Introduction
On 25 June 2025, the European Commission (EC) adopted the new Framework for State Aid measures to support the Clean Industrial Deal (Clean Industrial Deal State Aid Framework: CISAF), which was published on 26 June 2025. This framework outlines how the EC will assess state aid measures notified to it that stimulates investments in clean energy supply, clean production methods and the production of hardware essential for the energy transition.
We will analyse the CISAF and compare it to the Guidelines on State aid for climate, environmental protection and energy 2022 (Climate, Energy and Environmental Aid Guidelines: CEEAG) and the General Block Exemption Regulation (GBER). The GBER allows certain aid to be granted without prior notification to and approval from the EC. While it is beyond the scope of this article to discuss the entire CISAF in full, we highlight some key points.
Key Takeaways
- Broader Opportunities for Energy Transition Projects:
- The CISAF provides broader opportunities for state aid to support energy transition projects or investments in the production of products critical to the transition. However, strict conditions apply, which are sometimes stricter than those under the CEEAG or GBER.
- Overlap with GBER and CEEAG:
- Aid falling under the GBER can be granted without prior notification to and approval by the European Commission, even if it also falls under the CISAF.
- Both the CISAF and CEEAG may apply to certain aid measures. A critical and precise assessment is required to determine which conditions are most favourable for achieving the intended goals.
- Under the CISAF, for example, aid can generally only be granted through aid schemes, with limited exceptions. The possibilities for ad hoc aid (tailored aid for individual companies without an underlying scheme) are very restricted compared to the GBER and CEEAG.
- Competitive Bidding Process:
- The CISAF mandates the use of a competitive bidding process for most aid measures, with limited exceptions. This aligns with the CEEAG. The GBER, however, often allows higher aid intensities when a bidding process is used but also permits aid without such a process.
- Private Investments in Energy Transition:
- The CISAF enables aid to promote private investments in energy projects or the production of products critical to the energy transition, such as batteries or solar panels. It is crucial for investors to ensure compliance with the CISAF and other state aid rules before making investments to avoid financial risks.
- Approval Outside CISAF or CEEAG:
- Aid that does not fall within the CISAF or CEEAG frameworks may still be approved by the EC. However, this requires a well-substantiated argument demonstrating the desirability of the aid's objectives and why it cannot be accommodated within the CISAF or CEEAG.
New framework, alongside other frameworks
Since 25 June 2025, the CISAF has replaced the Temporary Crisis and Transition Framework (TCTF), which the EC adopted in 2023. The CISAF applies alongside the GBER and the CEEAG. Member States and beneficiaries should therefore assess whether the intended objectives can be achieved within the GBER's framework. The same applies to the CEEAG. The relevant government body primarily determines the legal basis for the aid. However, it is also in the interest of the beneficiary company to contribute to this process, if necessary, in order to secure the optimal aid for its project. A critical evaluation is always necessary to determine which legal basis offers the best opportunities for the specific investment or project.
Schemes and bidding processes
While the GBER and CEEAG allow more flexibility for ad hoc aid under the CISAF, aid seeking approval from the EC typically needs to be established within a scheme, with some exceptions. The use of a competitive bidding process is also frequently required, based on the principle that such procedures minimise the amount of aid granted. Under the GBER and CEEAG, aid is generally also possible without a bidding process; however, in such cases, the permissible aid amount is significantly lower than when a bidding process is employed.
Hydrogen: A Key Focus
The CISAF places significant emphasis on renewable hydrogen. Given the slower-than-expected production and uptake of renewable hydrogen, the Clean Industrial Deal acknowledges the need for low-carbon hydrogen to contribute to emission reductions, particularly in hard-to-decarbonise sectors like transport, where more energy- or cost-efficient alternatives are not yet readily available. Consequently, the CISAF enables state aid not only for renewable hydrogen projects but also for low-carbon hydrogen (storage) projects.
Natural gas
Under the CISAF, aid for natural gas-based processes is still possible but under strict conditions. This concerns in particular the use of natural gas in industrial processes. Investment in processes using natural gas can only be eligible for aid if the Member State demonstrates that (i) there is no technologically mature alternative for natural gas, (ii) that alternatives to natural gas are not yet feasible due to insufficient availability or infrastructure, or (iii) that the decarbonisation will take place in stages. Even then, the Member State must require that beneficiaries submit a credible and detailed plan showing how natural gas will be phased out by 2040. Furthermore, investments that are largely based on natural gas as a means to decarbonise industrial heat must, upon entry into operation, deliver a reduction in direct greenhouse gas emissions of at least 70 % or a reduction of energy consumption per unit of output of at least 40 %.
