Commission approves €400 million Italian State aid scheme to support decarbonisation of industrial processes to foster the transition to a net-zero economy

The European Commission has approved a €400 million Italian scheme to support investments in the decarbonisation of industrial production processes to foster the transition towards a net-zero economy, in line with the Green Deal Industrial Plan. The scheme was approved under the State aid Temporary Crisis and Transition Framework (‘TCTF’), adopted by the Commission on 9 March 2023 and amended on 20 November 2023 and on 2 May 2024.

The purpose of the scheme is to reduce greenhouse gas emissions from production processes by at least 40% and/or reduce energy consumption by at least 20%, compared to today. Under the scheme, the aid will take the form of direct grants and subsidised loans. The measure will be open to (i) investments enabling the substitution of fossil fuels by using renewable hydrogen or renewable hydrogen-derived fuels or through the electrification of industrial processes; and (ii) investments leading to significant energy efficiency improvements.

The Commission found that the Italian scheme is in line with the conditions set out in the TCTF. In particular, the aid will not exceed €200 million per beneficiary and be granted no later than 31 December 2025. Furthermore, the aid will be subject to conditions to limit undue distortions of competition. For example, the scheme includes a claw-back mechanism to address windfall profits and beneficiaries will not be able to increase their production capacity beyond 2%.

The Commission concluded that the scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance to implement the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) TFEU and the conditions set out in the TCTF. On this basis, the Commission approved the scheme under EU State aid rules.

More information on the TCTF can be found here. The non-confidential version of the decision will be made available under the number SA.109439 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.