EU Boosts Green Investments: How to Benefit
TL/DR –
The European Commission (EC) has amended its State aid framework to support the Green Deal Industrial Plan for the Net-Zero Age, part of the broader European Green Deal aiming to make Europe climate-neutral by 2050. The Net Zero Plan includes legislative proposals and initiatives that simplify the regulatory environment, accelerate funding, enhance skills for the net-zero transition and promote open trade for resilient supply chains. It also responds to clean tech investment incentives created by the US Inflation Reduction Act, offers new opportunities for companies to benefit from State aid and other financial support and addresses the increasing economic competition in the transition to a net-zero economy.
EU Boosts Green Subsidies – Benefit from New Support for Sustainable Investments
On June 23, 2023, the European Commission (EC) enhanced its State aid framework to back the “Green Deal Industrial Plan for the Net-Zero Age” (Net Zero Plan). This move is part of the larger European Green Deal, which strives to make Europe the first climate-neutral continent by 2050. The EC also plans to lead global hydrogen production, similar to its previous renewable energy and energy efficiency initiatives.
The Net Zero Plan outlines numerous legislative proposals and non-legislative initiatives, including modifications to the EU State Aid framework. The four main objectives of the Net Zero Plan are:
- Streamlining regulatory environment;
- Facilitating access to substantial funding;
- Developing skills for the net-zero transition; and
- Encouraging open trade for resilient supply chains.
The modifications to the State Aid framework also aim to counter the cleantech-related investment incentives created by the US Inflation Reduction Act (IRA), offering new opportunities for companies to benefit from State aid and other financial support. The EC proposal for a Net-Zero Industry Act (NZIA) is currently in the trilogue phase of the legislative process, and the Critical Raw Materials Act (CRMA) is due to be formally adopted soon. In March 2023, the EC outlined its plans for the European Hydrogen Bank (EHB), intended to support the production and uptake of renewable hydrogen in the EU (read more here), and published terms for the upcoming EU Hydrogen Bank pilot auction on August 30.
Funding for Net-Zero Industry Increases
Funding for the European Green Deal can come from EU Member States, the EU itself, and private investment. Member State funding must comply with EU State aid rules, and be approved by the EC before the funding is granted. The State aid General Block Exemption Regulation (GBER) exempts Member States from this notification obligation, provided all GBER criteria are met.
In response to global economic competition and increasing demand for raw materials and products for a net-zero economy, the EC revised the State aid GBER to increase aid thresholds and exempt aid measures. The key sectors expected to benefit from these amendments include Hydrogen, Carbon capture and storage, Zero-emission vehicles, Energy-efficient buildings, and Recharging and refuelling infrastructure.
To enhance Member State flexibility, the EC transformed the Temporary Crisis Framework into the Temporary Crisis and Transition Framework (TCTF), which will remain in place until December 31, 2025. The key changes will simplify aid for renewable energy, facilitate aid for decarbonisation, support new investments in strategic net-zero sectors, and enable Member States to match aid offered by a third country to competitors outside the EU, subject to certain safeguards.
The EC and the European Investment Bank (EIB) will redirect financial resources already available under US Economic News