EU Launches Hundreds of Billions of Euros in National Investment Revolution: Shifting from Subsidies to 'Equity Investment' in Green Enterprises

 

Abstract:

The EU's new state aid framework, with its radical approach of "equity investment replacing direct subsidies," aims to mobilize €100 billion to gain a competitive edge in the green industry race.
 

 

By Penn

Edited by Penn

→This is the 1575th original article of Global Zero Carbon

 

A competition surrounding the green industry is underway among China, the United States, and Europe.

 

The EU, hailed as a global climate "top student," is facing the dual challenges of funding constraints and loss of competitiveness. Under the pressure of China's catching up in green technology, the EU is reshaping the competitive landscape of the green industry through a disruptive policy.

 

On June 25, the European Commission officially launched the Clean Industrial State Aid Framework (CISAF), adopting a radical approach of "equity investment replacing direct subsidies" in an attempt to gain a competitive edge in the green industry race.

 

This framework agreement, valid until 2030, positions the state as a "strategic investor in the green industry" for the first time. By simplifying aid rules in five key areas—promoting renewable energy, reducing electricity prices for energy-intensive industries, decarbonizing production facilities, and others—it aims to build a "fast track" for clean energy development.

 

For Chinese companies, this approach of "attracting production through investment," using government-guided funds to invest in emerging industries, is not unfamiliar.

 

The EU is learning from China, using CISAF to leverage private capital pools through market-based means, attempting to rebuild its competitive advantage in areas such as electrification, hydrogen energy, and carbon capture.

 

In February this year, the European Commission published the Clean Industrial Deal, planning to mobilize €100 billion in the short term to support the energy transition of the domestic manufacturing industry and strengthen the EU's industrial competitiveness. This deal mainly focuses on two areas: energy-intensive industries and clean technologies, aiming to accelerate decarbonization and ensure that manufacturing remains rooted in Europe in the future.

 

The new state aid framework (CISAF), as a supporting measure, will promote member states in developing clean energy, industrial decarbonization, and clean technologies.

 

Before the announcement of this state aid plan, Teresa Ribera, Executive Vice-President of the European Commission and Commissioner for Competition, stated that, Member state governments should invest public funds in clean technology by purchasing corporate equity, rather than using direct subsidies.

 

Teresa Ribera, who is responsible for managing the clean transition within the European Commission, told the Financial Times that while EU state aid rules restrict public subsidies to businesses, there are other ways to help Europe's emerging green technologies compete with China and the United States.

 

Previously, Stephane Sejourne, an EU official from France, proposed an initiative suggesting that governments purchase their own European products and grant exemptions from "state aid rules" to manufacturers of solar panels, wind turbines, and batteries.

 

Ribera stated that such subsidies are not only illegal but also distort market competition. As an alternative, she encouraged governments to consider equity investment, noting that "equity investment is a more effective and economically sustainable form of state aid than simply relying on grants or subsidies. This model not only achieves strategic direction but also ensures a social return on public risk."

 

Image: Teresa Ribera, Executive Vice-President of the European Commission

Source: EPA

 

Ribera pointed out that the EU is ready to participate in global competition, and we will provide stability, predictability, and reliability. We are prepared to integrate public and private investment, focusing on energy, decarbonization, clean manufacturing... Europe has a great opportunity to become a destination for attracting private investment.

 

The new state aid framework launched by the EU is the key to attracting global green industry investment, as mentioned by Ribera. CISAF stipulates the conditions under which member states can provide support for specific investments and objectives in accordance with EU state aid rules.

 

Under this framework, the European Commission will authorize member states to launch aid programs aimed at promoting the development of clean industries, enabling the rapid rollout of individual aid.

 

CISAF came into effect on June 25, 2025, and will be valid until December 31, 2030, replacing the Temporary Crisis and Transition Framework (TCTF) implemented since 2022.

 

The framework simplifies state aid rules in five key areas: 1) Promoting renewable energy and low-carbon fuels; 2) Measures to provide electricity price subsidies for energy-intensive users; 3) Decarbonization of existing production facilities; 4) Development of the EU's clean technology manufacturing capacity; 5) Reducing investment risks in clean energy, decarbonization, clean technology, energy infrastructure projects, and projects supporting the circular economy.

 

Image: CISAF simplifies state aid rules in five key areas

Source: European Commission

 

Specifically, the framework will build a "fast track" for promoting renewable energy. CISAF introduces simplified procedures to rapidly promote renewable energy plans. The new framework covers support for renewable energy and low-carbon fuels, particularly low-carbon fuels such as blue and green hydrogen, which play a key role in emissions reduction. They will support the green transition of companies in "hard-to-decarbonize" industries.

 

At the same time, new rules on flexibility measures and capacity mechanisms under the framework provide member states with more tools to integrate intermittent renewable electricity (such as wind and solar) into the energy supply. CISAF will also provide temporary electricity price reductions for energy-intensive users, ensuring a transition to low-cost clean electricity.

