EU Sustainability: State of Play — Competition Law and Clean Tech

Our EU Sustainability: State of Play series focuses on regulatory developments and policy initiatives emerging from Brussels. In this series, we explore EU sustainability frameworks and their intersection with other areas of EU law.

EU sustainability regulations continue to play a key role in shaping the direction of international ESG frameworks. Latham’s European ESG Practice tracks these EU-driven developments closely by drawing on our connections with EU regulators, our presence in Brussels, and our broader European platform.

The Interplay Between EU Competition Law, Sustainability, and Clean Technology

In July 2025, the European Commission (the Commission) issued three pieces of guidance outlining the role of competition law in achieving sustainability goals. Notably, the guidance suggests the Commission is taking a pragmatic approach to aligning competition enforcement with broader climate objectives. Whilst sustainability goals and targets fall outside the competition law field, the Commission aims to minimise legal uncertainties that could undermine steps towards the net zero economy and decarbonisation.

In principle, this approach also applies to EU State aid rules, another area of EU competition law. State aid rules exist to prevent government support leading to a company gaining a distortive advantage over its competitors. However, with the new Clean Industrial Deal State Aid Framework (CISAF), the Commission has established a framework that supports the objectives of the Clean Industrial Deal (CID), aimed at enabling Member States to advance the development of clean energy, industrial decarbonisation, and clean technology. According to Commission Executive Vice President Teresa Ribera, the new framework “recognizes the state as a strategic investor in our future”European Commission, press release: New State aid framework enables support for clean industry, 25 June 2025 (https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1598). and she hopes the new framework “unlocks investment” and ensures that “green drivers” will be “market drivers.”EVP Ribera says green subsidy plan will transform Europe’s industrial base MLex-report of 15 June 2025 (here).

The EU’s ambitious targets for climate neutrality have prioritised the development and deployment of clean technologies such as renewables, batteries, hydrogen, and carbon capture. This shift has implications for EU competition law, which must ensure that markets for these technologies remain open and competitive while also supporting innovation and investment. The Commission recognises that strong competition can drive affordable and efficient clean tech solutions that benefit both consumers and the environment.

This article examines how the Commission’s recent actions align competition policy in State aid, horizontal regime, and merger control with sustainability objectives. The article also assesses other recent developments in relation to clean technology that are relevant for businesses.

Competition Law and Sustainability Objectives

State Aid and the Clean Industrial Deal: Member States’ Support for Clean Energy, Decarbonisation, and Clean Technology

Background to the CISAF and the CID

The Commission introduced the CISAF on 25 June 2025, replacing the Temporary Crisis and Transition Framework (TCTF), an amended version of the temporary framework initially adopted in March 2022 in the context of Russia’s invasion of Ukraine. The CISAF, which will remain in force until the end of 2030, forms a central component of the CID.

The CID includes policies to support investment in renewable energy, industry decarbonisation, affordable energy, clean products and clean tech, and the circular economy. The CID helps advance the EU’s climate objectives set out in the European Green Deal and codified by the EU Climate Law: cutting emissions by at least 50% by 2030 and reaching climate neutrality by 2050.

Scope and Key Elements of the CISAF

The CISAF applies to five areas: (i) renewable energy development, (ii) temporary electricity price relief to ensure transition (up to 50% of wholesale prices, covering up to 50% of consumption), (iii) industrial decarbonisation, (iv) clean tech manufacturing, and (v) de-risking mechanisms, accelerated depreciation, tax incentives, and capacity mechanisms for investments in clean technologies, including manufacturing strategic components and critical raw materials.

The CISAF simplifies procedures and compatibility assessments, thereby offering more flexibility than its predecessor, the TCTF. Further, it streamlines the aid’s compatibility assessment — which is based on three conditions: positive condition, negative condition, and balancing test — by creating presumptions. In other words, schemes falling within the scope of the CISAF and meeting all conditions set out in the relevant section of the framework will be presumed to satisfy the compatibility requirements. For instance, the CISAF introduces a simplified, fast-track approval process for the rollout of renewable energy and low-carbon fuels.CISAF, paras. 39 et seq.

