The European Union (EU) is planning to relax state aid rules on tax credits for renewable energy projects in a bid to compete with the United States in the green subsidy race.
The move comes as a response to the Inflation Reduction Act of the US President Joe Biden, which aims to increase investments in renewable energy projects from electric cars to wind turbines, worth $369 billion.
Draft plans suggest that the EU intends to allow investment in green industries, even in production facilities. The provisions would enable member states to align their national fiscal incentives on a common scheme, offer greater transparency and predictability to businesses across the EU.
The proposals also seek to set new targets for green industrial capacity, increase the level of scrutiny for deals under state aid rules, and simplify the approval process for renewables projects. Biden’s initiative has already helped reinvigorate the renewables market in the US, and it is hoped that the EU will follow suit, and contribute to reducing carbon emissions globally.
