Overview
I. Introduction
Companies should take the opportunity to influence the EU's new clean energy State aid rules, to protect their interests. On March 11, 2025, the European Commission (the Commission) launched a public consultation inviting all interested stakeholders to comment on its draft State aid Framework accompanying the Clean Industrial Deal. The Commission aims to gather feedback from stakeholders on new provisions designed to support the EU's transition to a climate-neutral economy.
With these new State aid rules, the Commission wants to achieve four goals aimed at growing Europe’s installed renewable energy capacity and decarbonizing its industries:
(i) Simplify the tender processes to enable the permitting of more clean energy capacity;
(ii) Enable Member states to set up tender-based schemes or directly finance projects that decarbonize industrial operations;
(iii) Allow Member states to invest in State aid schemes for the development of clean energy equipment including solar panels, batteries and wind turbines, and;
(iv) Implement measures to de-risk private investments into these sectors.
This consultation will be open until April 25, 2025 and is an important opportunity for businesses, industry groups, and other stakeholders to influence the EU rules that will determine how State aid can be granted at the national level for green technologies and industrial decarbonization efforts under the EU’s broader Green Deal objectives. This newsletter provides a brief overview of the context leading to the current consultation, its main features, and its potential consequences for businesses. Please reach out to Steptoe’s competition team in Brussels for any guidance regarding this consultation.
II. Political background
In July 2024, in response to the shortcomings highlighted in the Draghi Report, Commission President Ursula Von der Leyen outlined Europe’s plan for sustainable growth: the Clean Industrial Deal. On February 26, 2025, the Commission published its Communication on the Clean Industrial Deal: A joint roadmap for competitiveness and decarbonization, also announcing the adoption of a new State aid framework in the second quarter of 2025.
The Clean Industrial Deal is part of the EU’s commitment to achieve net-zero emissions by 2050 and it represents a big shift for EU businesses, specifically in energy-intensive sectors. It shall boost investments in green technologies (renewable energies, CO2, hydrogen networks, digitalized energy systems, etc.), ensure the transition of carbon-intensive industries, and reduce carbon emissions across industrial sectors. However, for these objectives to be met, Member states must have a flexible framework to provide appropriate support to industries that are still heavily reliant on carbon-intensive processes. The proposed new State aid regulations shall provide guidance to the Member states on how to structure their intended financial support measures in the clean energy sector. When devising and implementing such measures, they must find the right balance between the decarbonization goals and undistorted competition within the EU’s internal market.
III. Key features of the new framework
At the heart of the proposed new State aid rules is the Commission's aim to accelerate the decarbonization of industrial sectors while avoiding disruptions to the internal market. Once adopted, they shall facilitate certain standard requirements, such as the mandatory bidding process to allocate State aid, to speed up the use of the schemes once they are set up by Member states.
One of the central proposals is supporting clean technologies that can drive significant reductions in industrial carbon emissions by permitting Member states to support the production of specific clean technology equipment, such as batteries, solar panels, wind turbines, heat pumps, electrolyzers, and carbon capture systems, along with their essential components and raw materials. Under strict conditions, Member states could also provide higher levels of aid to match support offered by third countries, preventing investments from being diverted outside the EU.
The new rules also address the provision of State aid to accelerate the rollout of renewable energy including through the introduction of programs that support investments in renewable energy and energy storage through streamlined tender processes. The new rules also encourage direct support for less advanced technologies like renewable hydrogen, bypassing tender processes and includes tailored provisions for State aid supporting non-fossil flexibility and capacity mechanisms.
Furthermore, they include the adoption of measures to promote industrial decarbonization: Member states would have the option to back investments in a wide range of decarbonization technologies, e.g., renewable heat, reuse of waste-heat, investments reducing greenhouse emissions, etc. This could involve either tender-based initiatives or direct project funding, within predefined limits. For particularly large projects, authorities would need to demonstrate that public funding does not exceed the financial shortfall of the project.
Another key aspect of the new framework is its focus on de-risking private investments. Member states shall be enabled to adopt measures to reduce the risks associated with private investments in renewable energy, industrial decarbonization, manufacturing capacity in clean technologies and energy infrastructure. Such aid could take the form of loans and/or guarantees provided to a dedicated fund or special purpose vehicles that will hold the portfolio of eligible projects.
IV. Outlook and takeaways for businesses
In its recent Competitiveness Compass, the Commission identified the need for a flexible and supportive State aid framework to support businesses in their switch to clean technologies. This involves providing targeted and streamlined aid to promote decarbonization investments while maintaining fair market competition. Additionally, Member states must ensure that aspects of their tax systems, such as tax credits, effectively incentivize private investments and support the development of clean production business models.
In addition, in its Work Program for 2025, the Commission outlined the Clean Industrial Deal and placed the new State aid framework at the heart of its decarbonization strategy, emphasizing the need for rules that contribute to an accelerated renewable energy deployment, boost industrial decarbonization, support investments in technologies driving emission reductions through tender-based programs or direct funding with safeguards to prevent over-subsidization, and expand manufacturing capacity for clean technologies.
These measures are designed to create favorable conditions for clean energy projects, enhance industrial sustainability, and secure Europe’s competitive position in the transition to a greener economy. The Commission aims to ensure that Member states can provide support, where needed, to achieve the ambitions of the Clean Industrial Deal without causing undue distortions of competition in the Single Market.
Given the implications for industries involved in the green transition, companies in carbon-intensive sectors, as well as those involved in the development of green technologies, should pay close attention to how the draft State aid framework could impact their operations – positively or negatively – and access to funding. Stakeholders are encouraged to share their views on various aspects of the proposal, such as the scope of the aid, its compatibility with EU rules, and whether the criteria for granting aid are sufficiently clear and fair, by April 25, 2025.
The Commission plans on adopting the new State aid rules in the first half of 2025, which will be in force until the end of 2030 and will replace the current Temporary Crisis and Transition Framework. Other State aid instruments, such as the Climate, Environmental Protection, and Energy State Aid Guidelines, will remain applicable and can be used by Member states for distinct and more complex initiatives.
Any company or trade association that wishes the Commission to take into account its views have one month to make a submission. Please contact the authors if you would like to talk through the merits of such a submission.