The CISAF also relies on the “do no significant harm” principle, according to which an economic activity must not significantly harm any of the EU’s environmental objectives defined in the EU Taxonomy Regulation, namely: (i) climate change mitigation, (ii) climate change adaptation, (iii) sustainable use and protection of water and marine resources, (iv) transition to a circular economy, (v) pollution prevention and control, and (vi) protection and restoration of biodiversity and ecosystems.Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088. Moreover, the principle provides that the activities benefitting from the aid do not have a significant negative impact on other environmental or social objectives pursued by EU policies, such as the European Green Deal or the CID.

Guidelines on State Aid for Climate, Environmental Protection, and Energy

If measures do not meet the requirements of the presumptions set out in the CISAF, Member States can continue to rely on the guidelines on State aid for climate, environmental protection, and energy (CEEAG).CISAF, para. 10. The CEEAG, adopted on 27 January 2022, provide softer rules for Member States to support sectors that promote the environment and clean energy as compared to the prior version of the guidelines. The CEEAG also address a broader range of issues than the CISAF, to capture more sectors supported by the EU’s environmental and climate policy.

Enforcement to Date

The Commission’s enforcement of the new framework is already underway with approval of France’s €11 billion aid scheme to support offshore wind energy. The Commission found the aid meets the conditions set out in the CISAF, since it will be provided as direct price support through a monthly variable premium calculated by comparing a reference price, awarded via a competitive process. The Commission also noted there are sufficient safeguards to ensure markets function properly and to avoid compensating producers when market prices are negative.

Other measures that likely did not meet the CISAF presumption requirements have been approved in the application of the CEEAG. For instance, the Commission recently approved a Danish measure of €36 million aimed at reducing greenhouse gas emissions in the domestic aviation sector by encouraging the use of sustainable aviation fuel for domestic flights. The new State aid rules seek to support these schemes that clearly pursue EU’s policy objectives, such as the development of renewable energy and the reduction of greenhouse gas emissions.

The New Horizontal Regime: Specific Rules for Sustainability Agreements to Further Sustainability Objectives

The Commission published its revised Horizontal Guidelines in June 2023, providing specific rules applicable to sustainability agreements concluded between competitors. While the Horizontal Guidelines define sustainability agreements broadly as “any horizontal cooperation agreement that pursues a sustainability objective, irrespective of the form of the cooperation”,Communication from the Commission – Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, C/2023/4752 (Horizontal Guidelines), para. 521. the chapter only provides guidance for a subset of these agreements (specifically, sustainability standardisation agreements). The scope should also exclude sustainability agreements involving producers of agricultural products that could benefit from an exclusion from the scope of Article 101(1) TFEU under the guidelines on sustainability agreements of agricultural producers. Adopted on 7 December 2023, these guidelines provide guidance on the exemption set out in Article 210a of the Regulation of the Common Organisation of the Markets in agricultural products.Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007.

In the Horizontal Guidelines, the Commission acknowledges that certain sustainability agreements are likely to fall outside the scope of Article 101(1) TFEU, including agreements that: (i) are aimed at compliance with legally binding requirements, (ii) do not concern competitors’ economic activity but rather their internal conduct, (iii) create a database with information on suppliers with (un)sustainable value chains, production processes or inputs, (iv) relate to the organisation of industry-wide campaigns about sustainability.Horizontal Guidelines, paras. 528-531. If an agreement does fall within the scope of Article 101(1) TFEU then the Horizontal Guidelines provide limited guidance, but the effects should, in principle, be assessed unless the agreement is used to disguise hardcore restrictions.Horizontal Guidelines, paras. 532 and 547-548.

