EU cannot solve the issue of state aid
2023.01.14 09:36
EU cannot solve the issue of state aid
By Kristina Sobol
Budrigannews.com – As the bloc considers measures to prevent the United States from luring investment away from its green energy subsidy package, the European Commission asked member states for input on proposals to ease state aid rules by January 25.
In a letter to member states that was seen by Reuters, Commission Vice-President Margrethe Vestager stated, “We need a strong European response.”
The 27-nation bloc is concerned that the generous tax breaks in Washington’s $430 billion (400 billion euros) Inflation Reduction Act (IRA) could deter European car manufacturers and green technology developers from doing business there.
Ursula von der Leyen, President of the European Commission, stated in December that the EU would modify its state aid regulations to prevent an exodus of investment triggered by the US package.
According to Vestager, the Commission had already accomplished a lot by approving 672 billion euros, or $728 billion, in state aid as part of a crisis mechanism that was established after Russia invaded Ukraine.
She stated that Germany had reported 53% of the funds to the EU, France had reported 24%, and Italy had reported over 7%.
In her letter, Vestager suggested making alterations to the current crisis mechanism, such as expediting the approval process and simplifying the aid amount calculation.
She wrote, “I am proposing to expand the scope of the existing simplified provisions to cover all renewable energy technologies and to provide member states with simpler options to quantify the amount of aid they can grant to each project.”
Additionally, Vestager recommended creating the possibility of a relocation assistance for environmentally friendly investments in strategic sectors.
In her letter, she stated, “I envisage dedicated provisions to support new investments in production facilities, including through tax breaks.”
“The goal of these new provisions is to stop investments from being unfairly diverted to third countries outside of Europe,”
According to Vestager, this assistance ought to be proportionate in terms of aid amounts, limited in duration, and targeted at those industries that truly face such risk.
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