Executive Summary
- What is new: The European Commission has adopted a new state aid framework (CISAF) as part of its Clean Industrial Deal. It provides a toolkit for EU countries to provide support for strategic industries that align with the EC’s industrial goals, including in relation to renewable energy, decarbonization and cleantech manufacturing.
- Why it matters: These developments seek to accelerate Europe’s green transition, strengthen industrial resilience and enable quicker, simplified approval of state aid schemes for businesses advancing these goals.
- What to do next: Companies should consider investment opportunities in strategic sectors that are aligned with the EC’s goals, assess eligibility under new state aid schemes, and monitor updates to tax incentives and regulatory frameworks supporting clean industrial projects.
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The European Commission (EC) is at a crossroads in its industrial policy as it seeks to address Europe’s current geopolitical context.
Supporting clean or renewable energy rollout and promoting cleantech manufacturing is key to meet the EC’s ambitious green targets and protect Europe’s energy security. At the same time, China and the US (key producers of critical net-zero technologies) increasingly prioritize their own national industrial strategies.
The EC’s Clean Industrial Deal (February 2025) sets out a road map to integrate climate action with competitiveness and position the EU as a global leader in the energy transition. This followed the Competitive Compass (January 2025), which will steer the EC’s work over the next five years. In June 2025, the EC adopted a new state aid framework accompanying the Clean Industrial Deal (CISAF) as a pillar of its industrial strategy.
Key Points
- Support for strategic industries is at the heart of the EC’s agenda, including in relation to the rollout of renewable energy and low-carbon fuels, price relief for energy-intensive users, industrial decarbonization and clean tech development, and support for batteries, automation and semi-conductors.
- CISAF provides a toolkit for EU countries to support businesses further advancing these industrial priorities, allowing for a quicker assessment of State aid schemes and encouraging public and private investments across the supply chain.
- The EC’s agenda also includes a commitment to develop new large-scale, strategic, cross-border Projects of Common European Interest (IPCEIs), encouragement for member states to introduce tax incentives to enhance invests in line with these strategy goals (Recommendation on Tax Incentives to support the Clean Industrial Deal), as well as broader support for industries such as defence.
State Aid – A New Framework for the EC’s Industrial Policy
State aid covers financial support measures from an EU member state (or state-owned companies) giving a company a selective economic advantage that distorts competition and affects trade among EU member states.
A measure that qualifies as state aid must be notified and vetted by the EC or otherwise meet a preapproved set of conditions. The EC then assesses compatibility with the internal market, depending on the industry sector and type of measure. There is a standstill obligation for any state aid that requires the EC’s review. Aid granted in breach of the standstill obligation is illegal and may need to be recovered for violations dating back 10 years. The EC may also sue member states that do not comply before the European courts.
State Aid for Strategic Clean and Green Industries
CISAF replaces the previous Temporary Crisis and Transition Framework (TCTF) and builds on the Climate, Energy and Environmental Aid Guidelines (CEEAG). It aims to provide quicker and more simplified approval across the value chain for renewable energy, decarbonization and cleantech:
- Investment in the fast-track rollout of clean energy (including production, storage and flexibility services): State aid schemes to support investment in renewable energy and low-carbon fuels, as well as the promotion of non-fossil electricity flexibility.
- Investment in technologies leading to industrial decarbonization or increased energy efficiency: Support for decarbonization technologies such as electrification, hydrogen, biomass, carbon capture utilization and storage based on predefined aid amounts, funding gap or competitive bidding process.
- Expand support for manufacturing in clean tech: Support covering projects concerning technologies covered by the Net-Zero Industry Act as well as on an individual basis when needed to avoid such investments being diverted away from Europe.
Along with CISAF, the EC is also assessing the potential to further simplify and update the state aid General Block Exemption Regulation (GBER) with the aim to further reduce red tape and facilitate necessary support for the industry in line with the EU’s Competitive Compass and Clean Industrial Deal.