Sustainability Standardisation Agreements

The Commission creates a presumption that sustainability standardisation agreements will fall outside the scope of Article 101(1) TFEU if an agreement meets six cumulative conditions (soft safe harbour).Horizontal Guidelines, para. 549. The conditions are orthodox, consistent with applicable guidance for non-sustainability-related standardisation initiatives. Most conditions are clear and predictable, i.e., transparent and participative, voluntary and open, ability to adopt higher standards, limited exchange of sensitive commercial information, and effective and non-discriminatory access. The sixth condition requires the sustainability standard to meet at least one of two conditions:

• the sustainability standard must not lead to a significant increase in price or a significant reduction in the quality of product concerned; or
• the combined market share of the participating undertakings must not exceed 20% on any relevant market affected by the standard.

The creation of a soft safe harbour presumption is helpful for companies to obtain comfort on their agreements. However, the second condition creates legal uncertainty for agreements that cover more than 20% of the market as the Horizontal Guidelines do not specify what constitutes a “significant” price increase in this context.

Finally, the Commission provides guidance for including sustainability benefits in the analysis of all sustainability agreements under Article 101(3) TFEU in order to benefit from an exemption. The agreement must bring efficiency gains, be indispensable, pass benefits to consumers, and must not eliminate competition.Horizontal Guidelines, paras. 557-596.

In particular, the demonstration of benefits to direct and indirect consumers of the products covered by the agreement requires evidence in economic terms of at least some current and/or future benefits among: (i) individual use-value benefits (efficiencies at individual level), (ii) individual non-use value benefits (consumers’ appreciation of the impact of sustainability benefits), and (iii) collective benefits. While the first two categories refer to direct consumers of the relevant products, collective benefits can accrue to a larger group of beneficiaries as long as consumers in the relevant market are part of this wider section of society.

Informal Guidance Notices: Providing Companies With Non-Binding Guidance Letters to Businesses

In practice, the Horizontal Guidelines aim to encourage companies to seek informal guidance from the Commission, as foreseen by its Informal Guidance Notice.Horizontal Guidelines, para. 515. The Commission had revised its Informal Guidance Notice in 2022 in order to enable it to provide guidance letters and hence increased legal certainty on a wider range of issues, including sustainability-related questions. See Commission, press release dated 3 October 2022, Commission adopts a more flexible antitrust Informal Guidance Notice; withdraws Antitrust COVID Temporary Framework. As mentioned above, the Commission issued its first informal guidance letters in July 2025 to provide comfort for companies: the first two are based on the Horizontal Guidelines and the third is based on the guidelines on sustainability agreements in the fields of food and agriculture:

• Guidance on the creation of a licensing negotiation group in the automotive sector: The first guidance letter addresses the collaborative efforts of a group of automotive companies to jointly negotiate licenses for technologies protected by standard essential patents (SEPs). This initiative aims to increase efficiency in the licensing of SEPs related to digital technologies in order to contribute to the EU’s zero-net emissions objectives, which was relevant to demonstrate efficiencies.
• Guidance on sustainability agreements to reduce CO2 emissions: The second letter pertains to a sustainability agreement between port operators focused on joint purchasing and the establishment of technical specifications for electric container-handling equipment utilised in ports in order to reduce CO2 emissions — which, once again, seeks to contribute to the EU’s policy objectives.
• Opinion on the compatibility of a sustainability agreement in the French wine sector: The Commission issued its first opinion under Article 210a of the Regulation of the Common Organization of the Markets in agricultural products approving the compatibility of a sustainability agreement between French wine producers on the setting of indicative prices for wine produced in accordance with the standards for organic and for Haute Valeur Environnementale wines. In this case, the Commission notably took into account that the agreement aims at contributing to several sustainability objectives and standards that are higher than what is mandated by EU or national law.

The two guidance letters adopted in application of the Horizontal Guidelines were issued after about seven months of investigation, the speed of which should encourage undertakings to come forward. The review process is even shorter for Article 210a opinions, given the Commission is legally required to issue its opinion within four months. Whether the Commission will continue to issue more informal guidance to encourage others to engage in sustainability initiatives remains to be seen.

