The European union has proposed simplified rules to make clean tech production easier.

Posted on 07 February 2023

​In an effort to catch up to the US green initiative, the European Union has announced tax credits and domestic subsidies to companies to help accelerate the production of clean tech in the EU.

The plan will enable the bloc to avoid strategic dependencies on vital clean technologies and will be achieved through diversifying suppliers and developing local production opportunities.

This initiative could ease state-aid rules, which allows more competition with the US and their inflation reduction act. However, concerns have been raised that this could unfairly advantage those wealthier countries.

“We need to be cautious in relaxing state-aid rules,” Italian Prime Minister Giorgia Meloni told reporters. “We should help companies but we can’t risk weakening the single market — we should guarantee a level playing field.”

The proposal is set to be discussed in Brussels next month with 27 of the EU member states. A plan for a fund to help finance innovative sectors, initially proposed in September, should come into play by the summer of 2023.

Some of the key points in the proposal include the following:

A net-zero industry act: The act will simplify regulations and speed up permits. It will also promote cross-border projects.

Support for new investments in factories in crucial green sectors. This includes tax benefits which match what third countries are offering.

Increase the threshold for notifying the commission support in sectors such as hydrogen or clean vehicles and simplify the procedure for Important Projects of Common European Interest.

The bloc would establish a critical raw materials club bringing together consumers and resource-rich countries to develop common principles.

The EU has requested that the US make changes to their law so that European companies have more flexibility to take advantage of the available credit. However, it is becoming increasingly unlikely to transpire. As a result, the EU is looking for a way to protect the European industry directly.

While these subsidiary rules are to be formalised, it is still vital that they do not disadvantage smaller and developing countries.

“We need no excessive extension of EU subsidies,” German Finance Minister Christian Lindner told reporters. “Subsidy rules must be more agile, we must reach decisions more quickly, but we don’t need any excessive extension of subsidies in the European Union.”

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