Brussels will relax the rules to give States more room to grant aid for the green transition

The European Commission is finalizing its formulas to compete with the United States and its subsidies to promote the energy transition, which may have as a side effect the flight of companies from the EU to the US to benefit from the aid. Brussels proposes relaxing the rules so that the Member States have more room and autonomy to distribute state aid for the green energy transition. The measure is intended to increase green spending and the competitiveness of EU companies, and is part of a large plan that the President of the Commission, Ursula von der Leyen, will send to the countries this Wednesday and to which she has had access THE COUNTRY.

The proposal, which wants to deal with multimillion-dollar aid from Washington, but also from China —which has billions of euros in often opaque subsidies—, which it mentions directly in the draft of the communication, also proposes rules of more flexible state aid on tax credits for green investments. This measure was already proposed at the beginning of January by the Competition Commissioner, Margrethe Vestager, in a letter to the States, advanced by this newspaper. A formula not far from that proposed by the US Inflation Reduction Act (IRA), which simplified the rules for federal tax credits.

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It also puts other elements on the table, such as the expediting of permits for clean technology producers —with renewable hydrogen and batteries other key industrial technologies to meet the objectives against the climate crisis. In addition, it adds measures that were already kicking in independently, such as the drafting of a new law on critical raw materials, aimed at guaranteeing access and security of supply —even facilitating extraction—, or initiatives to promote specialized employment. These include promoting reciprocity for access to public procurement markets in non-EU countries.

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Current regulations dictate that Member States have a margin of autonomy to spend and grant national and European aid up to a certain amount in euros, depending on what. If we talk about regional development aid, for example, countries must inform and consult the Commission if the item to be delivered is more than 20 million euros; The autonomy limit to have aid for participation in fairs for SMEs is 7 million euros. What Brussels is proposing now is to reclassify these scales and raise the ceilings so that Member States have more flexibility to spend without asking for permission and also save time and bureaucracy. A formula that can favor countries with the deepest pockets, such as Germany or France, which also already account for 77% of the aid to companies due to the crisis in Ukraine: of the 672,000 million euros budgeted for aid by the Commission, 53% correspond to Germany and 24% to France (Italy would be the third, 7.6%. Spain, the fourth economy in the euro, is on that list at an abysmal distance, barely 1.7% of the total).

Lately, the recipe of the European Commission is to make the rules of access to aid more flexible. He already raised it in October, with a very relevant change in the legal framework to relax the rules on State aid and allow the rescue of large energy companies in trouble due to the crisis, too strategic to fall into the midst of an economic war for gas and oil . And with that premise, it also plans to make the scales more flexible to facilitate subsidies for elements such as hydrogen, zero-emission vehicles, energy efficiency measures or carbon capture. A measure in line with Spain’s proposal, according to a letter sent by Vice President Nadia Calviño to Brussels on Friday. The European Commission estimates that the industry needs to invest 170,000 million euros by 2030 in plants for the production of solar energy, green hydrogen, batteries, heat pumps and wind energy.

The Brussels plan is fundamentally based on reclassifying the money that exists in some funds and programs that already exist, in order to guarantee and make their spending on green energy more flexible, as Paris and Berlin also want—frugal when it comes to putting European money in a common basket. However, although it does not specifically include it, it leaves the door open to putting fresh money on the table through formulas such as a European Sovereignty Fund that would arise from the review of the multiannual budgetary framework, but that could also be nourished by a reorganization of items .

This fund, says Brussels, is a “medium-term” solution set as a ceiling for the summer of 2023 and that could occur during the semester of the Spanish presidency of the EU, which begins on July 1. “To avoid fragmentation of the single market due to different levels of national support, and different capacities to deliver such support, there must also be adequate funding at EU level to facilitate the green transition across the union,” says the proposal.

“The industrial era of net zero emissions will be decided by the measures that are taken today,” says the draft of the text, which is still under discussion among the Commission teams. Among the commissioners who deal with these issues, as among the countries, there is division on which is the best of the solutions: some want to reclassify items —review how much there is in programs that are barely used due to the difficulty of absorbing the money and reordering them— and use that money in the green transition, also opening the hand in terms of the conditions; others plan that the solution is to put in new money.

Von der Leyen points out that he will present a broader strategy to boost long-term competitiveness in March – when the single market celebrates its 30th anniversary – as requested by the European Council.

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