The EU Response to IRA.
This February the European Commission unveiled its Green Deal Industrial plan to respond to US IRA to ensure that it remains competitive on green growth. Although details on the measures to accelerate the uptake of green tech are still missing, the debate in the EU on the relaxation of state aid to match the IRA competitive subsidies is quite heated.
The plan includes a new Net-zero Industry Act – possibly presented in March - to speed up the roll out of clean technologies, by mainly identifying specific technology capacity goals by 2030, accelerating permitting procedures, and setting-up new EU standards for key tech. On financing, state aid rules will be eased until 2025, while roughly 250 billion euros from the existing REPowerEU programme will be re-oriented. A new EU Sovereignty Fund is also in the pipeline. Some Member States fear that excessive use of state aid will benefit only those countries with larger fiscal capacity such as France and Germany, endangering the integrity of the single market. And this dispute may prevent the law to move forward. The plan also focuses on skills – enhancing those sectors for green transition - and trade – supporting cooperation in key clean tech, and boosting Free Trade Agreements (i.e., with India).
Overall, EU industry warned against a subsidy race but welcomed the Commission’s intention to respond to IRA. Given the IRA’s use of tax credits, observing the EU’s more flexible use of subsidies, is essential to understand UK’s potential response and position in the international debate. The CBI will continue monitoring further developments and welcomes feedback from its members on this new EU plan.
Implementation of the IRA in the US
Talk about the Inflation Reduction Act (“IRA”) is all the rage in policy circles at the moment. And rightly so, it is a massi
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