On June 25, 2025, the European Commission adopted the Clean Industrial Deal State Aid Framework (CISAF) to promote the EU’s goals for decarbonization and competitiveness. CISAF makes permanent the relaxed State aid compatibility rules adopted under the Temporary Crisis and Transition Framework (TCTF). It will be in effect from June 25, 2025 until December 31, 2030.
Key takeaways
- CISAF allows EU Member States to grant more State aid to achieve the EU’s decarbonization and competitiveness goals, under certain conditions.
- Based on the TCTF rules on renewable energy, industrial decarbonization and cleantech manufacturing, which were originally adopted in response to the Russian invasion of Ukraine and the U.S. Inflation Reduction Act (see our blog), CISAF maintains a relaxed approach to State aid.
- CISAF introduces new types of aid, including support for production of low-carbon fuels, manufacturing nuclear technologies and energy-intensive users.
Relaxed State aid rules
CISAF sets out relaxed State aid rules that EU Member States are required to follow when they are granting State aid to achieve the Clean Industrial Deal’s goals.
Although State aid is, in principle, prohibited, the Commission can authorize it to support certain economic activities. The Commission must ensure that the aid incentivizes certain activities that would not otherwise happen, or would not happen under the same conditions. This might include supporting a company to decarbonize its industrial activities. The aid must then be shown to be necessary, for instance, in circumstances where the market alone cannot provide the needed investment. Further, there should not be less distortive measures available. The aid must be limited to the minimum amount needed to achieve its goal.
If certain conditions are met, the Commission will use presumptions to verify aid compatibility. For example, projects that aim to reduce the greenhouse gas (GHG) emissions from industrial processes to certain levels will be presumed to need aid.
Under CISAF, when EU Member States adopt State aid schemes following these conditions, the Commission will not further analyze potential distortions of competition, except for higher amounts of aid. Unlike traditional State aid rules that limit aid to manufacturing activities in underdeveloped areas, CISAF allows aid for cleantech manufacturing outside those areas.
On 5 August 2025, the Commission approved the first State aid based on CISAF – a €11 billion French scheme to support offshore wind energy – via a competitive bidding process. Support will be granted through a two-way contract for difference (CfD), ensuring proper market function and avoiding compensating producers when market prices are negative.
The CISAF maintains the approach adopted with the TCTF
CISAF makes TCTF provisions permanent, while introducing some changes. It encourages Member States to include additional conditions on resilience and European preference criteria when granting aid.
For renewable energy, CISAF extends the completion and operation period for benefitting from these rules to 48 months, instead of the 36-month period provided in the TCTF.
Besides two-way contracts for difference, direct price support (“operating aid” in the TCTF) for renewable energy projects other than electricity production can also take the form of feed-in premiums (that is, premiums paid on top of the market price). The support mechanism can last for a maximum of 25 years, above the 20 years under the TCTF.
For industrial decarbonization, aid can only be granted to industrial installations producing tangible goods at scale, and it must result in direct GHG emissions.
Though no mandatory reduction threshold exists, aid is presumed necessary if the project’s GHG emissions fall by at least 40% compared to a situation without aid. The period by which the financed installations must be operational is extended to 60 months, compared to 36 months under the TCTF.
For cleantech manufacturing, CISAF broadens the list of eligible energy technologies, including energy infrastructures and industrial technologies. Under the TCTF, this category comprised batteries, solar panels, wind turbines, heat-pumps, electrolyzers, carbon capture usage and storage, as well as their key components and new or recovered critical raw materials used to produce such equipment. CISAF expands that list to include electricity grid, nuclear energy, sustainable biogas and biomethane, sustainable alternative fuels, hydrogen (e.g., hydrogen transmission and distribution networks), hydropower, geothermal energy, energy system-related energy efficiency, RFNBO, biotech climate and energy solutions, transformative industrial technologies for decarbonization, CO2 transport and utilization technologies, wind and electric propulsion technologies for transport.
“Matching” aid (dubbed “ad hoc aid”) can be granted for individual projects to attract investment in the EEA (European Economic Area) even outside assisted areas, if certain criteria are met. The investment must be shown not to be implemented as efficiently in an assisted area. Member States must prove that aid beneficiaries strengthen European autonomy by closing demand-supply gaps within the EU.
CISAF requires Member States to introduce claw-back mechanisms in volatile markets for them to get a share of unforeseen gains from aided projects.
New categories of aid
CISAF introduces new aid categories that benefit from relaxed compatibility rules:
- Low-Carbon Fuels: Aid for fuels such as recycled carbon fuels, low-carbon hydrogen and synthetic gaseous and liquid fuels derived from low-carbon hydrogen.
- Cleantech Demand: Aid for accelerated depreciation, allowing full and immediate expensing of qualifying asset costs.
- Temporary Electricity Price Relief: Reductions in wholesale electricity price for energy-intensive users. Note that reductions from levies financing renewable sources or combined heat and power are not addressed by CISAF but by the 2022 climate, environmental protection and energy aid guidelines (CEEAG) (see our blog).
- Non-Fossil Flexibility Support: Aid encouraging demand-side mechanisms for balancing power grid demand or storage.
- Capacity Mechanisms: Aid for electricity providers to maintain standby capacity, with specified criteria for strategic reserves and market-wide central buyer mechanisms. Note that other designs could be approved under the more stringent rules of the CEEAG.
CISAF also allows State equity, loans, or guarantees for private investors, like pension funds and insurance companies, to invest in green projects.
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