Key Industries at the Heart of the EC’s Agenda
Renewable Energies and Decarbonization
The EC has recently granted aid approvals in alignment with its green priorities, in particular to meet the requirement that renewable energy constitute at least 42.5% of the EU’s energy mix by 2030 (almost doubling the existing share).1 For example, aid was approved for wind and solar energy projects in Spain to reduce dependency on imported fossil fuels (May 2024).2 Tax credits amounting to €2.9 billion were greenlit for French production facilities of solar panels and wind turbines (January 2024).3 The EC has also approved €900 million of aid in France for the production of heat and fuels from biomass and renewable hydrogen for use in industrial processes and transport (March 2024).4
To encourage industrial decarbonization, the EC approved €2.6 billion in state aid to compensate businesses for the early closure of lignite-fired power plants in Germany,5 whilst in support of nuclear energy projects, the EC also approved Belgian support measures for electrical generation and distribution companies relating to the lifetime extension of two reactors.6
Batteries and Automotive Industry
In October 2024, the EC imposed duties on imports of battery electric vehicles (EVs) from China on top of the 10% EU import duty for cars.7 “Fair competition is good. What we don’t like is when China floods our market with massively subsidized electric cars. And we have to tackle this, we have to protect our industry,” said EC President Ursula von der Leyen.8
To expand manufacturing capacity and avoid falling behind global competitors, the EC will facilitate state aid for clean, connected and autonomous vehicles in its Industrial Action Plan for the European automotive sector. Direct production support for EU car battery makers can be combined with state aid, subject to companies proving that their battery cells and components comply with certain resilience requirements and show added value for the EU. The Clean Industrial Deal will also support battery production by updating the rules for investments in strategic net-zero equipment manufacturing capacity. In line with these policy objectives, the EC has recently approved aid schemes in relation to the battery industry, including in Spain (May 2024),9 France (January 2024)10 and Belgium (December 2023).11
Semiconductors
The EC aims to strengthen supply, resilience and technological autonomy in strategic technologies such as semiconductors (see European Chips Act Communication, 2022). The Competitive Compass announced the intention to further scale up investment in semiconductors, including by working with the European Investment Bank and private investors to deploy an investment program to help bridge the funding gap.
In line with this aim, the EC has already approved semiconductor aid, including €227 million for new semiconductor advanced wafer manufacturing facilities in Austria (February 2025), €920 million for a new semiconductor manufacturing plant in Germany (February 2025), and €5 billion to support the European Semiconductor Manufacturing Company in a German joint venture with Taiwan Semiconductor Manufacturing Company, Bosch, Infineon and NXP (August 2024).
EC and Member States To Design New IPCEIs
IPCEIs are a subsidy framework for EU projects of strategic significance that involve cross-border collaboration between member states and industry in line with key EU objectives such as the green transition. These include four EC-approved hydrogen IPCEIs with public and private investments for a total of €46 billion in 17 EEA states.12
The EC plans to widen the scope of IPCEIs and speed up support for industrial decarbonization and the scale-up of cleantech manufacturing. It aims to facilitate the pooling of investment and resources to support key projects in areas where the market alone will not deliver efficient outcomes, including in relation to microelectronics, hydrogen, batteries and cloud infrastructure. The EC will also work with the European Investment Bank to grant applications and advice on financial structuring. In April 2025, the EC announced a Design Support Hub for IPCEIs to work with member states to shape and design IPCEI candidates, as well as launching the design phase of IPCEIs for innovative nuclear technologies.
Taxation as a Clean Industrial Tool
Beyond CISAF, the Clean Industrial Deal sees tax policies as a key incentive. The EC Recommendation on Tax Incentives to support the Clean Industrial Deal (July 2025) calls for reform of member states’ corporate tax systems to incentivize clean businesses, combined with subsidies for scaling down and phasing out fossil fuel use.
The EC’s recommended measures include two core instruments to drive clean investment: (i) shorter depreciation periods for cleantech assets, allowing businesses to quickly write off costs and benefit from tax incentives that offset high initial investments; and (ii) targeted tax credits for businesses in strategic sectors to make investment in more financially attractive.
New EC Defense Priorities
In light of the shifting geopolitical context, the EC has also prepared a new defense plan. REARM Europe/Readiness 2030 aims to increase investment and spending on defense by up to €800 billion. In addition to an increase in EU funds, member states are expected to increasingly provide state aid to support defense companies.
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1 EC, Renewable energy targets.
2 EC, SA.113231, TCTF – Investments in strategic sectors for the transition to a net-zero economy (Principality of Asturias), Decision of May 14, 2024, para. 45.
3 EC, SA.109334, TCTF – Tax credit for investments in green industries, Decision of January 8, 2024.
4 EC, SA.109766, TCTF – Régime temporaire d’aides à la production de chaleur, de combustibles et de carburants dérivés de la biomasse et de l’hydrogène renouvelable, Decision of March 27, 2024 (in French); EC press release, Commission approves €900 million French State aid scheme to support the production of energy and fuel from biomass and renewable hydrogen to foster the transition to a net-zero economy (March 27, 2024).
5 EC, SA.53625, TCTF – State aid for lignite phase-out, Decision of December 11, 2023.
6 EC, SA.106107, TCTF – State aid measures to support lifetime extension of two nuclear reactors.
7 EC press release, EU imposes duties on unfairly subsidised electric vehicles from China while discussions on price undertakings continue (October 29, 2024).
8 Reuters article, EU’s von der Leyen: China must be stopped from flooding EV market (May 8, 2024).
9 EC, SA.113231, TCTF – Investments in strategic sectors for the transition to a net-zero economy (Principality of Asturias), Decision of May 14, 2024, para. 45.
10 EC, SA.109334, TCTF – Tax credit for investments in green industries, Decision of January 8, 2024.
11 EC, SA.109169, TCTF – RRF-Décarbonation des entreprises wallonnes - Renforcement des investissements dans les chaînes de val€liées à la transition énergétique, Decision of December 15, 2023.
12 EC, Approved IPCEIs in the Hydrogen value chain, Decision of March 13, 2025.
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