EU eases state aid rules to boost green projects, cut carbon footprint
The CISAF sets out the conditions under which member states can grant support for certain investments and objectives in line with European Union (EU) state aid rules, which exist to prevent government support leading to a company gaining a distortive advantage over its competitors.
The European Commission has adopted a new state aid framework supporting the Clean Industrial Deal to enable members to push forward clean energy development, industrial decarbonisation and clean tech. The framework that backs both renewables and low-carbon fuels will authorise aid schemes introduced by members to boost clean industry, enabling the swift rollout of individual aid.
Under the framework, the Commission will authorise aid schemes introduced by member states to boost clean industry, enabling the swift rollout of individual aid.
The CISAF will be in place until December 31, 2030, giving member states and businesses long-term predictability. It replaces the Temporary Crisis and Transition Framework (TCTF), which was in place since 2022.
The framework simplifies state aid rules in five main areas: the roll-out of renewable energy and low-carbon fuels; temporary electricity price relief for energy-intensive users to ensure the transition to low-cost clean electricity; decarbonisation of existing production facilities; the development of clean tech manufacturing capacity in the EU; and the de-risking of investments in clean energy, decarbonisation, clean tech, energy infrastructure projects and projects supporting the circular economy.
The new framework covers support for both renewable energy and low-carbon fuels.
The CISAF introduces simplified procedures to enable the quick roll-out of renewable energy schemes. Low-carbon fuels, such as blue and green hydrogen, also play a key role in reducing emissions. They support the transition for companies in 'hard-to-decarbonise' sectors, where more energy or cost-efficient options are not yet viable, an official release said.
New rules on flexibility measures and capacity mechanisms give member states additional tools to integrate intermittent renewable electricity sources into the energy supply, while ensuring consumers benefit from reliable electricity supply.
The CISAF defines 'target model' capacity mechanisms, where member states pay electricity providers to maintain standby capacity, which can qualify for 'fast-track' approval. Other designs will be assessed under the Climate, Environmental protection and Energy Aid Guidelines (CEEAG).
Member states may provide electricity price support for energy-intensive users and companies operating in sectors particularly exposed to international trade. This will allow member states to reduce the electricity costs of energy-intensive users that face higher costs than competitors in regions with less ambitious climate policies.
In return for receiving price support, companies will be required to invest in decarbonisation.
The framework allows for support for a wide array of decarbonisation technologies such as electrification, hydrogen, biomass, carbon capture utilisation and storage.
Support can be granted based on predefined aid amounts (for support up to €200 million), the funding gap or a competitive bidding process.
The framework also allows for support for the production and processing of critical raw materials necessary for clean technologies.
To safeguard cohesion between different regions in Europe, member states will be able to provide more support for projects in less advantaged regions, which are defined in regional aid maps.
In addition, the framework allows member states to stimulate demand for clean technology products by offering tax incentives, such as allowing companies to deduct the cost of clean technology investments from their taxable income more quickly.
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