 

In addition, the framework flexibly supports all technology investments that can achieve decarbonization or improve energy efficiency, including electrification, hydrogen energy, biomass energy, carbon capture, utilization, and storage. The European Commission sets the upper limit of financial support for each project at €200 million. The European Commission stated that governments can use gap funding assessments or competitive bidding to ensure fair competition.

 

For the clean technology manufacturing industry, This plan will support all manufacturing projects related to clean energy technologies listed in the Net-Zero Industry Act (NZIA), as well as individual production projects in the net-zero technology sector where necessary, to prevent investment from shifting outside the EU.

 

The framework also supports the production and processing of key raw materials needed for clean technologies. In addition, the framework allows member states to stimulate demand for clean technology products by providing tax incentives, such as allowing companies to deduct clean technology investment costs from taxable income more quickly.

 

Under the new framework, Member states can also take measures to reduce the risk of private investment in projects covered by the framework, including energy infrastructure and the circular economy. Support can take the form of equity, loans, and/or guarantees, provided to special funds or special purpose vehicles for holding portfolios of eligible projects.

 

Caption: Support measures under the Clean Industrial State Aid Framework (CISAF)

Source: European Commission

 

Industry widely welcomed the EU's combination of competitiveness and decarbonization. The European Greens said, “This new state aid framework for EU industry is crucial for accelerating the transition to a net-zero economy and sends a signal that European reindustrialization and the achievement of the climate neutrality agenda are proceeding in parallel.”

 

The European Chemical Industry Council (Cefic) stated that the Clean Industrial State Aid Framework (CISAF) is a key milestone for Europe's implementation of a competitive industrial policy and the achievement of a climate-neutral transition. CISAF responds to calls from European industrial leaders to revitalize investment in Europe with concrete measures, such as providing electricity price reductions for energy-intensive industries and supporting their decarbonization. CISAF provides the necessary practical measures.

 

Giles Dickson, CEO of WindEurope, said: “The EU's new state aid rules will benefit heavy industry investment in factory electrification, allowing industry to run on clean electricity instead of fossil fuels, boosting Europe's competitiveness and energy security. Power Purchase Agreements (PPAs) are a great way to achieve this. They guarantee that the electricity is renewable and provide new, efficient renewable energy, which is exactly what European industry wants.”

 

Caption: The European Commission releases the Clean Industrial State Aid Framework (CISAF)

Source: European Commission

 

In the process of global green transformation, large-scale capital investment is indispensable. The EU's previously released Clean Industrial Deal plans to mobilize €100 billion in the short term, creating fertile ground for innovation and growth in clean technologies. This newly released state aid framework, as a supporting measure, will provide necessary practical measures and financial support to promote member states' development of clean energy, industrial decarbonization, and clean technologies.

 

Chinese companies also have many opportunities to benefit from the advancement of the Clean Industrial Deal, especially through strategic partnerships and cooperation. The Clean Trade and Investment Partnership (CTIP) creates opportunities for companies outside the EU to participate in strategic clean value chains. By cooperating with local European companies and universities in clean technologies, electrification, circularity, and decarbonization standards, Chinese companies can gain access to new market resources and investment opportunities.

 

By participating in various partnerships and making full use of the subsidy policies provided by the Clean Industrial Deal, Chinese companies can further strengthen their competitiveness in the European market, consolidate their market position, contribute to global decarbonization efforts, and obtain practical benefits from the EU's commitment to the future of sustainable industry.

 

 

 

 

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References:

[1] https://ec.europa.eu/commission/presscorner/detail/de/statement_25_1620

[2] https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1598

[3] https://www.ft.com/content/f957bdf2-3624-441d-991c-368922549603

[4] https://cefic.org/news/the-clean-industrial-state-aid-framework-cisaf-a-key-milestone-for-europes-industrial-future/

[5] https://windeurope.org/newsroom/press-releases/new-eu-state-aid-rules-will-accelerate-the-decarbonisation-of-europes-industry/

[6] https://www.h2-view.com/story/europe-adopts-state-aid-framework-to-support-clean-industrial-deal/2128582.article/

[7] https://competition-policy.ec.europa.eu/about/contribution-clean-just-and-competitive-transition/clean-industrial-deal-state-aid-framework-cisaf_en

[8] https://www.greens-efa.eu/en/article/press/clean-industrial-deal-state-aid-framework

[9] https://www.pv-magazine.com/2025/06/25/eu-adopts-state-aid-framework-for-cleantech-industry/

[10] https://www.reuters.com/sustainability/boards-policy-regulation/eu-eases-state-aid-rules-boost-green-projects-cut-carbon-footprint-2025-06-25/

[11] https://www.deloitte.com/cn/zh/issues/china-to-global/how-chinese-companies-can-benefit-in-the-european-clean-industry-agreemen.html

[12] https://www.project-syndicate.org/commentary/borrow-against-future-emissions-trading-system-revenues-to-finance-european-cleantech-investments-by-craig-douglas-2024-10/

[13] http://www.ccceu.eu/2024-12/13/c_4572.htm

[14] https://finance.sina.com.cn/cj/2025-02-27/doc-inemxrki3143989.shtml

 

 

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