Although most of European energy policy takes place slowly over time, at times one approval can foreshadow larger future changes. The recent authorization of the €400 million clean tech financing program by the EU demonstrates how the EU’s authorization of a large-scale funding plan could influence what is expected of those industries undergoing transformation in order to provide cleaner forms of energy.
The European Climate Policy has momentum
The European Commission has formally approved a €400 million state aid program to support the development of clean-tech manufacturing capacity across Greece. The program was cleared under the Clean Industrial Deal State Aid Framework (CISAF), which enables various types of clean energy-related activities. In addition to supporting clean energy deployment, the CISAF also supports the modernization of industrial sectors via the use of low-carbon technologies, specifically, the refining industry.
Significantly, the CISAF program is focused on the strategic goals of the program. The state aid will be used to support investment in expanded production of net-zero technologies and associated products; this includes new or reclaimed critical raw materials necessary for both the clean energy system and the refining sector.
The program is available until 2030 and offers direct grant payments and tax benefits to companies operating in Greece; therefore, this is an indication of the EU’s long-term commitment to the development of these sectors and not simply a short-term stimulus.
A program for accelerating clean energy manufacturing capacity
The goal of the CISAF program is to accelerate the development of manufacturing capacity for clean-energy technologies such as solar hardware and wind-energy components needed to execute the EU’s clean-energy plans. In terms of minimizing competition distortion and speeding up the implementation of renewable energy and industrial decarbonization (both of which are directly related to the modernization of refining operations), the Commission stated that this program addresses two key aspects.
This program is aligned with the EU’s Clean Industrial Deal and therefore represents a significant aspect of the EU’s overall intent to build upon its domestic supply chain for clean technology and to reduce its reliance on foreign markets for this type of technology.
Recent approvals for similar CISAF programs in Germany, Austria, and Italy suggest that the EU is actively working towards creating a coordinated strategy to promote the expansion of manufacturing capacity for clean technologies in various segments. These funds will be used to develop and deploy clean technologies such as batteries, solar panels, and carbon-capture equipment, as well as advanced materials that are directly relevant to the modernization of refining processes.
Why is this a key moment?
The CISAF program represents a necessary and timely move, according to officials at the Commission who described it as “necessary, appropriate, and proportionate” to enable the EU to expedite its transition to a net-zero economy. The language used by officials indicates a fundamental shift within the EU: the EU is sending a clear message that clean energy manufacturing capacity and industrial competitiveness will rely heavily on funding mechanisms that can facilitate rapid technological development.
Additionally, this program also represents an acknowledgment by the EU of increasing global competition. Other major economies have established aggressive clean-tech incentive programs, and the EU must respond similarly to prevent losing market share in emerging clean-tech sectors where clean energy and refining overlap, including hydrogen, sustainable fuels, and carbon-management technologies.
EU approval of this €400 million funding program signifies much more than just funding for the clean-tech sector. The approval represents a coordinated effort by the EU to link the ongoing development of clean-energy growth with the long-term development of the EU’s industrial and refining sectors. As the EU continues to pursue its ambitious net-zero objectives, this funding program may represent one of the primary steps taken to connect climate ambitions.
