"BRUSSELS -- The European Union's executive body set out a road map for competing with American green subsidies with a range of tools that could include coordinated tax rebates and the ability to match certain U.S. incentives on a dollar-for-dollar basis.
The European Commission published a document Wednesday laying out its proposals for supporting Europe's clean-tech industry and preventing what some officials fear could be a wave of decisions by European companies to shift their investments to the U.S.
The commission's ideas are set to be debated by European leaders at a summit in Brussels next week.
"Europe is determined to lead the clean-tech revolution," said European Commission President Ursula von der Leyen. Better access to finance would allow the bloc's green industries to scale up quickly, she said.
The U.S. Inflation Reduction Act, which includes $369 billion in incentives and funding for clean energy, has pushed Europe to reconsider how it approaches industrial policy. European countries are divided about how to respond to the U.S. subsidies, with some favoring heavy spending and others calling for restraint.
The commission said any new measures to loosen the bloc's subsidy rules should be targeted and temporary.
One provision suggested by the commission could allow governments to directly match certain green subsidies offered by the U.S. European competition chief Margrethe Vestager said that means that if a company was offered $1 billion to build a new battery factory outside Europe, "a member state could offer the same."
The matching subsidies program would have several conditions, Ms. Vestager said. A business would have to show how it could benefit from a subsidy from the U.S. or another country, and any matching funds would have to benefit more than one European country.
Commission officials say they don't want a subsidy race with the U.S., but add that a response will be needed to blunt the impact of the U.S. incentives and ensure the bloc remains globally competitive.
The commission said it wants to increase the value of certain types of subsidies that European governments can offer without seeking prior approval from the executive body. The higher limit could apply to several clean-tech sectors that are poised to benefit from the U.S. IRA, the commission said, such as hydrogen, carbon capture and storage, and electric vehicles.
EU-level funding also would be needed to avoid a situation where wealthier countries such as Germany and France significantly outspend their neighbors, the commission said. It said the funds could in the short term come from existing pots of money, such as a previously established pandemic-recovery program." [1]
1. World News: Bloc Details Plan to Counter U.S. Subsidies
Kim Mackrael. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 02 Feb 2023: A.8.
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