An open letter signed by Transport & Environment (T&E), car manufacturers and cleantech industry representatives calls on the European Commission to amend its State aid framework to unlock investment in clean technology manufacturing and support the bloc's electrification ambitions.

A coalition of Transport & Environment (T&E), automotive manufacturers, cleantech companies, project developers, investors, civil society organisations and industry associations has sent an open letter to the European Commission, urging it to revise the Clean Industrial Deal State Aid Framework (CISAF) before the publication of the EU's upcoming Electrification Action Plan, expected on 15 July.

The signatories argue that changes to the current State aid rules are essential if the European Union is to achieve its industrial and electrification objectives while strengthening the competitiveness of its clean technology manufacturing sector.

Aligning industrial policy with electrification goals

In the letter, the coalition recalls that the Commission presented the Industrial Accelerator Act (IAA) on 4 March 2026, setting the objective of increasing industrial manufacturing to 20% of EU GDP by 2035 and introducing "Made in EU" requirements for public support of strategic net-zero technologies.

The proposal builds on the Net Zero Industry Act, which establishes the goal of ensuring that, by 2030, the EU's domestic manufacturing capacity for strategic clean technologies can meet at least 40% of the bloc's annual deployment needs.

According to the signatories, the forthcoming Electrification Action Plan—prepared in response to the energy crisis triggered by the war in the Middle East and the closure of the Strait of Hormuz—is expected to accelerate the electrification of transport, heating and industry to reduce Europe's dependence on imported fossil fuels and increase energy security.

They argue that this transition represents a significant commercial opportunity for European clean technology value chains, provided that adequate public support mechanisms are put in place.

Call to amend the State Aid framework

While welcoming the Commission's broader industrial strategy, the coalition argues that the current Clean Industrial Deal State Aid Framework, particularly Article 6.2, is not sufficient to support large-scale investments in clean technology manufacturing.

According to the letter, the existing framework does not provide the level of certainty needed for projects to secure private financing. The signatories stress that manufacturing support must become "bankable", meaning that companies should be able to rely on predictable public support when seeking private investment and debt financing.

They argue that this requires subsidy levels to be established in advance through objective criteria, stable legal conditions and support mechanisms that remain under the control of beneficiaries. They also state that financial support should extend beyond the initial investment phase to help manufacturers compete during their first years of operation, particularly in the face of intense international competition.

The letter notes that the Commission has already implemented bankable support instruments in other sectors, including two-way Contracts for Difference for renewable energy projects and fixed subsidies for high-power electric vehicle charging infrastructure under the Alternative Fuel Infrastructure Facility.

Four key proposals

To strengthen manufacturing support, the coalition asks the Commission to reopen CISAF and amend Article 6.2 by introducing four key measures.

First, it proposes allowing temporary output-based production support, with fixed premiums linked to verified production volumes. Examples include support per kilowatt-hour of battery cells produced, per kilogram of renewable hydrogen, per watt of solar modules or inverters, or per kilometre of high-voltage cable manufactured.

Second, the signatories recommend applying clear proportionality principles, including temporary and gradually declining support, company-level funding caps and simple rules to ensure fair distribution of aid among Member States regardless of their fiscal capacity.

Third, they call for support to be reserved for companies with a substantial governance and operational presence in the European Union, in line with the Industrial Accelerator Act. At the same time, they propose safeguards regarding foreign ownership while maintaining eligibility for trusted international partners making long-term investments in Europe.

Finally, they request clear eligibility criteria and binding timelines for approval procedures to make investment decisions faster and more predictable.

Complementing broader EU funding

The coalition also stresses that revising the State aid framework should not replace future EU-level funding instruments but instead complement broader financial mechanisms, including the planned European Competitiveness Fund.

In addition, the signatories note that further revisions to State aid rules may be needed in the future to allow output-based support for factories that are already producing strategic net-zero technologies.

A changing global competitive landscape

The letter concludes that the EU's current State aid framework was designed at a time when competition primarily originated within the Single Market. According to the signatories, today's competitive challenges come increasingly from outside the European Union.

For this reason, they argue that the forthcoming Electrification Action Plan provides the Commission with an opportunity to align State aid rules with the objectives of the Clean Industrial Deal, creating a more competitive environment for Europe's clean technology manufacturing industry while supporting the bloc's electrification strategy.