Leaked European Union proposals reveal the bloc is to expand state aid rules in an effort to counter US green energy subsidies and unfair competition from China that are threatening European industry. The EU is to present its proposals on Wednesday.
President Joe Biden’s historic spending bill for $370 billion in energy transition subsidies, including tax breaks for US-made electric automobiles and batteries.
Next week, EU leaders will gather in Brussels to debate the bloc’s response to the Inflation Reduction Act, which they claim discriminates against companies exporting to the US.
It is expected that the IRA may entice European enterprises to relocate across the Atlantic, causing job losses and factory closures in the critical green technology industry.
Controversial response
However, loosening EU state aid rules has divided EU nations because less wealthy states would not be able to pour big money into businesses, leaving the single market fragmented.
The European Commission’s leaked response was worked out against a backdrop of disagreement on how best to protect Europe’s businesses, and fears of triggering a trade war.
EU Commission President Ursula von der Leyen said the EU was pushing Washington to make exemptions for European companies, adding that: “Even more significantly we are facing unfair competition in the clean tech sector from China”.
A significant point of contention is a new sovereignty fund proposed by EU Commission President Ursula von der Leyen but opposed by some members including Denmark and Finland.
Draft proposals seen by AFP suggest the fund idea will be jettisoned in the short term but state aid rules will be extended to the green technology sector.
The bloc’s 27 members have already committed 250 billion euros to the green transition in national recovery plans.
AFP
