DThe EU member states should counter the US $369 billion package for green technologies with their own billions in aid. This emerges from the “Green Deal Industrial Plan” presented by EU Commission President Ursula von der Leyen in Brussels on Wednesday. Von der Leyen said that in the coming years it will be decided what the climate-neutral economy will look like and where it will be located. Europe wants to have a say in this. Therefore, the EU must now be careful not to fall behind in the competition with the USA and China for the settlement of factories for batteries, heat pumps or hydrogen systems.
In the short term, the Commission is primarily counting on a noticeable softening of the EU state aid rules. This should enable them, as provided for in the “Inflation Reduction Act” (IRA), to grant tax reductions. For the industry, they have the charm that they are available quickly and easily.
Since not all EU countries have the necessary financial resources for this, the EU Commission also wants to allow them to use the remaining money from the Corona recovery fund to grant tax breaks. According to the Commission, there are still 250 billion euros left from the recovery fund and the Repower EU program created to decouple Russian natural gas and oil, which the states could use to respond to the IRA. In addition, 100 billion euros would come from the EU structural funds.
New rules are due to expire at the end of 2025
The Commission has decided not to propose new EU debt. “We still have a lot of money available, we just have to use it,” said Vice President Valdis Dombrovskis in an interview with the FAZ “That also applies in comparison with the USA.” EU Commissioners Thierry Breton and Paolo Gentiloni and Council President Charles Michel had demanded that the EU take on new debts in order to be able to counteract the US aid quickly.
The amended set of rules for national corporate subsidies, presented by Competition Commissioner Margrethe Vestager, expands the set of crisis rules developed for the economic consequences of the Ukraine war, which already allows for more generous state aid for companies – such as the German “double boom”. Vestager said that the new “crisis and transitional regulations” should enable “targeted and at the same time limited” subsidy payments. The rules are due to expire at the end of 2025. “That is new. And it is a far-reaching change in our state aid policy, even if it will only be in place for a limited time.”
The new rules made it much easier to move taxpayers’ money to individual companies. She is also aware that new risks are emerging for the domestic market, said the Dane. “Some states have more financial ability than others to take advantage of the rules.”
Batteries, solar panels and more
According to a recent analysis, Germany and France spent around three quarters of the business aid approved by the commission because of the Ukraine war. Precisely because of this imbalance, several less financially weak EU states such as Italy have repeatedly demanded that the EU have to go into debt again to promote its own economic development.