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EC Proposes Plan To Stop Businesses From Shifting Investments To US

 |  January 22, 2023

The European Union has stepped on the gas in response to the subsidies that the United States approved this summer to boost the energy transition. 

The EU Commission’s proposal is not yet finalized, but the European executive has already ironed out some of the details. One of them envisions support for “green investments in strategic sectors,” including “tax credits,” as reflected in a document prepared by the Commission’s vice president and commissioner for Competition, Margrethe Vestager, and sent to the economy ministers of the 27 member states. 

The document, which EL PAÍS has seen, includes a letter dated Friday, January 13, and an annex. The text mentions the possibility of creating a new common European fund to support countries in a fair and balanced way.

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Vestager has given member states a January 25 deadline to respond to this letter with her vision on the state aid reform that the Commission is working on. 

The initiative has been launched at the request of the governments themselves, particularly Germany and France. 

The move reflects how alarm has been growing on this side of the Atlantic since August, when the US Congress gave approval to Joe Biden’s flagship Inflation Reduction Act, which contemplates more than $369 billion in aid and includes measures to stimulate electric vehicle production.

At the last European Council meeting held on December 15, EU leaders asked the Commission to make proposals by the end of January 2023 “to mobilize all relevant national and EU tools and improve framework conditions for investment.”

 There is a certain amount of fear that products made in the USA will obtain market advantages thanks to subsidies, but above all, there is panic that businesses may decide to divert their investments in key sectors for the energy and environmental transition (renewables, electric cars, batteries) to the United States, where products must be assembled to be eligible for the subsidy scheme.