New European Union State Aid Framework for the Clean Industrial Deal

On June 25, 2025, the European Commission adopted a new State Aid Framework for the Clean Industrial Deal called CISAF (Clean Deal State Aid Framework), which will remain in force until December 31, 2030. This instrument, which replaces the previous Crisis and Transition Time Framework (Temporary Crisis and Transition Framework), is the new European response to the climate emergency, global competitive pressure and the need to ensure strategic autonomy in key sectors for the green transition.

Context

CISAF has been adopted in a context in which the European Union aims to lead the global race towards climate neutrality, facing major challenges ranging from energy price volatility and dependence on critical raw materials, to the risk of relocation of strategic industries and competition from regions with less stringent climate policies. The European Commission, aware that private investment alone will not be sufficient to transform the European industry, enables Member States through CISAF to intervene under clear limits and procedures to ensure the efficient use of public funds, making sure that state intervention does not generate unjustified distortions in the internal market.

The CISAF sets out the conditions for the granting of aid by Member States to certain investments and objectives in accordance with the European Union's State aid rules. On the basis of CISAF's provisions, the Commission will authorise aid schemes adopted by Member States to encourage the rapid granting of individual aid.

In this sense, CISAF is established as a more flexible framework, under which Member States will be able to financially support projects for the development of renewable energy, low-carbon fuels, industrial decarbonisation, clean technology manufacturing and circular economy. All of this, under a fundamental premise: the aid must be necessary, appropriate and proportionate to generate the minimum distortion of competition.

In this line, CISAF establishes that state intervention is only justified when the market alone cannot achieve the decarbonisation and industrial modernisation objectives within the required timeframe. Therefore, aid must be limited to the minimum necessary to incentivise the investment or activity that, in the absence of such aid, would not be carried out or would be carried out in a more limited way. Thus, CISAF introduces two fundamental conditions for State aid to be considered compatible with the internal market on the basis of Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU):

• Positive condition (incentive effect): the aid must induce the beneficiary to undertake an investment or activity that it would not undertake without the aid, or that it would carry out in a limited way. The incentive effect is presumed when the aid application is submitted before the start of works, or when the aid is granted automatically under objective and non-discriminatory criteria.
• Negative condition: the aid must not unduly affect trading conditions between Member States to an extent contrary to the common interest. To this end, the Commission assesses its necessity, appropriateness, and proportionality, as well as possible negative effects on competition, and requires that the aid is limited to the minimum necessary.

Content

One of the novelties of CISAF is the simplification of the procedures for the authorisation of aid in the field of renewable energy. The Commission recognises the need to accelerate and facilitate certain investments and activities to achieve the objectives of the Clean Industrial Deal. In this way, renewable energy projects and support mechanisms for electricity system flexibility may benefit from more agile procedures, with fewer bureaucratic obstacles and greater predictability for investors. In addition, maximum deadlines are set for the commissioning of projects and the establishment of penalty regimes in case of non-compliance is required to reinforce the effectiveness of the measures.

The framework also recognises the particular situation of energy-intensive industries, especially in sectors with high energy consumption and exposed to international competition. For these, CISAF contemplates the granting of temporary aid to relieve electricity costs, with the aim of preventing the relocation of strategic industries to regions with lower environmental requirements, but with a clear counterpart: the beneficiary companies must commit to invest in decarbonisation and energy efficiency.

In the field of industrial decarbonisation, CISAF seeks to promote the granting of aid for the development of a wide range of technologies and solutions: electrification of processes, use of renewable hydrogen, carbon capture and storage, biomass, energy efficiency, among others. The framework establishes specific eligibility criteria and aid limits in these areas, with maximum intensities and claw-back mechanisms to avoid overcompensation in large-scale projects. In addition, CISAF establishes that aid may take multiple forms: from direct grants and tax advantages (such as accelerated depreciation of investments in clean technologies), to loans, guarantees, or equity investments alongside private investors.

A particularly relevant chapter is dedicated to aid for boosting manufacturing capacity of clean technologies in Europe. CISAF incentivises the creation and expansion of production plants for strategic goods and components (such as solar panels, batteries, or critical raw materials), with different aid intensities depending on location and company size. The objective is clear: to reduce dependencies, strengthen industrial autonomy and prevent key investments from being diverted outside the Union, contributing to the 40% resilience benchmark in European manufacturing capacity, in line with the Net-Zero Industry Act. In this sense, it is also required that investments be maintained in the beneficiary area for at least 5 years, to avoid relocation and guarantee the creation of quality employment.

Risk reduction for private investment is another pillar of CISAF. The Commission thus allows Member States to set up funds or investment vehicles that, through instruments such as guarantees, subordinated loans or equity investments, facilitate and attract the participation of private investors in clean energy, decarbonisation, infrastructure and circular economy projects that would otherwise not assume the risk of this type of project.

CISAF also refers to the social and territorial dimension of the energy transition, encouraging Member States to incorporate, in the design of state aid measures, criteria that promote the creation of quality employment, training, and a just transition, and exclude entities that use tax havens to avoid their tax contribution. In addition, higher aid intensities are foreseen for projects located in less-favoured regions (assisted areas), thus contributing to cohesion and preventing the transition to a net-zero economy from aggravating territorial inequalities.

Regarding governance and control of aid, the framework establishes the following transparency obligations: publication of aid granted by Member States, submission of annual reports to the Commission and retention of records for at least ten years. The Commission reserves the right to carry out checks to verify compliance with CISAF conditions.