European Union countries will soon be able to support domestic companies more easily and extensively in their sustainable transformation efforts. To this end, the EU Commission is adjusting its state aid framework and allowing what would normally be prohibited under competition law. The new Clean Industrial Deal State Aid Framework (CISAF) is not intended to replace existing EU state aid rules, but to complement them. Member states are not obliged to make use of the new options for easing burdens and providing direct support to companies – but they can, at least until the end of 2030. With this time-limited framework, Brussels aims to give investors greater planning certainty.

A key point for Germany is that the EU has now created the legal basis for electricity subsidies. It remains unclear to what extent Berlin’s plans for an industrial electricity price will align with the new EU framework in every detail. However, the path is now generally clear for models that subsidise electricity costs for energy-intensive industries. „The relevant passages in CISAF broadly reflect the German government’s existing plans“, says the German Association of Energy and Water Industries (BDEW).

Member states can offer electricity price support to companies operating in globally competitive and energy-intensive sectors. The scope and level of support are capped, and as a condition for receiving aid, companies must commit to investing in decarbonisation measures. At the same time, national governments can more quickly approve green investment projects.

Administrative procedures have been streamlined – for example, by eliminating mandatory public consultations. The EU competition authorities also promise to fast-track approvals of national aid schemes aimed at promoting environmentally friendly industries, such as the expansion of renewable energy, low-carbon fuels, or the decarbonisation of existing production facilities. The new state aid rules will apply until 2030.

The revised framework also includes measures aimed at making it easier for private investors to participate with their own capital. EU member states are now allowed to reduce the risk of green transformation projects, energy infrastructure investments, and circular economy initiatives through loans, guarantees, or state equity stakes via funds or special purpose vehicles. Tax incentives are also permitted. The use of fossil fuels or nuclear energy in certain projects – such as hydrogen production or gas infrastructure – remains possible and is not excluded under the new rules.

Federal Minister for Economic Affairs and Energy Katherina Reiche welcomed the updated state aid rules as „pragmatic, technology-neutral, and forward-looking.“ The CISAF, she says, creates a new tool to strengthen the global competitiveness of German and European companies. The conservative-social democrat government had included the industrial electricity price in its coalition agreement. The Economics Ministry envisions a relief of 5 cents per kilowatt hour for energy-intensive companies, which would amount to a total cost of around 10 billion euros by the end of 2030.

The German Chemical Industry Association (VCI) also welcomed the updated framework. Although the constraints remain too tight in some areas, the changes represent „a real step forward,“ the VCI said. Brussels is finally giving member states more room to maneuver on state aid, though electricity-intensive industries still need greater relief – delivered quickly and with minimal bureaucracy, the group added.

The BDEW, however, warns that the option for relatively high risk coverage for electricity prices could distort the market – leading to higher prices for companies that do not qualify for aid. Meanwhile, the German Renewable Energy Federation (BEE) criticises the new rules as a step in the wrong direction, pointing to the fact that low carbon fossil fuels and nuclear energy are now also eligible for support. This, the BEE argues, could hinder the energy transition.