On 1 December 2024 the 2025-2029 College of Commissioners took office, led by President Ursula von der Leyen in her second term.
This blog explores what companies can expect from the new European Commission in the field of EU State aid.
Key takeaways
- The Commission will establish a new State aid framework to allow EU Member States to grant State aid for (i) accelerating the roll-out of renewable energy, (ii) deploying industrial decarbonisation, and (iii) ensuring sufficient manufacturing capacity for clean tech “made in Europe” while preserving cohesion objectives.
- Approval of State aid for Important Projects of Common European Interest (“IPCEIs”) will be made simpler and faster. The Commission may further expand the scope of IPCEIs to include innovations more broadly and possibly manufacturing projects.
- The Commission will create a ‘European Competitiveness Fund’, aimed at supporting the development of strategic technologies and their manufacturing in the EU. Depending on its design, this fund may help level the playing field among EU Member States.
- State aid rules will be revised to enable wider housing support measures, notably for energy efficiency and social housing. Other State aid rules will also undergo a revision during the 2025-2029 mandate, such as aid to the transport sector or for companies in difficulty.
Perpetuation of relaxed State aid rules for the green transition?
President Ursula von der Leyen announced in her political programme for the 2025-2029 mandate the need to have a new Clean Industrial Deal, to decarbonise, and to bring down energy prices.
As a key pillar of the EU Clean Industrial Deal, she called for the establishment of “a new State aid framework” (see mission letter to Executive Vice-President (“EVP”) Ribera, responsible for the ‘Clean, Just and Competitive Transition’ and thus for EU competition policy). This new framework will allow EU Member States to grant State aid for (i) accelerating the roll-out of renewable energy, (ii) deploying industrial decarbonisation, and (iii) ensuring sufficient manufacturing capacity for clean tech in the EU. It will build on the experience of the Temporary Crisis and Transition Framework (“TCTF”) and preserve cohesion objectives.
This new State aid framework may make more permanent the relaxed State aid rules in relation to the green transition.
As a response to the U.S. Inflation Reduction Act, heavily subsidising the green transition, the Commission relaxed the EU State aid rules for the roll-out of renewable energy, industrial decarbonisation, and manufacturing in the EU/EEA of relevant equipment for the transition towards a net-zero economy (for more details, see our blogpost). The TCTF was remarkable in terms of industrial policy because, under general State aid rules, support to large businesses pursuing manufacturing projects is generally considered unnecessary – large companies have access to capital and those measures may be considered highly distortive. Such aid could traditionally only have been authorised by the Commission under strict conditions and in support of a new economic activity in disadvantaged areas under the Commission’s Regional Aid Guidelines (“RAG”).
Under the TCTF, the Commission approved to date not less than 17 measures to accelerate the roll-out of renewable energy, six measures for industrial decarbonisation, and 16 measures for manufacturing capacity of net-zero equipment (e.g., batteries, solar panels, wind turbines, heat-pumps, electrolysers, carbon capture usage and storage, as well as key components and critical raw materials to produce such equipment). Overall, the Commission authorised approximately EUR 70 billion of aid, of which more than EUR 19 billion to France, EUR 12 billion to Ireland, and EUR 10 billion to Italy. In more than half of the cases, EU Member States had recourse (at least partially) to EU funds, such as the Resilience and Recovery Fund or the Just Transition Fund.
In most of the TCTF approvals, the measures were available beyond disadvantaged areas. Given the strong reference made by both EVP Ribera and EVP Séjourné to the need to preserve cohesion objectives,[1] it can be expected that the new State aid framework would require a stronger anchoring with disadvantaged areas of the EU and/or the involvement of several EU Member States for an aid than is the case under the TCTF.
Under the TCTF, the Commission’s approval process is much swifter than under the traditional State aid instruments (i.e., RAG as regards manufacturing projects or the 2022 Guidelines on State aid for climate, environmental protection and energy as regards the roll-out of renewable energy and the deployment of industrial decarbonisation measures)
Cross-border IPCEIs to advance the EU’s industrial policy in strategic sectors?
IPCEIs are large cross-border projects decided by EU Member States. Their support must be approved by the Commission based on the 2021 Commission’s Communication on the Criteria for the analysis of the compatibility with the internal market of State aid to promote the execution of important projects of common European interest (see our blogpost). IPCEIs can relate to R&D&I projects of breakthrough innovations, projects comprising first industrial deployment (but not mass production), or infrastructure projects of great importance in the environmental, energy, transport, health, and digital sectors.
So far, aid for IPCEIs has been approved relating to a rail-road link and the value chain of semiconductors, batteries, hydrogen, cloud computing and health, across 22 countries and after a complex selection process taking generally more than two years and State aid approval times spanning over one and a half years.
The Commission’s objective is “to make State aid review of IPCEIs simpler and faster and to examine the proposal in the Draghi Report to expand IPCEIs for innovation in strategic sectors”.[2]
It can be expected that the IPCEI communication would be amended to become a reference instrument to advance the EU’s industrial policy in strategic sectors.
