Summary

The EU's Clean Industrial Deal foregrounds tensions between renewable energy subsidies and competition rules. Can the EU State aid regime accommodate ambitious climate subsidies (for solar, hydrogen, etc.) without distorting markets? Under the new Clean Industrial Deal State Aid Framework (CISAF), aid for renewables and clean tech manufacturing is streamlined through simplified compatibility criteria, reflecting an ambition to fast-track the transition toward climate neutrality. Yet studies show national policies often remain conflicted - many Member States pair renewables support with fossil-fuel-based capacity schemes, undermining decarbonization. CJEU case law (e.g. the Paks II judgment) illustrates that even green subsidies must satisfy Article 107 TFEU and EU procurement rules. Additional sector-specific issues arise in energy infrastructure - for example, reliance on state-backed nuclear or hydrogen projects raises questions about market power and cross-subsidies. This paper reviews these developments to assess policy coherence. It suggests that updated Guidelines (2021 CEEAG and CISAF) offer a clearer regime for climate-friendly aid, but enforcement gaps persist. By posing these interlinked questions, it highlights how EU competition tools (merger control, abuse of dominance, procurement law) may need to adapt to enable the clean-energy transition. For policy-makers and scholars, it poses a crucial puzzle - balancing climate goals with the EU's market rules.

This paper will be part of the OGEL Special Issue on "State Aid and Competition Rules in the Energy Sector". More information here www.ogel.org/news.asp?key=840