Green state aid, Brussels consults member states on new flexibilities until 2030

Brussels – The European Commission wants to widen the mesh of state aid until 2030 to accelerate the deployment of renewable energy and industrial decarbonization. It includes alternative fuels (e-fuels, biofuels and green hydrogen) among the technologies that will be eligible for subsidies, and promises a “timely assessment” of aid for nuclear power, “in line with the Treaty and respecting technological neutrality.” Brussels has asked today (March 11) member states and “all interested parties” to comment on the draft revised state aid framework planned to accompany the Clean Industrial Deal.

The EU roadmap to combine competitiveness and decarbonization needs new flexibilities compared to the state aid scheme adopted in March 2022 following the energy crisis caused by Russia’s war of aggression in Ukraine, through which the EU endorsed €47 billion in state aid. Once adopted—in June, as indicated by the Commission—the CISAF will replace the old Temporary Crisis and Transition Framework and is expected to remain in force for five years, until December 31, 2030. In line with Brussels’ emphasis on the need to cut out red tape and speed up processes, the new framework will ease some standard requirements for the awarding of public grants, such as the mandatory bidding process.

The draft circulated by the European Commission provides that member countries, considering their energy mix, can set up specific state aid schemes for investments in renewables and energy storage with “simplified bidding procedures that can be implemented quickly,” while not abdicating “sufficient safeguards to protect a level playing field.” Specific incentives are provided to support investments “in all relevant technologies” needed for decarbonisation, with particular attention to batteries, solar panels, wind turbines, heat pumps, electrolysers and carbon capture and storage systems, as well as key components and raw materials needed to produce them.

EU capitals will be able to support “the production of renewable fuels of non-biological origin” (such as e-fuels and green hydrogen), as long as they are guaranteed to originate from renewable energy sources. Biofuels will also have to meet sustainability and greenhouse gas emission reduction criteria. “While respecting technological neutrality,” Brussels assures that it will “conduct a timely assessment of state aid to nuclear supply chains and technologies, including small modular reactors, to ensure legal certainty of such aid.”

Aid could be granted by competitive bidding or by administrative process, provided that it does not exceed 45 per cent of the costs of projects. However, the threshold would increase to 55 per cent of costs for medium-sized enterprises and 65 per cent for small ones. Member states would then have to ensure that eligible projects are implemented within a specified period.

At the same time, state aid would be allowed to be disbursed to various measures that accelerate industrial decarbonisation, either through tender-based schemes or by directly supporting projects, within certain limits. In any case, the European Commission proposes to set a minimum threshold of 20 per cent reduction in energy consumption for a company to enjoy state aid.

Today’s proposal “aims to ensure that member states can provide support where needed to accompany the ambitions of the Clean Industrial Deal without causing undue distortions of competition in the single market,” commented European Commission Executive Vice President for Transition and Competitiveness Teresa Ribera.

Consultation on the new state aid framework draft is open until April 25, 2025.