With a view to accelerating and simplifying the process, EVP Séjourné[3] intends to strengthen the Commission’s role, currently limited to State aid authorisation, to participate directly in an IPCEI. The Commission already created and leads the Joint European Forum (“JEF”) to assist in selecting, designing, assessing, implementing, and evaluating IPCEIs. As suggested by Mario Draghi in his EU Competitiveness Report (“Draghi Report”), the JEF’s tasks could be further expanded to a “systematic monitoring of both the procedural bottlenecks and the innovation outcomes” and “(…), to conduct Cost Benefit Analyses to support decisions to initiate IPCEIs”. Moreover, the Draghi Report also suggested the establishment of an ‘Excellence Centre for IPCEIs’ that can help accelerating and simplifying the process by offering (with the JEF) technical assistance and support to EU Member States and companies to screen and prepare projects.
As to their expansion, the Draghi Report and the Report on the Future of the Single Market of Enrico Letta, suggest to extend IPCEIs beyond breakthrough innovation, to include a broader class of innovations, and beyond First Industrial Deployment, if they “offer the potential for Europe to jump to the technological frontier in strategic areas where it is lagging behind”. IPCEIs could thus possibly also cover manufacturing projects, as long as they involve several EU Member States. Without providing any details, EVP Séjourné explained that the Commission is willing “to expand the scope of IPCEIs”, which is currently far too narrow” which could in future cover, for instance, to clean tech, artificial intelligence, nuclear energy, 6G technology, and zero-emission flights fields.
A European Competitiveness Fund to level the playing field among EU Member States?
One of the key objectives of the Commission’s political programme for the 2025-2029 mandate is the creation of a new ‘European Competitiveness Fund’, dedicated tto the EU industrial policy and aimed at supporting the development of strategic technologies (including clean tech) and their manufacturing in the EU. However, its sources and use are not settled yet, and they will depend on an agreement of the EU Member States. Therefore, it is not clear whether this new fund would replace the various EU funds currently used to support large businesses in their manufacturing projects under the umbrella of the Strategic Technologies for Europe Platform (“STEP”) adopted in February 2024 (see our blogpost on amended regional aid rules to foster support for strategic technology projects) or rely on EU own funds such as the Recovery and Resilience Fund, adopted in the aftermath of the Covid-19 pandemic.
As clarified by both EVP Ribera and EVP Séjourné,[4] the European Competitiveness Fund may be used to finance IPCEIs. In our view, this fund could also be used to finance projects under the upcoming new State aid framework.
EVP Séjourné[5] stressed that the European Competitiveness Fund “will include cohesion elements aimed at ensuring equal treatment and equal access to funds across Europe, for all countries”. We agree that cohesion could be fostered through a redistribution of EU funds, to allow EU Member States with lesser budgetary capacity to financially support projects for the green transition or in other strategic sectors. Such redistribution may possibly be more efficient to preserve cohesion in the current context of onshoring manufacturing capacity within the EU than channelling aid to disadvantaged areas where it is not necessarily rational to locate a large investment.
Other expected State aid activities
President Ursula von der Leyen asked EVP Ribera to work with the Commissioner for Energy and Housing, Dan Jørgensen, to “revise State aid rules to enable housing support measures, notably for energy efficiency and social housing”.[1]
Whereas benefits to households and citizens do not fall under State aid scrutiny, benefits to companies do. In this respect, the current rules on Services of General Economic Interest (“SGEIs”), i.e., public services of an economic nature, allow EU Member States to support social housing under specific conditions. Existing rules also enable EU Member States to support the development of energy-efficient housing under certain conditions without prior Commission approval under the State Aid General Block Exemption Regulation.
The revision of the existing rules would be able to cover the broadening of the concept of social housing as to include in scope people with higher income than disadvantaged citizens, since affordable housing is a social issue affecting increased layers of the population. It could also relate to increased amount of eligible costs that the EU Member States may cover to support energy efficiency in buildings, including housing (currently set at 30%).
In addition to the described priorities, the Commission will be involved in its constant review of State aid compatibility rules (so-called “fitness-check”). At the moment, the process concerns the 2014 Guidelines on State aid to airports and airlines, the 2014 Guidelines on State aid for rescuing and restructuring, and the 2008 Railways Guidelines, and will lead to the adoption of updated guidelines within the 2025-2029 mandate. Moreover, the Commission will also adopt the Transport Block Exemption Regulation, which will exempt from prior notification certain categories of aid in the rail, inland waterways and multimodal transport sector.
[1] EVP Ribera’s written answers to the European Parliament’s questions during the appointment process and EVP Séjourné’s hearing before the European Parliament
[2] Mission letter to EVP Ribera.
[3] EVP Séjourné’s hearing before the European Parliament.
[4] In their written answers (available here and here) to the European Parliament’s questions during their appointment process.
[5] EVP Séjourné’s hearing before the European Parliament.
[6] President mission letter to EVP Ribera.