EU wants to simplify tax credits to counter US green subsidies

The European Union is about to propose a plan to counter the 369 billion US dollars [€339bn] Cut Inflation Act on Wednesday (February 1), with looser state aid rules for tax credits in green investments.

The European Commission has drawn up plans to simplify and speed up companies’ access to tax credits in order to prevent companies from leaving the EU.

Major wind and solar developers have criticized the EU funding scheme as too complicated and pointed out that tax incentives in the US are triggered automatically, making them more attractive.

To address this, the commission has drawn up a plan to simplify the rules allowing for faster approvals for projects of common European interest. It also suggests setting tough targets for green industrial capacity by 2030, creating clearer direction.

According to the commission, the industrial sector must invest 170 billion euros by 2030 in manufacturing plants to produce solar, wind, batteries, heat pumps and green hydrogen.

To help companies reach this figure, the Commission wants to propose a temporary crisis and transition framework that would allow for increased support for clean technologies and more crucial renewable energies, going beyond what is allowed under current EU rules. EU on state aid.

Part of the plan is to raise the threshold for the so-called “block exemption”, making it easier for governments to subsidize hydrogen production, carbon capture technology, energy efficiency and electrification. transports.

Looming Debt Debate

The move, however, could raise controversy within the EU, as wealthier countries such as Germany could end up spending more than budget-constrained countries in the south.

Germany and France accounted for just under 80% of state aid granted since the pandemic, when rules were previously relaxed, while Italy, Europe’s second-largest industrial producer after Germany, has only allocated only 4%.

Competition Commissioner Margrethe Vestager, in an op-ed co-written with Trade Commissioner Valdis Dombrovskis and Green Deal Commissioner Frans Timmermans, warned last week that a “massive increase in subsidies where countries have the financial means different will only risk fragmentation”.

Spain, Italy and France have all called for EU borrowing to help countries with less fiscal space make the same investments in renewables and critical technologies.

Economy Commissioner Paolo Gentiloni, who is in Berlin to discuss European competitiveness, also signaled strong support for a new common debt. Commission President Ursula von der Leyen has said she will propose a European Sovereignty Fund by the middle of this year.

But Dutch negotiators and finance ministers from Finland, the Czech Republic, Denmark, Estonia, Ireland, Austria and Slovakia warned against “permanent or excessive untargeted subsidies”, the countries -Bas being particularly opposed to a new common debt.

French President Emmanuel Macron, in a last ditch effort ahead of next week’s EU Council meeting, is trying to drum up support from Dutch Prime Minister Mark Rutte for a robust European buying approach and is expected to hold a conference of joint press Monday evening .


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