28 February 2025 | By Marten Männis
State Aid
An overview of Feburary 2025 State aid developments
In recent years, the European Commission has taken a proactive stance in approving state aid measures aimed at bolstering strategic sectors across Europe. In February 2025, the European Commission approved several of such State aid measures. From groundbreaking investments in semiconductor manufacturing and nuclear energy to ambitious schemes promoting decarbonisation and circular economy practices, by outlining what measures were approved and what is being investigated, one can get a clearer picture on how modern State aid rules operate and what type of schemes currently fall under investigation.
French scheme on recycling plastic waste approved
First, on 3 February, The European Commission approved a €500 million French aid scheme designed to support the chemical recycling of certain types of plastic waste. This measure aims to convert mixed or contaminated plastics—such as trays, films, non-beverage bottles, and textiles with polyester—into virgin-like raw materials. By providing direct grants covering up to 40% of the extra investment costs over less sustainable alternatives, the scheme seeks to foster a more circular economy and reduce environmental impacts in line with the EU’s 2024-2029 priorities for a circular and resilient economic model.
The Commission assessed the scheme under EU State aid rules and the Guidelines on State aid for climate, environmental protection and energy (CEEAG), noting that this scheme is necessary and appropriate for its purpose and that this scheme has an ‘incentive effect’, as beneficiaries would not undertake these investments without public support. Additionally, safeguards have been put in place to minimize distortions of competition, as the aid is available to companies of all sizes across all sectors. On these grounds, the Commission approved the French scheme, marking the first State aid measure assessed under Section 4.4 of the CEEAG, which allows aid for resource efficiency and circular economy transition.
Finnish large-scale decarbonisation scheme approved
On 18 Feburary, the European Commission approved a €2.3 billion Finnish scheme designed to support investments in strategic sectors and help industrial companies decarbonise their production processes. This measure, implemented under the State aid Temporary Crisis and Transition Framework (TCTF), and aiming to foster the transition to a net-zero economy, aligns with the European Commission’s 2024-2029 priorities for clean energy and technology. The scheme is composed of three measures: one to accelerate the rollout of renewable energy and storage capacities (excluding electricity generation), another to promote decarbonisation and improve energy efficiency in industrial processes, with the goal being to reduce greenhouse gas emissions for companies by at least 40% and/or reduce their energy consumption by at least 20%, and a third to support investments in the production of strategic equipment, such as batteries, solar panels, wind turbines, and related components.
The aid, provided in the form of a tax credit and available to all sectors except financial institutions, is subject to strict conditions to ensure proportionality and limit competition distortions. For instance, the renewable energy measure supports only newly installed or repowered capacities, while the decarbonisation measure requires project completion within 36 months, with penalties for delays. Safeguards are also in place to prevent investment relocation within the EEA. With these conditions, the Commission concluded that the scheme meets the requirements under the TCTF and is compliant with EU State aid rules, thereby supporting Finland’s efforts to drive a sustainable, competitive, and green economy.
Germany’s new semiconductor facility approved
On 20 February, the European Commission approved a €920 million aid measure from Germany to support Infineon’s construction of a new semiconductor manufacturing facility in Dresden. This first-of-its-kind plant is designed to flexibly produce two distinct semiconductor technology families—discrete power technologies and analog/mixed-signal integrated circuits—for a wide range of applications in industrial, automotive, and consumer markets. The facility, set to reach full capacity by 2031, will cover wafer processing, testing, and separation and is expected to enhance the EU’s semiconductor production capacity while contributing to crisis preparedness in line with the European Chips Act Communication and the Political Guidelines for the European Commission 2024-2029.
In its assessment under EU State aid rules and Article 107(3)(c) TFEU, the Commission determined that the aid measure is both necessary and proportionate, addressing a proven funding gap that incentivizes the investment. Infineon’s commitment to sharing additional profits with Germany and its promise to invest in next-generation chip R&D, as well as provide access to SMEs and research organizations, further underscores the broader benefits for the European semiconductor ecosystem. The decision builds on a series of similar approvals aimed at strengthening Europe’s supply chain resilience and technological autonomy in semiconductor technologies.