Merger Control and the Consultation on Guidelines: The Role of Sustainability-Related Aspects in Merger Review

Sustainability has played an increasing role in merger enforcement over the past decade. While the Commission does not have a mandate to intervene in mergers for environmental reasons (absent any harm to competition),See to this effect the reasoning included in its decision M.8084 Bayer/Monsanto of 21 March 2018 in Section XIV: Non-Competition Concerns. competitive markets often go hand-in-hand with efforts to achieve more sustainable market outcomes,See Ellwanger/Kianičková/Schiffer/Usai, EU Green Mergers & Acquisitions Deals – How Merger Control Contributes to a Sustainable Future, Competition Merger Brief 2/2023, 1-2. and consequently, sustainability-related aspects of the Commission’s merger review are increasingly important. In essence, sustainability considerations have played a role in market definition and at various stages of the competitive assessment, including closeness of competition, innovation theories of harm, and efficiencies.See Ellwanger/Kianičková/Schiffer/Usai, EU Green Mergers & Acquisitions Deals – How Merger Control Contributes to a Sustainable Future, Competition Merger Brief 2/2023, 2-5.

In addition, the Commission received about 200 submissions from a broad range of stakeholders in early 2021 on how EU competition rules can support environmental and climate policies. The important issues identified for merger enforcement to enhance its contribution to sustainability goals include: (i) the need to take into account consumer preferences, e.g., for “green” products as a differentiating factor in general and in market definition in particular, (ii) the importance of enforcing and pursuing innovation theories of harm as a means of preventing the loss of “green” innovation, (iii) the importance of taking into account social and environmental benefits and thus accepting those as efficiencies stemming from a merger, and (iv) the need to stay vigilant with regard to “green” killer acquisitions, especially given that “green” innovation is often carried out by smaller players representing a threat for incumbent companies and that such concentrations may well fall below the notification thresholds at EU and national levels.See Ellwanger/Kianičková/Schiffer/Usai, EU Green Mergers & Acquisitions Deals – How Merger Control Contributes to a Sustainable Future, Competition Merger Brief 2/2023, 1.

Merger Guidelines Consultation

The Commission is consulting publicly to seek feedback on its ongoing review of the 2004 and 2008 EU merger guidelinesReview Merger Guidelines – Targeted Consultation, 8 May 2025; available here. See for an overview of the consultation our client briefing of 28 May 2025 “Review of the EU Merger Guidelines — The First Step” available here. that describe the framework that the Commission applies when assessing the competitive impact of mergers. The review process will explore whether and how merger control should factor in a number of transformational policy objectives, including sustainability, innovation, and resilience.See press release of the EC of 8 May 2025 “Commission seeks feedback on the review of EU merger guidelines”, available here. The consultation constitutes a first step “to modernise competition policy”.Ursula von der Leyen, Mission Letter to Teresa Ribera Rodríguez, 17 September 2024, available here. The Mission Letter takes account of Mario Draghi’s 2024 report on the future of Europe’s competitiveness that was commissioned by Commission President von der Leyen. Notably, Draghi called for “updated guidelines […] allowing for an ‘innovation defence’”The future of European competitiveness, Part B, In-depth analysis and recommendations, 9 Sept. 2024, p. 299; available here. and identified three necessities for the EU to boost its competitiveness: closing the innovation gap, decarbonizing the economy, and reducing dependencies. Through the January 2025 Competitiveness Compass, the Commission outlined a plan to translate these necessities into reality.The future of European competitiveness, Part B, In-depth analysis and recommendations, 9 Sept. 2024, p. 299; available here.

