State aid rules underpinning the Clean Industrial Deal aim to boost renewable power, decarbonization and clean tech.
BRUSSELS – New European Union state aid rules would allow governments to speed up aid to renewable energy, help pay the costs of industrial decarbonization and stoke demand for clean-tech products.
The European Commission is seeking feedback by April 25 on its proposed state aid framework to support the Clean Industrial Deal, aiming to finalize the subsidy rules in June.
The rules also open up more support for industries to invest in hydrogen to decarbonize, which could help steelmakers and other energy-intensive industries who are complaining about heavy demands in meeting new climate rules and paying higher energy bills.
“Today’s proposal aims to ensure that Member States can provide support – where needed – to accompany the ambitions of the Clean Industrial Deal without causing undue distortions of competition in the Single Market,” Commission Executive Vice President Teresa Ribera said in a press release.
The document said that considerable investment will be needed for Europe’s decarbonization effort “and for which funds will need to be mobilised, mainly from private sources, but, where necessary, incentivised or complemented by public funds.”
It aims to attract “risk-averse” pension funds to such investments by encouraging programs where governments can reduce investment risks.
Industry investments in decarbonization could get state aid of up to €200 million, up to 50 percent of the cost of a project that enables the use of hydrogen, up to 35 percent for renewable energy projects and 30 percent of carbon capture equipment.
To roll out programs more quickly, aid for renewable hydrogen and other “less mature technologies” could be granted without a tender. Governments must insist that hydrogen investments mostly use renewable hydrogen.
Notably, the document says that investments to cut industrial emissions will be considered for state aid “irrespective of the technological solution used,” as long as the proposed option can deliver certain climate-friendly outcomes. The language is a nod to the “tech neutral” approach the Commission has increasingly taken in recent months, bending to pressure from industry and major EU capitals.
To help demand for clean tech products – such as batteries, heat pumps and solar panels – the rules also call for EU governments to introduce tax incentives to help demand for clean tech assets “in the form of accelerated depreciation, including immediate expensing.” Clean tech manufacturing aid can also be given for producing key components and critical raw materials.
The Commission suggests capping subsidies for clean-tech manufacturing at €75 million per project, down from €150 million under a current program.
It also sets a €350 million limit for loans and caps state guarantees at €525 million for clean-tech businesses in some regions, part of a range of measures that also allow governments to pay up to 50 percent of investments in equipment or machinery using hydrogen and 35 percent for equipment to produce renewable energy.
The rules allow EU governments to match subsidies offered by a non-EU country to lure a project overseas. The rules specifically say they can’t back a project relocating within the EU.
The proposal aims to replace the current Temporary Crisis and Transition Framework and be in force until 2030.
Cory Bennett contributed reporting to this article.
