State Aid Reform: Clarity, Speed, and Strategy for a Competitive Europe
02 May 2025
Author: Petya Barzilska
As global competition for advanced technology manufacturing intensifies, risks of trade disruptions mount, and energy prices remain persistently high, the European Union must respond with a robust, clear, and actionable state aid framework that enables rapid and sustained investment in domestic energy and clean tech production.
As global competition for advanced technology manufacturing intensifies, risks of trade disruptions mount, and energy prices remain persistently high, the European Union (EU) must respond with a robust, clear, and actionable framework that enables rapid and sustained investment in domestic energy and clean tech production.
State aid rules – overseen by the European Commission across the EU – are no longer fit for purpose, in a landscape of fierce global competition and state intervention and support. Current guidelines obfuscate the clear, nondiscretionary and rapid disbursement of aid, sustain perverse incentives, and are failing to support European competitiveness on the global stage.
The new Clean Industrial Deal State Aid Framework (CISAF) should depart from the established state aid model and move towards supporting efficient manufacturing, technological innovation and local added value. CISAF should focus on making the EU more competitive globally and support strategic sectors such as wind power, battery manufacturing and grid technologies.
EIES welcomes the proposal by the European Commission to create a new state aid framework that supports the Clean Industrial Deal (CID), including through boosting domestic energy production and supporting industrial transformation such as in the steel sector. However, several challenges that could weaken the framework’s effectiveness remain and should be adequately addressed.
EU competition policy was designed to preserve the level playing field within the EU. A changed world, however, requires updated policy instruments.
State aid should support actual clean tech production, not just capacity. The current funding gap-based approach and clawback mechanisms should be abandoned to support clean tech manufacturing.
“Made in Europe” resilience criteria should be conditions for state aid eligibility. Conditionalities must be clear, achievable and aligned across the EU.
State aid notifications, rules, and procedures must be standardised and harmonised across Member States.
Greater clarity of definitions, rules, scope of support measures and links to related legislation such as the Net Zero Industry Act (NZIA) are required.
Operational costs (OPEX) should be supported in decarbonisation projects, as energy-intensive industries may face OPEX increases when they decarbonise.
Company-level aid would support scaling production by smaller clean tech producers.