What You Need to Know
Key takeaway #1
The Clean Industrial Deal State Aid Framework (CISAF) simplifies EU State aid rules to facilitate Member State support for energy transition, industrial decarbonization, and clean tech. It will allow for easier and quicker approvals of aid measures that comply with pre-defined criteria.
Key takeaway #2
The CISAF aims to stimulate investment in green energy, industrial decarbonization and clean tech manufacturing capacity by enabling necessary and proportionate State aid to overcome investment gaps, while "crowding in" private investment.
Key takeaway #3
The CISAF replaces the Temporary Crisis and Transition Framework that was introduced to address the impact of the conflict in Ukraine, and provides a stable and predictable framework until the end of 2030. Other State aid rules relevant to the energy sector and decarbonization, notably the 2022 Climate, Environmental protection and Energy Aid Guidelines, continue to apply in parallel.
On June 25, 2025, the European Commission adopted a new framework that simplifies EU State aid rules to make it easier for Member States to support the development of clean energy, industrial decarbonization and clean technology. This Clean Industrial Deal State Aid Framework (CISAF) will be in place until December 31, 2030 and replaces the Temporary Crisis and Transition Framework (TCTF), which was introduced in March 2023 to address the economic impact of the war in Ukraine and reduce the EU's dependence on imported fossil fuels.
The CISAF is one of the building blocks of the Clean Industrial Deal (CID), an ambitious policy agenda presented by the Commission in February 2025 (see our previous alert for more details), which aims to strengthen the competitiveness of European industry while at the same time accelerating the decarbonization of the economy. The main objective of the CISAF is to support investment in green energy, clean technology and industrial decarbonization by enabling necessary and proportionate State aid to overcome investment gaps, while "crowding in" private investment.
The CISAF simplifies the State aid rules in five key areas:
- the roll-out of renewable energy and low-carbon fuels;
- temporary electricity price relief for energy-intensive users to ensure the transition to low-cost clean electricity;
- decarbonization of existing production facilities;
- the development of clean tech manufacturing capacity in the EU; and
- de-risking of investments in clean energy, decarbonization, clean tech manufacturing, energy infrastructure projects and projects supporting the circular economy.
In particular, the CISAF simplifies the compatibility assessment under Article 107(3), point (c) of the Treaty on the Functioning of the European Union (TFEU). Under this provision, an aid measure must satisfy two conditions: the first being that it must be intended to facilitate the development of certain economic activities (positive condition) and the second being that it must not adversely affect trading conditions to an extent contrary to the common interest (negative condition):
- The positive condition requires Member States to identify an economic activity that will be facilitated by the aid measure, as well as the societal benefits of developing that activity (including, where applicable, its relevance to specific EU policies). The Member State must also demonstrate the incentive effect of the aid. Aid is considered to have no incentive effect if it supports the costs of an activity that the beneficiary would anyhow have carried out in the absence of aid, or if it only compensates for the normal business risk of an activity.
- The negative condition requires the Member State to demonstrate that the aid is necessary, appropriate, proportionate, and transparent and has no undue negative effects on competition and trade.
Having analyzed these conditions, the final step is to weigh the identified negative effects of the aid measure on competition and trading conditions against the positive effects of the planned aid on the supported economic activities, taking into account any contribution to environmental protection and the objectives of energy policy (balancing test).
The CISAF simplifies this compatibility assessment by making use of presumptions. Thus, aid measures falling within the scope of the CISAF and complying with all the conditions set out in the applicable sections are presumed to have incentive effect and to be necessary, appropriate and proportionate to support the development of the relevant activities; in addition, their positive effects are deemed to outweigh their negative effects on competition and trade. The compatibility conditions outlined in the CISAF are based on the Commission's case practice and relevant experience gathered by the Commission from the application of the TCTF.
Section 3 of the CISAF outlines general compatibility conditions. For instance, it states that an incentive effect can normally only be presumed if the beneficiary submits a written aid application to the competent authorities before starting work on the project or activity. However, aid can also be considered to have an incentive effect even if the start of work occurred before the submission of the aid application, if two cumulative criteria are met: (i) the aid is granted automatically in accordance with objective, non-discriminatory and non-discretionary criteria, and (ii) the measure has been adopted and is in force before work on the project or activity begins. Aid granted for investments that merely ensure compliance with Union standards that are in force at the moment of granting the aid, does not have an incentive effect.
To avoid a subsidy race between Member States, aid granted under the CISAF cannot be conditional on the relocation of an activity of the beneficiary to the country granting the aid from another (EEA) country.
