26 January 2023

EURACTIV: ‘We will not sacrifice the single market’ in global race for green subsidies, EU’s Vestager says

The EU executive is currently working on a new “temporary crisis and transition framework” for state aid allowing EU countries to subsidise companies in sectors that are considered “strategic” for the the green transition.

The European Commission has several “red lines” in its drive to simplify state aid rules, including the protection of the EU single market and avoiding a harmful subsidy race within Europe, EU competition chief Margrethe Vestager said on Wednesday (25 January).

The EU executive is currently working on a new “temporary crisis and transition framework” for state aid allowing EU countries to subsidise companies in sectors that are considered “strategic” for the the green transition.

The goal is to make the calculation of aid amounts simpler and approval faster so that investors can take quicker decisions, the Dane explained in a speech to national delegates.

“I am proposing to enlarge the scope of the existing simplified provisions to cover all renewable energy technologies,” she announced.

In addition, the EU executive is considering the introduction of a “new anti-relocation” clause obliging investors in “strategic sectors for the green transition” to maintain production in Europe.

“I envisage dedicated provisions to support new investments in production facilities, including via tax breaks,” Vestager said in what appeared like a tit-for-tat response to the US Inflation Reduction Act.

But in doing all of this, “we will not sacrifice the single market,” Vestager warned. “Because, as said, a well-functioning single market is part of the engine that will make this work,” she said earlier in the day, at the Cleantech for Europe Summit in Brussels.

“The circle we have to square consists of maintaining the single market, preventing fragmentation, preventing relocation of jobs and maintaining a cohesion perspective as to what we do,” Vestager told journalists.

There is growing concern about fragmentation within the European Union as countries with heavier economic firepower, like France and Germany, subsidise their home industries while others may not be able to afford this.

Asked about ensuring the balance between those countries that can afford state aid and those that cannot, Vestager admitted this was a “tricky point”.

“If you look at the aid that has been approved so far under our temporary crisis framework, Germany has had approval for give or take half, France 25%, Italy less than 10% and then you have the rest. And even measured in terms of relation to GDP, it’s not balanced,” she told EURACTIV.

 

Commission

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