The European Commission is set to greenlight national subsidies for energy-intensive industries as it unveils major changes to EU state aid rules — a move that will legitimize Germany’s

controversial plan to subsidize electricity costs for its most power-hungry companies.

On Wednesday, EU competition chief Teresa Ribera will present an updated subsidy framework — the Clean Industrial Deal State Aid Framework (CISAF) — that allows governments to offset electricity costs for heavy industries. The revised rules include a new clause on "temporary electricity price relief," which aligns closely with Germany’s proposed support scheme.

Just a month ago, Berlin's plan seemed unlikely to survive scrutiny under EU law, which typically bans state subsidies under Article 107 of the EU Treaty to prevent unfair market advantages. However, the Commission has increasingly acknowledged that targeted aid is essential to meet broader economic and environmental goals.

Germany’s strategy is seen as crucial not only for its own economy but for the EU as a whole. “If Germany sinks, we all go with them,” said an anonymous lobbyist representing energy-intensive industries.

Under the new CISAF rules, governments will be allowed to cover up to 50% of average yearly wholesale electricity prices — provided those prices stay above €50 per MWh. This change is expected to benefit not only Germany but also countries like Italy and others still heavily reliant on fossil fuels.

Still, industry groups from 10 member states, including Austria and France, argue that the updated framework doesn’t go far enough to support energy-intensive sectors.

France, meanwhile, has scored a win with the revised CISAF now referencing the Net-Zero Industry Act, making it easier for Paris to secure approval for nuclear energy funding — a national priority. French MEP Christophe Grudler welcomed the inclusion of nuclear technologies, calling the initial draft’s exclusion of nuclear but inclusion of natural gas "absurd."

As the EU seeks to revive its industrial competitiveness, CISAF represents a shift toward a more flexible approach to state aid. “There are no real instruments outside of state aid” to drive EU industrial policy, said Lena Hornkohl, a law professor at the University of Vienna.

However, the new framework still includes safeguards to ensure subsidies are justified and proportionate. For example, companies receiving electricity relief must reinvest at least 50% of the aid into decarbonization efforts.

How CISAF performs in practice will soon be tested, especially with large funding proposals. Adina Claici, an economist and former Commission official, warned that the Commission could face legal challenges from companies excluded from subsidies. “The stakes are high,” she said.