EU leaders to debate green subsidies with eye on deal

BRUSSELS — European Union leaders were due on Thursday to debate proposals to enable the bloc to compete with the United States in clean-technology production, with the aim of settling differences such as those over subsidies by March.

The European Commission has proposed loosening rules on state aid for investments in renewable energy or decarbonizing industry and faster approvals of green projects, partly in response to the US Inflation Reduction Act.

Many EU leaders are concerned that local content requirements of the $369 billion of green subsidies in the US legislation will encourage companies to relocate, making the US a leader in green technology at Europe's expense.

"European industries face pressure to install themselves in the United States, so we need an urgent message on clean technology. The EU doesn't just have advantages that don't exist anywhere else, but also act with this plan," an EU diplomat said, without giving his name.

France and Germany have led the push for looser state aid rules, but some EU states argue they will be unable to match the subsidies of the EU's two largest economies, unsettling the EU internal market.

Countries such as the Netherlands, the Nordics, the Czech Republic and Ireland have expressed concern in letters to the EU executive about the risk of excessive nontargeted subsidies and say work to improve the EU single market would be more effective.

"It's a potentially groundbreaking transformation of the EU state aid regime. We think it's all being done too fast and without sufficient analysis," an EU diplomat said.

The diplomat said it looks like the relaxation of state aid rules would take place, but hedged with conditions such as that it should only be temporary and proportionate.

EU leaders will reconvene in Brussels in late March, about the time when the European Commission would have proposed its Net-Zero Industry Act to speed up project or site approvals and the Critical Raw Materials Act, designed to boost processing and recycling in Europe.

On Wednesday, US Treasury Secretary Janet Yellen encouraged the idea of green subsidies by the EU to offset feared harm from the IRA, arguing there is enough business for all to benefit from the clean-energy transition.

"If Europe takes action to put in place subsidies similar to ours, this is good climate policy," Yellen said.

Agencies Via Xinhua