Sections 4 through 8 of the CISAF set out the compatibility conditions for aid in each of the five above-mentioned key areas:
- Roll-out of clean energy: The CISAF aims to
fast-track the roll-out of clean energy by allowing for easier and
quicker approval of support for clean energy projects through
simplified procedures. The new framework covers support for both
renewable energy and low-carbon
fuels, which the Commission considers important to reduce
emissions in hard-to-decarbonize industries such as the transport
sector. The aid may take the form of investment aid or direct price
support schemes (such as contracts for difference or feed-in
premiums). The aid may be granted through a competitive
bidding process or, barring some exceptions,
administratively. Where the aid is granted
administratively, maximum aid intensities apply,
i.e., the aid is capped at a certain percentage of total eligible
costs, such as 45% for investments in renewable energy or 20% for
investments in low-carbon fuels. Higher maximum aid intensities
apply for aid granted to SMEs. In addition, Member States must
ensure compliance with the "do no significant
harm" principle, to ensure that the aided activities,
despite making a substantial contribution to climate and
environmental objectives, do not have a significant adverse impact
on other environmental or social objectives.
The CISAF also defines a "target model" for capacity mechanisms whereby Member States pay electricity suppliers to maintain standby capacity. Such mechanisms are necessary to ensure reliable supply to end users when intermittent renewable electricity sources (such as wind and solar) account for an increasing share of production. Capacity mechanisms that comply with all the criteria of either of two target models – strategic reserve or market-wide central buyer mechanism – as set out in Annex I to the CISAF, will qualify for fast-track approval, provided the aid measure is approved for a period of no more than 10 years.
- Electricity price support for energy-intensive
users: The CISAF enables Member States to provide
temporary electricity price support for energy-intensive
industries, to make them more competitive on global markets. Only
companies in sectors that are particularly exposed to international
trade are eligible. The CISAF covers price support in the form of
reductions from the wholesale price for a certain share of
electricity consumption (other forms must be assessed under the
2022 Climate, Environmental protection and Energy Aid
Guidelines (CEEAG)). The Commission will consider the aid
proportionate if it covers at most a reduction of 50% of the yearly
average wholesale market price in the bidding zone in which the
beneficiary is connected, for not more than 50% of their annual
electricity consumption. Moreover, such reductions must not result
in a reduced price below 50 EUR/MWh for the eligible consumption.
In return for receiving price support, companies must invest in
decarbonization.
- Support for investments in decarbonization or increased
energy efficiency of existing production facilities: The
new framework allows for support for a wide array of
decarbonization technologies such as electrification, hydrogen,
biomass, carbon capture and storage. Supported investments must
result in tangible reductions of greenhouse gas emissions and may
not result in the displacement of the emissions to the energy
sector or from one industrial site to another. The CISAF defines
minimum decarbonization targets and sets maximum aid limits. The
aid limits are determined based on pre-defined maximum aid
intensities (e.g., 45% for investments in the production
of renewable energy or in carbon capture) or a funding
gap The method based on maximum aid intensities can only
be used for aid amounts up to EUR 200 million. Alternatively,
Member States may also determine the maximum aid amount by a
competitive bidding process, subject to some
additional conditions.
- Support for clean tech manufacturing: The
CISAF allows Member States to support investments in new
manufacturing capacity for all technologies covered by the Net-Zero Industry Act in the form of schemes,
as well as other investment projects in clean technologies on an
individual basis, where it is needed to prevent such investments
being diverted away from Europe. Eligible projects may concern
investments in manufacturing of final products or components but
may also support the production and processing of critical
raw materials necessary for clean technologies. Here too,
the CISAF sets maximum aid intensities, with projects in less
advantaged regions benefiting from higher aid ceilings. In
addition, the framework allows Member States to stimulate demand
for clean technology products by offering tax
incentives, such as accelerated depreciation of
investments.
- De-risking private investments: Member States can take measures to stimulate private investments in projects supporting the Clean Industrial Deal, including not only clean energy, decarbonization and clean tech manufacturing, but also energy infrastructure and the circular economy. Such measures must ensure additionality, meaning that through reducing the risks associated with the investment they crowd in private investors that otherwise would not have invested in the same type of projects. Support may take the form of equity, loans and/or guarantees provided to a dedicated fund or special purpose vehicle that will hold the portfolio of eligible projects.
Finally, Section 9 of the CISAF sets out some transparency and reporting requirements that Member States must comply with.
Besides the CISAF, other State aid rules relevant to clean energy and decarbonization, notably the 2022 CEEAG, continue to apply in parallel and may be used by Member States for different or more complex support measures. Member States may also continue to rely on the General Block Exemption Regulation (GBER) to implement State aid measures in this field without the need to notify them to the Commission.
Although the CISAF does not cover aid for nuclear energy generation, the Commission states that it recognizes the role of nuclear in the energy mix and will conduct a timely assessment of State aid for nuclear supply chains and technologies, including for small and advanced modular reactors.
Besides implementing this new State aid framework, the Commission also plans to simplify other existing State aid rules:
- The recently launched review of the GBER is intended to result in a significantly reduced administrative burden on both businesses and Member States;
- The Commission is also evaluating the 2008 Guarantee Notice, to assess if it is still a sufficiently clear and predictable framework for granting state guarantees.
Finally, the Commission also intends to work with Member States to speed up the design of new important projects of common European interest (IPCEI), and assess targeted changes to the IPCEI definition to strengthen the efficiency of the tool to support industrial decarbonization and the scale-up of clean tech manufacturing in the EU.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
