The European Commission (EC) released the “Communication on a Clean Industrial Deal” on 26 February 2025, confirming the EU’s climate goals by offering clear business incentives for industry to decarbonise within Europe.
The focus will be mainly on two closely linked sectors. Firstly energy-intensive industries, which require urgent support to decarbonise, electrify, as well as confront high energy costs, unfair global competition and complex regulations, harming their competitiveness. Secondly, the clean-tech sector.
The Commission will recommend to Member States that their corporate tax systems support a clean business case. Measures could include shorter depreciation periods for clean technology assets, allowing businesses to quickly write off costs and benefit from tax incentives that offset high initial investments, and the use of tax credits for businesses in strategic sectors for the clean transition to make it more financially attractive to invest in decarbonised practices.
Clean Industrial Deal State Aid Framework and other support and facilitation
The Commission proposes to adopt a new “Clean Industry State Aid Framework” by June 2025 and replace the current “Temporary Crisis and Transition Framework” and outlining conditions for tax incentives under EU State aid rules.
The new Clean Industrial Deal State Aid Framework will enable necessary and proportionate State aid that crowds in private investment. It will do so by providing Member States with a longer planning horizon of five years and businesses with more investment predictability for projects contributing to the objectives of the Clean Industrial Deal.
The new Framework will make a fundamental contribution to the simplification of State aid rules to further Clean Industrial Deal objectives while preserving the level playing field and European cohesion. Simplified and flexible rules will allow quick approval of State aid measures for decarbonisation, notably where they have undergone a European selection process and clean tech projects, while avoiding undue competition distortions in the Single Market.
The Framework will introduce “off-the-shelf” options for Member States to easily demonstrate compatibility as well as a wider use of simplified methods to set aid amounts instead of complex individual assessments, building on the experience of the Temporary Crisis and Transition Framework.
It will also allow separate support schemes for specific technologies, such as wind and solar, and further facilitate support to non-fossil flexibility measures and capacity mechanisms accelerating the decarbonisation of the energy system. Support for additional manufacturing of clean-tech products, such as batteries and renewable technologies, will also be allowed by updating the rules for investments in certain strategic net-zero equipment manufacturing capacity.
Finally, tax policies are a key incentive to reach the objectives of the Clean Industrial Deal. They should not give fossil fuels an advantage over clean energy. The Commission will recommend to Member States that their corporate tax systems support a clean business case.
Measures could include shorter depreciation periods for clean technology assets, allowing businesses to quickly write off costs and benefit from tax incentives that offset high initial investments, and the use of tax credits for businesses in strategic sectors for the clean transition, to make it more financially attractive to invest in decarbonised practices.
To the extent such measures involve State aid, the new State aid framework will integrate these instruments into its compatibility rules.
