EU greentech funding plan splits blocs over global subsidy race

The new green of the EU Tech The funding plan has raised concerns about an escalating global subsidy race.

This initiative Inflation control lawThe legislation provides $369 billion in subsidies for green technology, primarily through tax credits for “Made in America” products.

This incentive has raised concerns that EU companies will be tempted to redirect investment and production to the US. Critics say the measure amounts to protectionism in violation of existing trade agreements.

In response to this act, the EU this week green deal industrial plan — A roadmap to making the block’s cleantech sector competitive.

The proposal is divided into four pillars: efficient regulation, easier access to finance, enhanced skills and open trade for resilient supply chains. The European Commission said the plan would protect the single market from unfair trade in clean technology while ensuring that extra-block subsidies do not distort competition.

European Commission President Ursula von der Leyen said: “We will work with speed, ambition and purpose to secure the EU’s industrial leadership in the rapidly growing net-zero technology sector. We have a unique opportunity to show the way.” .Europe We are determined to lead the clean technology revolution. ”

The move was generally welcomed by German and French politicians, but not everyone supported it.

“European countries are not equal in state aid.

A particularly divisive proposal is that lState subsidy rules will be relaxed by the end of 2025. Her smaller EU member state fears the move will disproportionately benefit more wealthy states.

There is compelling evidence for their claims. In 2022, the share of Germany and France almost 80% of state aid granted by the Commission under the Emergency Grants Rule.

“European countries are not equal when it comes to state aid,” admitted EU competition chief Margrethe Vestager. on Wednesday.

Critics are also wary of the EU accelerating its subsidy race with the US. Milan Elkerbout, a researcher at the Brussels-based think tank CEPS, warned in November that trade unions should prioritize transatlantic cooperation.

“In any case, there is also the risk of subsidizing sectors that may inevitably shift production in a low-carbon world.” He said.

Politicians in EU member states have their own concerns. The Finance Ministers of Estonia, Finland, Austria, Ireland, the Czech Republic, Denmark and Slovakia a subsidy race, Reuters reported this week. Meanwhile, the governments of Finland, Ireland, the Netherlands, Poland, Denmark and Sweden Concerned State aid divides the internal market and undermines regional development.

Another source of controversy is that new subsidies are drawn primarily from diversions of existing uses. fundraising A program, not a new investment.

There are also compelling arguments in favor of the EU’s approach. Proponents of the plan say there are large enough markets on both sides of the Atlantic. They point out that both the US and her EU can benefit from green technology incentives. Nonetheless, the discord appears to be simmering.

French President Emmanuel Macron Warned in December A “super-aggressive” US law could “divide the West.” But the EU response threatens to split the bloc.