Proposed use of pressure tax credits in response to President Biden’s $369 billion green grant program in the United States. The EU plans to relax state aid rules to increase renewable investment. Proposed use of pressure tax credits in response to Biden’s $369 billion green grant program in the United States. The EU is stepping up its green subsidy race with the US through a plan to relax state aid rules for tax credits for renewable energy projects. European policymakers have been under pressure to respond to US President Joe Biden’s $369bn (£298bn) Inflation Reduction Act, which aims to encourage renewable investment in everything, from electric cars to wind turbines.

The European Commission plans to relax state aid rules to allow investment in manufacturing facilities in green industries, according to the draft plan. EU member states are divided on whether to introduce the new rules and when, according to the Financial Times, which first reported the plans. The draft proposals reportedly suggest some €800bn (£705bn) Covid-19 recovery funds could be redirected towards tax credits. The tax benefit provisions will allow member states to align their national financial incentives in a common scheme, and thus provide greater transparency and predictability for businesses across the world. across the EU, the draft said. The European energy system has come under intense scrutiny since Russia’s invasion of Ukraine and Moscow, followed by a regulation of gas supplies into Europe.

Brussels intends to set new targets for green industrial capacity and simplify the approval process for renewable projects. It plans to increase the extent to which transactions are scrutinized by the Commission under state aid rules. Biden’s new rules, introduced last fall, have invigorated the renewables market in the US, leading to a wave of new projects. The president hailed the legislation as the biggest climate step forward ever when he signed the bill last year. It is estimated that the legislation could reduce U.S. emissions by about 40% by 2030, compared with 2005 levels, bringing Biden close to his goal of cutting U.S. emissions by the end of the decade. Companies, investors and politicians have called on Europe and the UK to follow suit, with Jozef Síkela, Czech Minister of Industry and Trade, equating the US program with doping in sport.

In the UK, ministers have been accused of discouraging renewable energy investment by extending a wind tax on northern oil and gas companies to power producers, including wind and energy projects. sun for old contracts. Chris Hewett, chief executive of industry body Solar Energy UK, has accused the government of providing more generous tax terms for oil and gas projects and of tilting the playing field against renewables. Meanwhile, Shadow Climate Change Minister Ed Miliband said a Labor government would form an anti-OPEC coalition of nations dedicated to renewables, to lower energy prices and boost industry. clean technology. On Monday, oil and gas company BP said global carbon emissions are expected to fall faster than in the past as a result of the war in Ukraine and Biden’s efforts to encourage green investment.