With plans to relax the rules regarding state aid for tax credits for renewable energy projects, the EU is intensifying its green subvention race with America.
European policymakers are under pressure to react to the US President Joe Biden’s $369bn Inflation Reduction Act (PS298bn), which encourages renewables investment in everything, from electric cars to turbines.
According to draft plans, the European Commission intends to relax state aid rules in order to allow investment into green industries.
According to the Financial Times, the EU member states are split over whether or not to implement the new rules.
According to the draft proposals, some of the EUR800bn (PS705bn recovery fund) could be used for tax credits.
The draft stated that the provisions regarding tax benefits would allow member states to align their fiscal incentives on a single scheme and offer greater transparency to businesses across Europe.
Since Russia’s invasion in Ukraine and Moscow’s subsequent throttling gas supplies to Europe, Europe’s energy system is under constant scrutiny.
Brussels will set new goals for green industrial capacity, and streamline the approval process for renewables project approvals. It will increase the scrutiny of deals by the commission in accordance with state aid rules.
Biden’s rules, which were introduced last autumn, have reenergized the US renewables market, resulting in a wave of new project launches. The president hailed the legislation as ” the biggest climate change step forward.
It was believed that US emissions could be reduced by 40% by 2030 compared to 2005 levels. This brings Biden closer to his goal of halving US emissions by the end the decade.
Investors, politicians, and companies have called on Europe and the UK for the same. Jozef Sikela (Czech minister of industry and commerce) equated the US program with ” doping within sport”.
Ministers in Britain have been accused of discouraging investment in renewables by extending windfall taxes on North Sea oil companies to electricity generators. This includes wind projects on older contracts.
Chris Hewett is the chief executive officer of the industry body Solar Energie UK. He has accused the government with offering more generous tax terms for oil and gas projects, and “tilting to renewables”.
Ed Miliband, shadow secretary for climate change, has stated that a Labour government will form an “anti Opec” alliance with countries committed to renewables to lower energy prices and promote clean tech.
Monday’s announcement by the oil and gas company BP that global carbon dioxide emissions would fall faster than expected was a result the war in Ukraine, and Biden’s efforts to promote green investment, came Monday.