The European Commission is making it easier for EU countries to support key sectors in the transition to a carbon-neutral economy. It wants to stimulate investments in the development of clean technologies.

A more favorable subsidy climate should prevent companies from leaving for the United States, for example, where billions of dollars in “green” subsidies are available.

The EU Executive Committee warns that the new measures are temporary in nature. For example, under certain circumstances, member states may provide government aid until December 31, 2025 for “strategic” production, such as batteries, solar panels, wind turbines, heat pumps, electrolysis, and carbon utilization and storage. The committee hopes for faster deployment of renewable energy, energy storage and the decarbonization of industrial production processes.

Read also | The EU will temporarily relax state aid rules

Inflation Reduction Act

The regulation issued by Brussels is in response to US President Joe Biden’s Inflation Reduction Act (IRA). By giving “green” subsidies to businesses, Biden hopes to mitigate high inflation. However, the upshot is that companies from outside the United States can also claim subsidies. The fear from Brussels is that this will weaken the competitive position of companies in the European Union and companies may leave or move their production to the United States.

The latter seems to be slowly becoming a reality. For example, the German hydrogen company Thyssenkrupp Nucera has already stated that it is considering increasing production in the United States because of the IRA. Audi, Schaeffler and Northvolt are also considering increasing their presence in the United States.