New objectives/instruments
In addition to the objectives already familiar from the CEEAG and GBER, such as aid for renewable energy deployment, aid for low-carbon fuel deployment, industrial decarbonisation, or aid for capacity mechanisms, the CISAF introduces several new objectives. These include aid for investments in non-fossil flexibility, aid for the temporary reduction of electricity prices for energy-intensive users (already known from the TCTF), aid for increasing production capacity for commodities or products critical to the energy transition (also previously seen under the TCTF), and, briefly, aid for risk financing by private parties. We will discuss some of these objectives.
Direct price aid schemes
The CISAF introduces new opportunities for price aid schemes, such as contracts for difference and feed-in premiums. The EC has previously approved such price support schemes for renewable energy in individual decisions. The CISAF now provides a more transparent framework for how the EC will evaluate these schemes.
Direct price aid for electricity generation from renewable sources must take the form of two-way contracts for difference. These are agreements between a power-generating facility operator and a counterpart, typically a public entity, that ensure both minimum remuneration protection and a cap on excess remuneration. These contracts must be designed in accordance with the principles outlined in Article 19d(2) of the EU Electricity Regulation.
Aid may be granted either through a competitive bidding process or administratively. However, with the exception of demonstration projects or small projects, all aid for the production of electricity from renewable sources must be awarded through a competitive bidding process.
Aid for the temporary reduction of electricity prices for energy-intensive users
Since high electricity costs risk driving industries outside the EU to regions with less stringent environmental policies and discourage electrification of production processes, Member States may provide temporary electricity price relief to affected industries. Eligible sectors are those with high trade intensity and electro-intensity, as listed in Annex 1 of the CEEAG, or others demonstrated to meet these criteria with verified data.
Aid must be granted on the basis of a scheme and will be considered proportionate if it reduces electricity costs by up to 50% of the average wholesale price for no more than 50% of annual consumption, without lowering prices below €50/MWh. Beneficiaries must allocate at least 50% of aid to investments that reduce electricity system costs and support decarbonisation, such as renewable energy, energy storage, demand-side flexibility, or electrification (the four times 50 approach). Aid can be granted for a maximum of three years, with payments ending by 31 December 2030.
Aid to reduce risks of private investments related to clean industrial deal objectives
A significant addition compared to the CEEAG and TCTF is the section addressing aid to reduce risks for private investors in what is broadly referred to as "clean industry." This Section 8 shares similarities with the well-known Article 21 of the GBER, which concerns aid for risk financing. However, unlike aid under Article 21 of the GBER, which does not require prior approval by the EC, aid under the CISAF framework does require such approval.
Aid under Section 8 of the CISAF can be provided in the form of equity, (subordinated) loans, or guarantees in favour of a dedicated fund or special purpose vehicle (SPV). The fund or SPV then manages a portfolio of eligible projects. This means that the aid is not provided directly to individual projects by the government. Instead, aid schemes under this section must be implemented through a financial intermediary or an implementing authority.
The fund is required to invest in projects that fall within the scope of other sections of the CISAF, with the exception of supporting specific projects under the Innovation Fund. The strict conditions imposed on these funds are designed to ensure that investments are made based on market-oriented considerations.
The state aid element lies in the fact that governments can, for example, take on a first-loss position, meaning they do not invest in the fund on a pari passu basis with private investors. This non-market-based participation by public entities enables private investors to achieve an acceptable return on their investments. However, it is crucial to verify that the participation of public entities complies with state aid rules. If government participation is withdrawn, it could significantly affect the return on investment for private parties.
Aid for production of products important for energy transition
Aid for the production of products critical to the energy transition, such as (components for) solar panels, power plants for concentrated solar plants (e.g., CSP reflectors), wind turbines, batteries, pumped hydro storage, and proton exchange membrane fuel cells, is not entirely new. Such aid was already possible under the TCTF. Aid can be provided for the establishment of new production capacity.
While the CISAF primarily facilitates aid through aid schemes, in this case it also allows for ad hoc aid. The CISAF demonstrates a preference for initiating such activities in assisted areas. Investments outside assisted areas are not excluded, but it must be demonstrated that the investment cannot be carried out as efficiently in an assisted area.
This ad hoc aid is designed to match potential aid granted outside the EEA, thereby encouraging production within the EEA. In contrast, support for production capacity provided through schemes is subject to less stringent conditions.
Promoting cross-border collaboration
We note that CISAF does not include specific instruments to promote cross-border cooperation, such as higher aid intensities for projects that meet certain minimum requirements for cross-border collaboration. Introducing such measures could simultaneously advance the integration of the internal market alongside other objectives.
As a result, the promotion of cross-border cooperation projects still appears to rely on aid specifically designed for Important Projects of Common European Interest (IPCEIs). This is outlined in the European Commission's Communication on the Criteria for the Analysis of the Compatibility with the Internal Market of State Aid to Promote the Execution of IPCEIs. Notably, several projects in the field of energy transition have already been approved under this Communication.
For parties interested in exploring the possibilities of cross-border cooperation in the context of the energy transition, we may also examine the provisions of the Communication on IPCEIs.
