A broad coalition of industrial manufacturers, investors, and environmental organisations has issued an urgent appeal to the European Commission: fix the state aid rulebook before Europe's cleantech manufacturing slips further behind. In an open letter published on 7 July 2026, signatories ranging from Transport & Environment to automotive and battery industry players call for a fundamental overhaul of the Clean Industrial Deal State Aid Framework (CISAF), arguing that current instruments are too complex, too slow, and ultimately fail to attract the private capital Europe desperately needs to build out its battery cell, solar, and hydrogen value chains.
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What the Coalition Demands: Output-Based, Bankable Production Support
At the centre of the letter is Article 6.2 of the CISAF, which governs state aid for clean technology manufacturing capacity. The coalition's core complaint is straightforward: the existing framework does not provide for output-based production support — the single instrument that would make aid genuinely bankable. Under current rules, large-scale projects still require individual assessment, with aid amounts determined either by a funding-gap calculation or by reference to what third countries offer (so-called "matching aid"). The result, according to the signatories, is multi-year negotiations, clawback provisions, and first-of-a-kind restrictions that fail to address the real challenge of scaling up production. What the coalition wants instead is a system of temporary, degressive production premiums per unit of verified output: a fixed amount per kilowatt-hour of battery cells, per kilogram of renewable hydrogen, per watt of solar modules, or per kilometre of high-voltage cable. These premiums would be time-bound, capped per company to ensure fair distribution, and reserved for companies with a substantial EU-based governance and operational footprint — in line with the "Made in EU" approach championed by the Industrial Accelerator Act introduced in March 2026.Why Now: The Electrification Action Plan as a Policy Window
The timing of the letter is no coincidence. On 15 July 2026, the European Commission is expected to unveil its Electrification Action Plan — a sweeping initiative designed to accelerate the electrification of transport, heating, and industry across the bloc. The plan, conceived partly as a response to the energy crisis triggered by the war in the Middle East and the closure of the Strait of Hormuz, aims to dramatically reduce Europe's exposure to fossil fuel price shocks. For the coalition, this moment represents a rare and urgent policy window. "The State Aid framework that ensures internal discipline at the cost of EU's global competitiveness was designed for a world where the main competitive threat came from within the Single Market," the letter states bluntly. "That is no longer the case." The signatories argue that without predictable, bankable production subsidies, Europe's ambitions under the Net Zero Industry Act — which targets 40% of the EU's annual deployment needs to be covered by domestic manufacturing by 2030 — will remain aspirational.Europe's Battery Manufacturing Gap: A Reality Check
The letter's demands land against a sobering backdrop. To date, Europe has failed to establish a truly comprehensive battery value chain. The continent's flagship battery champion, Northvolt, filed for Chapter 11 bankruptcy protection in late 2024 and has since scaled back operations dramatically. Other projects, from Britishvolt to Italvolt, have similarly stalled or collapsed. Meanwhile, Chinese manufacturers led by CATL and BYD continue to expand at a pace that dwarfs European efforts — backed by state support mechanisms that are faster, simpler, and far more generous than anything available within the EU's single-market framework. The numbers tell a stark story. According to the coalition, Europe's share of global lithium-ion battery cell production remains in single-digit percentages, while China commands over 70% of global capacity. In solar manufacturing, the gap is even wider. The letter frames this not merely as a competitiveness issue, but as a strategic vulnerability — particularly as the energy transition accelerates and demand for batteries, electrolysers, and grid equipment soars.The Bankability Problem: Why Current Subsidies Fall Short
The coalition's most pointed criticism centres on what financiers call "bankability" — the ability of a company to secure private investment and debt by incorporating predictable public de-risking into its financial model at the moment of investment. This requires three things: subsidy levels known ex-ante through objective criteria, conditions that remain within the recipient's control, and a stable legal framework. The current CISAF delivers none of these sufficiently, the signatories argue. The Commission has, to its credit, already demonstrated that bankable aid is possible. The Alternative Fuel Infrastructure Facility, for instance, offers a fixed €20,000 to €30,000 per high-power charger — a predictable, rules-based mechanism that has proven effective at crowding in private capital. Two-way Contracts for Difference have similarly de-risked renewable energy projects. The coalition's question is straightforward: if this model works for chargers and wind turbines, why not for battery cells and electrolysers?The Global Race: China's Shadow Over European Cleantech
The letter explicitly frames its demands within the context of intensifying global competition. While the EU debates the fine print of state aid revisions, China continues to roll out extensive funding programmes that combine direct subsidies, preferential loans, and infrastructure support for domestic cleantech manufacturers. The United States, through the Inflation Reduction Act, has deployed hundreds of billions of dollars in tax credits and grants to attract battery and clean energy manufacturing to its shores. Europe, by contrast, remains caught between its commitment to single-market discipline and the urgent need to build strategic industrial capacity. For European consumers and drivers, the consequences are already visible. The batteries powering many of Europe's most popular electric vehicles — from the Volkswagen ID.3 to the Tesla Model Y built in Berlin — rely heavily on cells imported from Asia. Every gigawatt-hour of battery capacity that Europe fails to produce domestically represents not just a missed industrial opportunity, but a strategic dependency on suppliers whose geopolitical alignment may not always be reliable.What Happens Next: The July Countdown
The Commission now faces a delicate balancing act. The Electrification Action Plan must reconcile the coalition's call for simpler, faster state aid with the EU's longstanding commitment to a level playing field within the single market. The risk is that without reform, the plan's ambitious electrification targets will simply accelerate demand for batteries, solar panels, and electrolysers — the vast majority of which will be manufactured outside Europe. The signatories are clear that any revision of CISAF must complement, not replace, broader EU funding instruments such as the planned European Competitiveness Fund. The goal is not to hand out blank cheques, but to design a system where public money acts as a genuine catalyst — allowing a single euro of state aid to leverage multiple euros of private investment, rather than disappearing into a bureaucratic process that takes years to deliver results. For Europe's cleantech ambitions, the next few weeks could define the next decade.What is the Clean Industrial Deal State Aid Framework (CISAF)?
CISAF is the EU's rulebook governing how member states can provide state aid to clean technology manufacturing projects. Article 6.2 specifically covers aid for clean technology manufacturing capacity, including battery cells, solar modules, electrolysers, and related equipment. The framework has been criticised for lacking predictable, output-based production support mechanisms that would make investments genuinely bankable for private financiers.
How would output-based production premiums work in practice?
Instead of negotiating subsidies on a case-by-case basis through lengthy funding-gap calculations, the proposed system would pay manufacturers a fixed, pre-announced amount per unit of verified output — for example, a set euro amount per kilowatt-hour of battery cells produced. These premiums would be temporary, degressive over time, and capped per company to prevent disproportionate advantages. The model is similar to the EU's existing fixed grants for high-power charging infrastructure (€20,000–30,000 per charger).
Which companies and organisations signed the open letter?
The letter was coordinated by Transport & Environment (T&E) and signed by a range of industrial companies, project developers, investors, civil society organisations, and industry associations. The full list of signatories is available in the published PDF version of the letter. The coalition includes both manufacturing companies and environmental advocacy groups, reflecting a broad consensus that current state aid rules are insufficient.