Clean industrial deal State aid framework

KEY POINTS

Compatibility principles

State aid must be necessary, appropriate and proportionate, and its positive effects must outweigh potential distortions of competition:

• eligible forms include grants, tax advantages, loans and guarantees;
• aid may be combined with national or EU funding if overall limits are respected;
• conditions requiring the relocation of activities are not permitted.

Aid for clean energy roll-out and electricity cost support

Member States may grant:

• investment aid for renewable or low-carbon energy projects, including repowering and storage, through competitive bidding or based on aid intensities where relevant;
• price support through two-way contracts for difference¹ or feed-in premiums², limited to 25 years;
• aid for renewable and low-carbon fuels that meet EU sustainability and greenhouse gas emission-saving criteria.

Flexibility and capacity mechanisms³

Aid may cover demand response, storage and other non-fossil flexibility solutions, and capacity mechanisms consistent with EU electricity market target models. Such schemes must be competitively awarded, performance based and technologically neutral.

Temporary electricity price relief

Targeted, time-limited aid may be granted to energy-intensive users at risk of carbon leakage, provided it contributes to decarbonisation.

Relief cannot cover taxes or levies unrelated to wholesale prices and must include clear end dates and reporting requirements.

Industrial decarbonisation

Aid may finance process changes and energy efficiency improvements that lead to measurable reductions in greenhouse gas emissions or energy use:

• services, primary agriculture, fisheries and fossil fuel extraction are excluded;
• all sustainable technologies are eligible but projects must show verifiable results;
• aid amounts may be determined through competitive bidding, aid intensities or funding gap⁴ calculations, with a claw-back mechanism if projects generate higher returns than initially envisaged.

Clean technology manufacturing

Investment aid may support the establishment or expansion of EU manufacturing capacity for net-zero technologies such as solar panels, batteries or electrolysers:

• investment aid schemes are based on maximum aid intensities and amounts, with higher ceilings for assisted areas and for small and medium-sized enterprises (SMEs);
• investment must remain operational for at least five years (three years for SMEs) and cannot result in relocation within the European Economic Area (EEA) (see summary);
• ad hoc aid for large projects can be declared in the case of non-EU-country subsidies artificially diverting investment away from Europe; it must be limited to the minimum amount necessary and include safeguards against overcompensation, including a claw-back mechanism;
• aid in the form of accelerated depreciation can be granted to provide a tax incentive for the purchase of clean technology products.

Innovation Fund and Sovereignty Seal projects

Member States may co-finance projects selected under the Innovation Fund, including those awarded a Sovereignty Seal under the strategic technologies for Europe platform (STEP) (see summary), using either the Innovation Fund’s parameters or the framework’s aid limits, under simplified conditions.

Risk-sharing schemes

To mobilise private investment, Member States may establish funds or special purpose vehicles⁵ offering equity, loans or guarantees to projects pursuing clean industrial deal objectives.

Schemes must ensure additionality, limit exposure per project and follow transparent selection procedures.

Transparency and monitoring

Member States must publish information on aid above €100 000 within six months of being awarded, submit annual reports and keep records for 10 years.

The European Commission may request additional information regarding the aid granted.