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T&E Report: "State Aid 2.0 – Lean, Clean, European" Calls for Revised EU Cleantech Strategy

Transport & Environment (T&E) has released a report highlighting critical gaps in the EU’s State Aid framework, emphasizing that current policies fail to effectively support European cleantech manufacturing. The report argues that to compete globally, Europe must introduce a revised, performance-based State Aid system tied to ‘Made in EU’requirements for sustainable products.

Key Findings:

• Inadequate Framework: Leaked EU State Aid guidelines indicate an insufficient framework to promote domestic cleantech manufacturing, especially in batteries and renewable technologies.
• Need for Recalibration: EU State Aid spending was only 2% in 2020 & 2021 and needs recalibration, shifting focus towards cleantech instead of continued fossil fuel subsidies.

Key Recommendations:

• End Fossil Fuel Subsidies: Gas projects still receive nearly 100 Euro billion in annual support, which needs redirection towards green industries.
• Mandatory "Made in EU" Criteria: State Aid must prioritize local content, control, and manufacturing to strengthen Europe’s supply chain.
• Support Products, Not Just Projects: Introduce output-based incentives, such as 25 Euro/kWh for battery cells, gradually phasing down, plus a 5 Euro/kWh bonus for battery packs.
• Leverage EU Funding for Synergies: Increasing State Aid contributions by 5%-15% could unlock up to 51 Euro billion annually, ensuring a just energy transition and enhancing EU competitiveness.

T&E’s report underscores the urgent need for a strategic, targeted State Aid policy to position Europe as a leader in cleantech manufacturing while reducing reliance on fossil fuels.