Fast track and flexibility: EU relaxes state aid for the green economy

Brussels – The more you invest in the green industry, the more you are subsidized. It is not a slogan but a political, industrial, and strategic objective. The European Commission wants a green economy, and it does so by proposing a reform of the rules on state aid in five areas considered crucial to fostering the implementation of the European sustainability agenda. According to the proposal, simplification and a loosening of regulations will apply to the introduction of renewable energy and low-carbon fuels, the temporary reduction of electricity prices for high-energy-consuming users—to ensure a transition to low-cost clean electricity—and the decarbonization of existing production facilities.

Furthermore, there will be fewer legal constraints for developing clean technology production capacity in the EU. Lastly, there will be a de-risking of investments in clean energy, decarbonization, clean technologies, energy infrastructure projects, and projects supporting the circular economy.

Fast-tracks, flexibility, and support: the Commission’s measures

More specifically, the EU executive-defined framework provides a “fast track” for the roll-out of clean energy. Whether renewables or low-emission alternative fuels, including blue and green hydrogen, these will be facilitated through fast-track procedures to allow even faster implementation of the Clean Industry Plan.

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For energy-intensive users, governments may grant electricity price support to companies operating in sectors particularly exposed to international trade and highly dependent on electricity for their production (energy-intensive users). This will allow Member States to reduce electricity costs by up to 25 percent of the final cost for three years for energy-intensive users who face higher costs than competitors in regions with less ambitious climate policies. In return for the price support, companies will have to invest in decarbonization for an amount equal to at least half of the reduction in their bills.

Furthermore, the EU executive proposes flexible support for investments in all technologies leading to decarbonization or increased energy efficiency. This means support for electrification, hydrogen production and use, biomass, and carbon capture and storage. Support may be granted based on predefined aid amounts (for support up to EUR 200 million) or a competitive tendering procedure.

Concerning the production of clean technologies, the state aid framework allows national governments to support investments in new production capacities for all manufacturing projects in technologies covered by the Net-Zero Industry Act. This support can be given through schemes or individual production projects in net-zero-emission technologies, where necessary, to prevent such investments from being diverted outside Europe. Member States may provide more support for projects in less favored regions to safeguard cohesion between European regions, as defined in regional aid maps.

All this is in a communication, an act that is by nature non-legislative. In the present case, it is not an informal proposal but a policy guidance document. “The new framework simplifies and speeds up support for decarbonization, but it goes further: it recognizes the state as a strategic investor in our future,” said Teresa Ribera, Executive Vice-President of the EU Commission, responsible for Clean and Competitive Transition.

The European Greens welcomed the initiative. “This new state aid framework for EU industry was necessary to accelerate the transition to a net-zero economy and send the signal that the re-industrialization of Europe goes hand in hand with achieving the climate neutrality agenda,” said Sara Matthieu, member of the European Parliament’s Industry Committee. “However, we regret that the Commission has now broadened the scope to include nuclear energy,” she criticizes, returning to the issue of atomic energy included in the taxonomy — the classification system for green sources.

English version by the Translation Service of Withub