State Aid for Clean Technologies in the EU

Over 2,000 EU state aid decisions and 250,000 individual awards have been analysed by cep, with a sobering result: Europe's state aid practices are little innovative. The vast majority of aid still consists of non-repayable grants or tax relief. Smart risk-absorbing instruments such as loan guarantees remain the exception. 

"The manifold risks of the green transformation require a rethink in technology funding. Our analysis shows that Europe's state aid lacks creativity in its choice of instruments," explains cep economist Andre Wolf, who authored the study with Anselm Küsters. The deficit is particularly apparent when it comes to the technology mix: under the slogan ‘clean tech’, the member states primarily promote large-scale technologies such as grid expansion or nuclear projects. Future-oriented fields such as hydrogen, battery technology or CO₂ capture have so far only played a minor role.

There is still time for a change of course. The cep sees the planned reform of the state aid framework for clean technologies as a key opportunity. To overcome existing routines and political path dependencies, Europe needs support policies that are technologically open, risk-aware and evidence-based. "Europe is facing a turning point: While our data shows a clear focus on established infrastructure technologies, global competition - particularly with the USA and China - requires a bolder diversification of funding strategies," warns cep digitalisation expert Anselm Küsters.