lure investment from third countries into the EU.
The draft CISAF has now been published for public consultation (link), which is open until 25th of April 2025.
Does the CISAF live up to the European Commission’s promises?
In the table below, we look at some of the key differences between the draft CISAF and the CEEAG and the TCTF (non-exhaustive list). While some of the elements introduced in the TCTF will remain in force (e.g., renewable energy and decarbonisation aid can be granted outside of a tendering process and without public consultation), and some criteria under the CEEAG and TCTF will be slightly simplified (e.g., matching aid under the TCTF will be less complex, but only slightly), the draft CISAF also clearly shows that a number of elements that were previously criticised will remain in force (e.g., strict adherence to tendering or funding gap analysis).
Overview of some of the key differences between draft CISAF, CEEAG and TCTF
Aid category | Draft CISAF | CEEAG | TCTF |
|---|---|---|---|
Investment aid to accelerate the rollout of renewable energy | 1. Funded projects: Investments in production or storage of renewable energy, including renewable fuels of non-biological origin (RFNBOs) that comply with the methodologies set out in Directive (EU) 2018/2001 and its implementing or delegated acts. 2. Aid amount: a. Competitive bidding process (100% of total investment costs possible). Competitive bidding process is now optional for onshore wind, offshore wind, hydropower and solar projects. b. Determined administratively by the Member State (not possible for renewable energy production capacities), with up to 45% of the investment costs possible (20% increase for small and 10% increase for mid-sized companies possible). 3. Timing: Projects must be completed and operating within 36 months after date of granting (exceptions: offshore wind, hydropower and -storage, hydrogen) 4. Aid instruments: No requirements. | 1. Funded projects: Renewable energy generation. 2. Aid amount: a. Competitive bidding process, where the budget and volume are designed in a way that it can be expected that not all bidders will receive aid b. Determined administratively for small projects or cross-border projects only, if there is an insufficient number of potential bidders. 3. Timing: No requirements. 4. Aid instruments: No requirements. 5. Further requirements: a. Public consultation on the competition impacts and proportionality of measures b. Where the aid takes the form of individual aid, the Member State has to demonstrate that the aid measure will not lead to distortions of competition (through increased market power). c. Member States have to give reasons for measures which do not include all technologies that compete with each other. | 1. Funded projects: Investments in production or storage of renewable energy including renewable hydrogen and hydrogen-derived fuels. 2. Aid amount: a. Competitive bidding process (100% of the investment costs possible) is mandatory for onshore wind, offshore wind, hydropower and solar projects of a certain size. b. Determined administratively by the Member State, with up to 45% of the investment costs possible (20% increase for small and 10% increase for mid-sized companies possible). 3. Timing: The aid is granted by 31 December 2025, and the projects must be completed within 36 months after the date of granting (with the exception of offshore wind). 4. Aid instruments: The aid is granted in the form of direct grants, repayable advances, loans, guarantees or tax advantages. |
Aid in the form of direct price support schemes for the production of renewable energy (operating aid) | 1. Aid amount: a. Competitive bidding process b. Determined administratively by the Member State (eligible cost will be the expected net cost, accounting for main costs, revenues and prior aid over the project’s lifetime). Exceptions for projects where the aid amount does not exceed 30 million EUR and the projects are defined as small projects. 3. Timing: No requirements 5. Further requirements: Contract duration will not exceed 25 years after the aided installation starts operations. | 1. Aid amount: a. Competitive bidding process b. Determined administratively for small projects or cross-border projects only, if there is an insufficient number of potential bidders. 3. Timing: No requirements. 4. Aid instruments: No requirements. 5. Further requirements: Public consultation on the competition impacts and proportionality of measures. | 1. Aid amount: a. Competitive bidding process b. Determined administratively with the strike price set to cover the expected net costs and taking into account all revenues and aid received. Exceptions for projects where the aid amount does not exceed 30 million EUR and the projects are defined as small projects. 3. Timing: Aid is granted by 31 December 2025, and the installations must be in operation within 36 months, with the exception of offshore wind. 4. Aid instruments: Two-way contract for difference. 5. Further requirements: Contract duration no longer than 20 years after the aided installation starts operations. |
