The European Commission (the Commission) is proposing to adapt the rules governing Member State economic support to industry, changing the focus of the permitted subsidies that guide the EU economy to a great degree. The proposal forms part of a wave of initiatives aimed at improving the competitiveness of the EU.

On 11 March 2025, the Commission published a draft Commission Communication on a Framework for State Aid measures to support the Clean Industrial Deal (the draft State Aid Framework), setting out the latest evolution in the EU’s State aid policy. The draft State Aid Framework complements the existing EU State Aid guidelines, including the guidelines on State aid for climate, environmental protection and energy (CEEAG) by enabling and accelerating specific investments and activities. Competitiveness and sustainability constitute two pillars of the Commission’s overarching political objectives for the 2024-2029 legislature.

Until 25 April 2025, a window is open for stakeholders to share their views on the draft State Aid Framework as part of the public consultation being run by the Commission. Businesses that could benefit from aid measures, and businesses that compete with subsidized rivals, may have in an interest in submitting comments on the aspects that are most likely to affect them.

The Clean Industrial Deal and the State Aid Framework

The EC published on 26 February 2025 a Communication on a Clean Industrial Deal (the Clean Industrial Deal), which introduced a suite of sustainability and competitiveness measures to address challenges such as slow economic growth in the EU and technological competition, covered in our client alert.

The adoption of a modified State Aid Framework by Q2 2025 is one of the flagship actions laid out in the Clean Industrial Deal to improve EU investment levels and make energy more affordable in the EU. The new State Aid Framework is intended to replace the Temporary Crisis and Transition Framework, as amended, which has been in place in different forms since November 2022.

Under the Treaty on the Functioning of the EU (TFEU), State aid by EU Member States is generally prohibited, unless it is justified in order to support objectives such as economic development. EU State aid policy, which is managed by the Commission, aims to determine where the limits of the economic development justification lie. This is a key EU economic policy question, with serious consequences for the structure of the EU economy and the ability of non-EU companies to compete fairly on the EU market, for example.

The draft State Aid Framework proposes the following changes to EU State aid policy:

• Compatibility Assessment under Article 107(3)(c) TFEU:
• Subject to conditions, measures that are in line with the Clean Industrial Deal would tend to be more easily found to satisfy the positive and negative conditions of Article 107(3)(c) TFEU.
  • Aid under the draft State Aid Framework would generally be cumulable with other State aid, de minimis aid or centrally managed EU funds, subject to conditions.
• Subject to detailed and extensive conditions, the Commission would generally deem compatible with the EU internal market (and thus greenlight) State aid to support the following activities:
• Investments for the production of energy from renewable sources, including the production of renewable fuels of non-biological origin (RFNBOs), as well as investment in storage for RFNBOs, biofuels, bioliquids, biogas and biomass fuels obtaining at least 75% of its content from a directly connected production facility.
  • Electricity and thermal storage.
  • The promotion of non-fossil electricity flexibility.
  • Capacity mechanisms following a target model.
  • Investments contributing significantly to reductions of greenhouse gas emissions from industrial activities or leading to a substantial reduction in the energy consumption of industrial activities through the improvement of energy efficiency.
  • Investment projects creating additional manufacturing capacity to produce equipment relevant for the transition to a net-zero economy, its key components, and new or recovered related critical raw materials necessary for its production.
  • The acquisition of clean technology equipment through accelerated depreciation schemes.
  • The reduction of risks of private investments into portfolios of eligible projects in the renewable energy, industrial decarbonization and clean tech manufacturing areas.

The Public Consultation

The draft State Aid Framework has not been adopted yet. Rather, the Commission intends to adopt its definitive version by June 2025. As such, the content of the draft State Aid Framework is still subject to change.

From 11 March 2025 until 25 April 2025, the Commission’s Directorate-General for Competition, which is responsible for State aid enforcement and policy, is seeking feedback from citizens, organizations and public authorities concerning the draft State Aid Framework. To that effect, it is running a public consultation, to which contributions may be submitted here.

To the extent that the Commission seeks to simplify State aid rules, accelerate the rollout of renewable energy, deploy industrial decarbonization and ensure clean tech manufacturing capacity, the public consultation constitutes a good opportunity to share any views and suggestions in relation to those goals.