To trigger the in-depth consultation, the Commission has drafted seven papers on “focus” topics.These encompass competitiveness and resilience, the assessment of market power, innovation and other dynamic elements, digitalisation, efficiencies, considerations on public policy, security, media plurality, and labour markets, and, notably, sustainability and clean technologies. The Commission confirms that it cannot intervene in mergers solely on public policy grounds unrelated to competition,Review Merger Guidelines – Targeted Consultation, 8 May 2025, para 73 fn 61; available here. however sustainability will be addressed in merger reviews when it is a parameter of competition in the relevant markets. Indeed, the Commission increasingly considers sustainability in recent merger reviews, e.g., in market definitionSee the examples in Review Merger Guidelines – Targeted Consultation, 8 May 2025, fn 62; available here. or to assess a merger’s potential effects.See for an overview Competition Policy Brief No 1/2024, Section 1.4.

In the context of horizontal mergers, sustainability considerations play a role as a non-price parameter of competition. For example, firms’ offerings may differ based on customers’ preferences for recycled products or the use of green technologies or in the assessment of whether the parties to the transaction are close competitors — such as when the merging firms are both innovators on cleaner or more sustainable products or in green technologies; or in the assessment of whether one of the merging parties is an important competitive force.See the examples in Review Merger Guidelines – Targeted Consultation, 8 May 2025, para 74; available here. They may also be part of the theories of harm related to the loss of “clean” R&D and “green” innovation competition,See the examples in Review Merger Guidelines – Targeted Consultation, 8 May 2025, para 75; available here. or they may constitute so-called “green” efficienciesMergers may generate sustainability benefits including innovative clean technologies that might be considered as offsetting negative effects on competition (‘green efficiencies’); see Review Merger Guidelines – Targeted Consultation, 8 May 2025, paras 70, 77 and 104; available here and here. that could offset negative effects on competition. The main question in that context is how those should be identified and quantified for the merger assessment.

Clean Tech As a New Area of Focus Beyond Competition Law

Beyond core competition instruments, the EU is rolling out sectoral frameworks and initiatives that will shape clean technology markets and investment. The implications for businesses give rise to a new set of complex legal problems surrounding sustainability and competition law. The new frameworks result in challenges for companies involved in clean tech and other sectors, such as oil and gas, which need to navigate new and evolving regulatory requirements, balance collaboration with compliance, and address the intersection of market dynamics, innovation, and the EU’s climate and environmental objectives.

The Net Zero Industry Act: Strengthening EU Manufacturing Capacity for Net Zero Technologies

The Net Zero Industry Act (NZIA), which entered into force in June 2024, is part of the EU’s Green Deal Industrial Plan. Its primary objective is to strengthen the EU’s manufacturing capacity for clean technologies — such as solar panels, wind turbines, batteries, heat pumps, hydrogen, and carbon capture and storage — by ensuring that at least 40% of the EU’s annual deployment needs for these technologies are met by domestic production by 2030. The NZIA introduces a range of measures to accelerate permitting, streamline regulatory processes, and foster investment in clean technology manufacturing.

The NZIA does not introduce new, direct EU-level subsidies for net zero industries, rather it relies on existing funding mechanisms and encourages Member States to support projects through State aid, subject to the CISAF. This framework allows for targeted support to strategic sectors, provided it does not unduly distort competition or fragment the single market.

A notable feature of the NZIA is Chapter III, which establishes a binding EU-wide target for CO2 storage. By 2030, at least 50 million tonnes of annual CO₂ injection capacity must be achieved. This target relates to storage capacity — i.e., the physical ability to inject and permanently store captured CO2 underground — and not to capture (the other side of the coin of carbon capture and storage (CCS), as a clean tech initiative for hard-to-abate sectors). Notably, the obligations are imposed on EU oil and gas producers, but not on Member States, who are required to contribute to the development of CO2 storage capacity proportionate to their share of oil and gas production in the EU.