Belgian nuclear plants’ lifetimes extended
On 21 February, following an in-depth investigation, the European Commission approved a revised Belgian support measure under EU State aid rules to extend the operational lifetime of two nuclear reactors, Doel 4 and Tihange 3, for an additional 10 years. This decision comes in the context of Belgium’s earlier nuclear phase-out law and the energy crisis triggered by geopolitical tensions, which prompted the government to ensure security of supply. The measure, which involves a comprehensive package including a contract-for-difference (CfD), the creation of a new entity called BE-NUC, and various financial mechanisms such as loans and an operating cashflow guarantee, is designed to cover different risks associated with the lifetime extension project. In addition, the arrangement includes the transfer of nuclear waste liabilities from Electrabel to the Belgian State, for a lump sum of €15 billion, thereby addressing potential financial exposures.
To address the Commission’s concerns regarding market distortions and risk-sharing, Belgium implemented several safeguards. These include transferring the decision-making authority on economic modulations to an independent energy manager to ensure competitive market participation, setting a CfD strike price based on a discounted cash flow model to limit the aid amount, and incorporating a ‘Market Price Risk Adjustment’ mechanism. Additional measures, such as capping the operating cashflow guarantee and strictly managing the transfer of nuclear waste liabilities through a dedicated national body, further demonstrate the proportionality and necessity of the support. With these adjustments ensuring the measure remains limited to the minimum necessary and does not unduly distort competition, the Commission approved the revised Belgian support package under EU State aid rules.
Croatian support into wood processing investigated
On 24 February, the European Commission launched an in-depth investigation into Croatia’s public support for Hrvatske Šume d.o.o. (HŠ) and certain Croatian wood processing companies. The investigation centres on allegations that the 100% state-owned HŠ, which has exclusive rights to manage and commercially exploit all publicly owned forests in Croatia, may have received an undue economic advantage. Specifically, the Commission is examining two key concerns: first, that HŠ did not pay any remuneration to the Croatian State for these exclusive rights, potentially skewing competition against private forest owners who must purchase or lease such rights; and second, that the non-market prices offered by HŠ to its wood processing customers may not represent independent commercial decisions, thereby conferring a selective economic benefit.
The inquiry was triggered by a complaint alleging that these practices might distort competition and impact trade within the EU by providing HŠ and its selected partners with an unfair advantage. The Commission’s investigation will allow all involved parties—including Croatia, the alleged beneficiaries, and the complainant—to submit comments. While the probe is still in its early stages and does not pre-judge any outcomes, it reflects the Commission’s commitment to ensuring that all state support complies with EU rules, maintaining a level playing field in the internal market.
Austrian wafer manufacturing facility approved
On 24 February, the European Commission approved a €227 million aid measure from Austria to support ams Osram in constructing a state-of-the-art wafer manufacturing facility in Premstätten. This project, set to be fully operational by 2030, will be the first in Europe to integrate CMOS technology with advanced techniques like Through Silicon Via and optical filtering. The facility is designed to produce Grade 0 automotive qualified chips for diverse markets including automotive, consumer, industrial, and medical sectors. Beyond manufacturing, the plant will also be accessible to other semiconductor companies, reinforcing Europe’s strategic independence and resilience in the semiconductor supply chain.
In its assessment under Article 107(3)(c) TFEU, the Commission recognized the measure’s incentive effect and its essential role in filling a funding gap that would otherwise prevent the investment. The approval underscores the broader impact on the European semiconductor ecosystem, particularly in enhancing technological autonomy and supply security, as envisioned in the European Chips Act Communication. In addition, ams Osram has committed to initiatives that extend the project’s benefits, such as prioritizing orders during supply shortages and investing in educational programs to boost the skilled workforce.
Across these assessments published in February, there is a clear emphasis on strategic investments that bolster Europe’s industrial and technological sovereignty while addressing pressing sustainability and supply chain challenges. Several measures—such as those supporting semiconductor manufacturing in Germany and nuclear reactor extensions in Belgium—are designed to ensure a more secure and resilient energy and technology supply, in line with the European Chips Act and broader security of supply objectives. Similarly, the Finnish and French schemes focus on the green transition, supporting decarbonisation and circular economy initiatives, which reflects the EU’s strong commitment to climate neutrality and sustainability.
