January 27, 2023

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Massive subsidy package attracts US green industry – and now the EU is responding

Since January 1st, the giant US aid package (IRA) has been in effect. $370 billion in tax credits for investment in green energy attracted European industry to the United States. The European Union is now planning a response. EU finance ministers will meet on Monday and Tuesday. On Friday, EU Competition Commissioner Margrethe Vestager sent a letter to finance ministers expressing the idea of ​​making the temporary arrangement permanent. you ask in the letter, As Euroactive writes, To get the first reactions of finance ministers on such a proposal during this week’s meeting.

include Norway

These exemptions will be included in Norway’s state aid rules as part of the European Economic Area Agreement. Norway is already in dialogue with the European Union on this matter. The challenge from the United States was the theme of the dinner hosted by Prime Minister Jonas Gahr Stoer and Presidents Emmanuel Macron and Ursula vom der Leyen in Paris before Christmas, energy and climate. At the table in Paris, it was emphasized that this concerns the protection of the internal market in the European Union, of which Norway is a part through the European Economic Area.

What Vestager is proposing would give EU member states the opportunity to subsidize renewable energy more easily and make skid and tax cuts so that companies in strategically important and risky sectors can move operations to countries outside the EU.

High activity

It is exactly the last thing to fear from the US package of support called the Irish Republican Army.

EU Commissioner for the Internal Market Thierry Breton visited many of those countries Who now fear that the industry will decline, such as Poland, Spain and Belgium. The committee has this high on the agenda. European Commission President Ursula von der Leyen is expected to provide more details when she addresses the World Economic Forum in Davos, which will take place from January 16-20.



Undermining the single market?

How the EU will meet the challenge from the United States is dividing member states. A number of economically weaker member states would like EU-level funds. While those who are net shareholders in the EU have little appetite for more money or for the EU to borrow more money.

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Under the temporary regulations, €670 billion in subsidies has already been paid into the EU. The money is used to stem rising energy prices and the impact of the loss of Russian gas. But this is unevenly distributed. Germany, with its large support package, accounts for more than 50 percent, France 24 and Italy 7 percent. The other 24 member states “share” the rest.

The difference in the level of support among the member states is a challenge for the internal market. The criticism of the German aid package was precisely that Germany undermined the principle of equal competition in the EU’s internal market.

Germany and France support opening up to give member states the opportunity to spend more on national plans.

at the summit table

The transatlantic trade war will be a hot topic at the EU summit on February 9-10. This has been It was informally discussed during the December summit. The EU’s response to the IRA is an issue that will dominate the agenda of the Swedish EU presidency for the next six months.

The article was first published on energy and climate.