European Union competition chief Margrethe Vestager has proposed a new state aid framework that would help counter “urgent” challenges brought by the United States’ green-subsidy splash, documents seen by POLITICO reveal.
In a letter dated January 13 and sent to EU finance ministers, Vestager hits out at the U.S.’s Inflation Reduction Act, a $369 billion climate-friendly subsidy package. Brussels views the program as a protectionist move that could potentially breach international trade rules.
The U.S. bill “risks luring some of our EU businesses into moving investments to the U.S.,” Vestager writes.
In response, she suggests a new “temporary crisis and transition framework,” which would simplify state aid rules for green projects, and particularly for “all renewable energy technologies.”
Hydrogen and electric-vehicle sectors could also get exemptions for state aid notification requirements under the bloc’s General Block Exemption Regulation.
The new framework, Vestager adds, would also offer “anti-relocation investment aid” in a bid to keep firms from leaving the bloc to seek more favorable conditions abroad.
“I envisage dedicated provisions to support new investments in production facilities, including tax breaks,” Vestager writes.
Vestager is seeking feedback from member countries on her changes, with a deadline of January 25 for their responses. EU finance ministers will meet in Brussels on Tuesday.