Aid for industrial decarbonisation | 1. Funded projects: Investments reducing greenhouse gas emissions (including energy efficiency) of industrial activities. 2. Aid amount: a. Schemes: (i) Standardized process: For individual aid up to EUR 200 million, the maximum aid amount under an aid scheme can be determined on the basis of the total investment costs directly related to the achievement of the greenhouse gas emission savings, and (ii) an aid intensity no higher than 50% for hydrogen investments, 30% for carbon capture, 35% for renewable energy production, storage and electrification investments and 20% for all other technologies. Increases by 10% for small and 5% for mid-sized companies possible. (ii) Individualized process: Beneficiaries submit a funding gap calculation as part of the aid application using the uniform funding gap template. A claw-back mechanism must be put in place. (iii) Competitive bidding where all projects that contribute to greenhouse gas emissions avoidance are eligible. b. Individual aid: Funding gap calculation using the uniform funding gap template. A claw-back mechanism must be put in place. 3. Timing: The installation or equipment to be financed by the aid is in operation within 36 months after the date of granting. 4. Aid instruments: Direct grants, repayable advances, loans, guarantees or tax advantages. | 1. Funded projects: Investments reducing greenhouse gas emissions, including those resulting from industrial processes. 2. Aid amount: a. Competitive bidding process b. Determined administratively for small or cross-border projects, if there is an insufficient number of potential bidders. c. Competitive certificates / supplier obligation schemes. 3. Timing: No requirements. 4. Aid instruments: No requirements. 5. Further requirements: Public consultation on the competition impacts and proportionality of the aid. | 1. Funded projects: Investments reducing greenhouse gas emissions by industrial activities, where at least 40% of the greenhouse gas emissions are reduced through electrification, or at least 20% of the greenhouse gas emissions are reduced due to energy efficiency measures. 2. Aid amount: a. Competitive bidding process b. Determined administratively, not exceeding 40% of the eligible costs (the difference between the costs of the project and the costs savings or additional revenues in the absence of the aid). 3. Timing: Aid is granted by 31 December 2025, and installation must be in operation within 36 months after the date of granting. 4. Aid instruments: Direct grants, repayable advances, loans, guarantees or tax advantages including tax credits. |
Aid to ensure sufficient manufacturing capacity in clean technologies (“matching aid”) | 1. Funded projects: Production of equipment or components for the transition towards a net-zero economy, and production or recovery of related critical raw materials. 2. Aid amount: a. Investment aid schemes: Outside assisted areas, aid cannot exceed 15% of the eligible costs and EUR 75 million per project. In an assisted area, aid cannot exceed 35% of the eligible costs and EUR 175 million per project. Aid to small companies can be increased by 20%, to mid-sized companies by 10%. Alternative maximum amounts apply to aid granted exclusively in the form of loans or guarantees to SMEs or to large undertakings with at least a B (or equivalent) rating. b. Individual aid: Aid amount cannot exceed the lower of (i) the amount of subsidy that the beneficiary could receive for an equivalent investment in a third country outside the EEA, or (ii) the minimum amount needed to incentivise the aid beneficiary to realise the investment in the area concerned in the EEA rather than in the alternative location outside the EEA. 3. Timing: No requirements. 4. Aid instruments: No requirements. | No specific provisions. | 1. Funded projects: Production of equipment or components for the transition towards a net-zero economy, and production or recovery of related critical raw materials. 2. Aid amount: a. Investment aid schemes: Aid may not exceed 15% of eligible costs, overall aid amount may not exceed EUR 150 million per company per Member State. Aid may be increased (i) to 35% of the eligible costs and 350 million EUR in assisted areas, and (ii) for another 5% if the aid is granted in form of tax advantages, loans or guarantees. b. Individual aid: Individual aid up to the amount of subsidy which the beneficiary could demonstrably receive for an equivalent investment in a third country jurisdiction outside the EEA, provided that (i) the investment takes place fully in an assisted area, or in at least three EEA Member States where a significant part of the investment takes place in an assisted area. 3. Timing: Aid must be granted by 31 December 2025. 4. Aid instruments: Direct grants, tax advantages, subsidized interest rates on new loans or guarantees on new loans. |
Aid to reduce risks of private investments | 1. Funded projects: Aid can be granted on the basis of a scheme to incentivise private investment in portfolios of projects in renewable energy, industrial decarbonisation, clean technology manufacturing or energy infrastructure. 2. Aid amount: a. Competitive process: Selection of private (co-)investors in a fund or SPV on the basis of a competitive selection procedure, setting out the policy objectives and investment strategy of the fund / SPV. b. Standardized process: (i) Where aid is granted in the form of subordinated loans and guarantees to a portfolio of projects, the aid to the investor is in the form of a first-loss protection of not more than 15%, and the risk taken by the State is reflected in a premium which is less than 25% lower than the market-conform remuneration. (ii) Where the aid is granted in the form of equity investments to a portfolio of projects, the allocation of the investment returns to the share classes held by the private investors is capped at 75% of the expected return on the portfolio’s investment. The remaining 25% of the investment returns are channelled to the share class held by the Member State (75%) and to the share classes held by the private investors (25%). 3. Timing: Loans or guarantees must not exceed ten years in total. 4. Aid instruments: Equity, loans and/or guarantees provided to a dedicated fund or SPV. | No specific provisions. | No specific provisions. |
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