Green subsidies to keep European companies ahead

The EU’s Heads of State and Governments met in Brussels last week, and while the visit of Ukrainian President Zelenskyy rightfully took the attention of the headlines, there were also meaningful discussions running in parallel that will influence the way the EU does business, specifically targeting the clean-tech industry. 

The leaders decided to relax the joint state aid rules so that, in the future, Member States can provide “targeted, temporary and proportionate” subsidies to the green technology companies around Europe. This is designed with the clean tech sector in mind after both the US and China ramped up investments in the area. The latest news is that the US has invested around €343 billion in supporting its fast growing clean-tech companies.  

Cleantech companies involved with renewable energy, such as wind and solar, are suggested as likely inclusions in the EU’s new measures. The President of the Commission, Ursula von der Leyen, stated at the press briefing following the meeting that this relaxation of state aid rules is to maintain the head start the cleantech industry in Europe already has when it comes to innovation and competitiveness. Less prominently mentioned, another reason behind relaxing the rules is to ensure that European companies do not move their businesses out of the EU to gain both more state aid support and favourable tax reductions elsewhere on the global market.  

The next step is for the European Commission to prepare a proposal that will be discussed and approved at the next EU summit towards the end of March. This task will fall into the hands of Commission Vice-President Margrethe Vestager, and she is acutely aware that she will need to find a delicate balance. It will not be an easy task. State aid rules are both complex and exist as a compromise to ensure that the Member States have an equal playing field against one another in the EU. The Commission will need to interfere with the core rules and pillars that uphold the internal market. Moreover, there is a large risk of undermining those Member States that cannot afford to spend taxpayers’ money on supporting green companies. The Council Conclusions state that the new rules must not have negative consequences for the internal market, but finding that balance will be tricky.  

Besides relaxing the state aid rules, the Council Conclusions mention that there should also be new EU-level funding, adding to the competitiveness of the EU’s clean-tech strategy but also able to mitigate the impacts and risks of state aid on the cohesiveness of the internal market. The EU’s funding should be distributed fairly and with equal access, but also facilitate access to other financial sources. The European Investment Bank is named specifically as one such source.   

It is also interesting to look at what was purposefully not mentioned in the conclusions. We know that there were discussions on the financing of the proposal – posing the question of whether the EU should go for another round of joint borrowing, which is a highly controversial discussion among the Member States, or which alternatives should be put on the table. This question is also left open for the Commission to interpret and present a solution at the next meeting.  

The new rules and sources of funding for cleantech companies should make companies working in these sectors look to Brussels in the coming months – both to seek funding and to influence the political debate, to make sure they benefit from the new opportunities. If your company is looking for help to do that, Lykke Advice has great experience with exactly that, and we are ready to help you. 


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