CISAF: The EU’s ambitious State aid framework for competitive decarbonisation

To reach its ambitious 2050 climate neutrality goal, the European Union (EU) is determined to decarbonise its most greenhouse gas (GHG) emitting sectors, power generation and industries. At the same time, in a world shaped by geopolitical tensions, sluggish growth and fierce tech competition, the EU is striving to remain a competitive industrial and technological powerhouse and it is betting on decarbonisation as a growth engine across the value chain.

With this and the key recommendations of the Draghi report on EU competitiveness in mind, the European Commission (Commission) launched the Clean Industrial Deal in February 2025 (see our previous blog post). On 25 June 2025, following a public consultation (see our previous blog post), the Commission adopted the Clean Industry State Aid Framework (CISAF), which sets out how Member States can design State aid measures for key sectors. It is valid until 31 December 2030.  

The CISAF builds on and replaces the Temporary Crisis and Transition Framework (TCTF), the EU’s previous State aid framework implemented in response to the United States’ Inflation Reduction Act and Russia’s invasion of Ukraine which both impacted EU competitiveness. While the TCTF had already significantly loosened restrictions to State aid, the CISAF goes further - with a view to simplifying procedures and promoting EU investments for the sake of strengthening EU competitiveness - and appears to double down on the subsidy race, albeit with a more refined, strategic and long-term approach. 

In this blogpost, we provide an overview of the new rules. 

A broad toolbox for a clean transition, creating investment opportunities in many sectors and for many actors 

The CISAF opens the door to investments across a wide range of sectors and technologies. Its scope is intentionally broad – covering nearly anything with a ‘clean’ angle, be it in a traditional energy sector, in any industry, or in the investment space – and it offers opportunities for Member States, investors and industry players. With a bit of creativity, options seem virtually endless. 

• Renewable energy generation: Unsurprisingly, the CISAF allows aid for the production and storage of renewable energy, renewable fuels of non-biological origin (such as green hydrogen), and even low-carbon fuels, as well as non-fossil flexibility support schemes and capacity mechanisms.
• Electricity cost relief: Recognising the threat posed by high electricity costs for energy intensive industries exposed to international trade, the CISAF allows electricity price relief for these industries in support of the competitiveness of EU industrials.
• Industrial decarbonisation: Aid can also be made available for investments that reduce the GHG emissions or energy consumption of industrial activities (such as steel, metals, chemicals, plastics, paper, wood, food, and many others), which are now defined more broadly than under the TCTF. Aid can even include energy generation, storage and transport (under certain conditions). Any solution that cuts GHG emissions or electricity consumptions is eligible, not just electrification or the use of renewable and electricity-based hydrogen. 
• Clean-tech manufacturing: A major novelty in the CISAF is its support to the whole value chain of technologies that reduce GHG emissions associated with industrial processes, including nuclear technologies, thus leveraging all available decarbonised energies to enhance EU competitiveness and sovereignty as recommended by the Draghi report. This goes from equipment for the net-zero transition (batteries, solar panels, wind turbines, heat-pumps, hydrogen technologies, sustainable biogas and biomethane technologies, equipment for carbon capture usage and storage and nuclear fission and fusion technologies) to the key components thereof and even related critical raw materials. Demand-side support via accelerated depreciation of acquisition or leasing costs is also covered.
• Innovation Fund projects: The CISAF grants a special treatment to aid schemes for certain investment projects positively assessed under the Innovation Fund, including investments for clean energy and of low-carbon fuel production and storage, the reduction of GHG emissions from industrial activities, and the creation of additional manufacturing capacity.
• De-risking of private investments: Implementing the recommendation of the Draghi report which stressed the need to unlock private capital to meet EU’s objectives, the CISAF wants to gear up private investments in the above sectors, unlocking opportunities for investors and stakeholders. The CISAF also tries to lure investments from third countries into the EU by matching the aid provided by third countries (although with a cap). It now allows Member States to mitigate risks for private investments – in particular for risk-averse investors like pension funds, foundations, business angels and family offices, but also banks and insurance companies that would otherwise be deterred by the risk/return profile of the eligible projects. Specifically, Member States can set up aid schemes (not individual aid) through dedicated funds or SPVs (that will hold the portfolio of eligible projects),  structured via competitive or standardised processes, with strict safeguards using equity, loans, or guarantees with capped returns and risk-sharing mechanisms.

The CISAF allows both investment and operating aid, with few limits on the types of measures. However, the Commission favours (or requires) aid schemes rather than individual aid. 

Ambitious yet guarded

Despite its flexibility and wide net, the CISAF is not a free-for-all. It contains strict compatibility conditions, such as: competitive bidding (or equivalent) processes, claw-back mechanisms, detailed funding gap assessments, aid intensity limits, compliance with EU electricity market design rules (including the Renewable Energy Directive 2018/2001 and Electricity Regulation 2019/943), compliance with certain decarbonisation objectives, timing, additional requirements for certain technologies or fuels, more favourable treatment for aid in assisted areas, etc.  Although the caps applicable to the matching aid mechanism have been increased - which is positive - in the final version of the CISAF (compared to the one submitted to consultation), the cap should ideally have been abandoned as, if the aid is really matching, there is no reason to impose a cap.

Likewise, some notable exclusions also apply. To name a few: Promotional banks are not considered private investors under de-risking schemes. This broadens the scope of potential aid donors and imposes the discipline of the market economy investor principle on this  important source of investments. Greenfield investments by new entrants in decarbonisation and energy efficiency are to be assessed under the CEEAG, not the CISAF. Nuclear energy does not make the cut for aid schemes for clean energy rollout. Hence, despite the CISAF’s introduction recognising Member States’ rights to determine their energy mix,  the principle of technological neutrality is not fully reflected in the new rules. They cover aid for nuclear technologies, but not include for the production of nuclear energy. This contradicts the EU’s stated principle of technological neutrality and  hinders the decarbonisation and EU competitiveness and sovereignty objectives. At last, excluding nuclear energy from the scope of the CISAF will also result in increasing the regulatory gap between nuclear energy and other low carbon energies, as projects involving nuclear energy will continue to be assessed under the CEEAG - which notably provides that Member States must consult publicly on the competition impacts and proportionality of State aid measures - while the CISAF do not provide such a mechanism, although both constitute low carbon energies.

Final thoughts

The CISAF is a bold step forward – more permissive than its predecessor. But it is not a simplification. The CISAF’s layered conditions, multiple exceptions, and overlap with other State aid instruments mean that navigating it will require expertise and strategy from stakeholders wishing to benefit from the new opportunities that the CISAF presents. The real test will be how the Commission enforces these rules: if applied effectively, the CISAF could become a cornerstone of EU’s green industrial transformation—turning decarbonisation into a competitive advantage.