Other Clean Tech Frameworks and Initiatives

Other EU frameworks and initiatives that are relevant for clean technologies and that have implications for businesses include:

• Critical Raw Materials Act: A 2024 Regulation adopted with the aim to ensure EU access to a secure and sustainable supply of critical raw materials, including those essential for clean tech manufacturing, and enabling the EU to meet its 2030 climate and digital objectives.
• REPower EU Plan: A 2022 initiative and legislative package adopted to reduce the EU’s dependence on Russian fossil fuels in response to the energy crisis caused by the geopolitical developments, and aimed at accelerating the clean energy transition by increasing energy efficiency, diversifying energy supplies, and scaling up the deployment of renewables and clean technologies.
• Industrial Accelerator Act: Building on the original Industrial Decarbonisation Accelerator concept, and announced as part of Commission President Ursula von der Leyen’s 2025 State of the Union address, the forthcoming legislative package will seek to streamline and expedite administrative procedures across a wide range of strategic industrial sectors, including clean tech, while keeping decarbonisation objectives at its core. The proposal is expected by year end.

Conclusion and Outlook

The primary goal of EU competition law is to benefit consumers through a set of instruments, such as State aid and merger control, as well as interventions against cartels or abuses of dominant positions. Conversely, sustainability goals are policy goals set by the Commission. Competition law is not a tool to oblige Member States or private companies to adhere to such goals, let alone enforce them. However, there is considerable overlap between the two sets of goals, for example where anticompetitive conduct is used to undermine innovation towards more sustainable technologies. The Commission has already intervened in such matters and imposed hefty fines on the companies involved.See, for example, the European Commission’s decision (AT.40178) of 8 July 2021 to fine three car manufacturers a total of ca. € 800 million for restricting competition in emission cleaning for new diesel passenger cars (see https://ec.europa.eu/competition/antitrust/cases1/202330/AT_40178_8022289_3048_7.pdf). See also the European Commission’s decision (AT.40522) of 12 July 2022 to fine two metal packaging manufacturers a total of ca. € 31.5 million, inter alia, for information exchange regarding minimum durability recommendations (see https://ec.europa.eu/competition/antitrust/cases1/202307/AT_40522_8986595_2868_7.pdf).

In State aid, the Commission has significantly facilitated Member States’ measures to support the EU’s environmental and climate objectives both procedurally and substantially, triggering substantial approvals by the Commission that appear to align with the high-stakes expectations of EVP Ribera that the new framework “unlocks investment” and ensures that “green drivers” will be “market drivers.”

In addition, the Commission is prepared to provide guidance to companies considering sustainability agreements under its 2022 revised Notice on Informal Guidance.Commission Notice on informal guidance relating to novel or unresolved questions concerning Articles 101 and 102 of the Treaty on the Functioning of the European Union that arise in individual cases (guidance letters) of 3 October 2022 (C(2022) 6925 final; available here). Such guidance is available in cases presenting novel or unresolved questions for applying EU competition rules and represents a major shift towards legal certainty. As long as the companies involved stay within the limits stated in the guidance, they should not be exposed to antitrust investigations or allegations.

Depending on the outcome of the consultation and reform of the merger guidelines, competition law may further facilitate sustainability-driven activities. Regardless, sustainability evidently ranks high on the Commission’s agenda, and competition law seems to constitute a key tool to support the Commission’s objectives for a net zero economy and decarbonisation in the EU.

As clean technology becomes increasingly central to the EU’s economic and environmental goals, competition law is evolving to balance the need for rapid green innovation with the principles of fair and open markets. In any event, these revised (or entirely new) regimes create significant opportunities for private businesses aiming to contribute to sustainability goals through key projects. Companies can expect more support from Member States but also more flexible rules to obtain funding, cooperate with business partners and, potentially, obtain approval for mergers and acquisitions. Given the current context, businesses may reconsider sustainability projects that would have likely been barred by competition law a decade ago.

This article was prepared with assistance from Samantha Banfield and Ronan Foley of Latham & Watkins.

Latham’s European Antitrust & Competition and ESG Practices have experience advising on a broad range of topics related to EU competition law, EU sustainability, and international ESG matters. If you have questions about this article, please contact one of the authors listed below or the Latham lawyer with whom you normally consult.