Washington’s $430 billion plan for green energy subsidies has turned up the temperature on the European Union’s simmering debate about picking industrial winners and losers. Politicians across the EU are furious at the U.S. Inflation Reduction Act and its host of provisions which favour domestic suppliers. That’s given European Commission President Ursula von der Leyen a prime audience for her proposed sovereignty fund, a financing vehicle to help small countries keep up with their bigger and wealthier peers. The lack of specifics so far underscores the precarious nature of her leadership effort, first put forward in September. While EU members would love to loosen the purse strings on industrial assistance, they are leery of handing over more power to Brussels.
European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, September 28, 2022. REUTERS/Yves Herman/
BRUSSELS, Dec 14 - Washington’s $430 billion plan for green energy subsidies has turned up the temperature on the European Union’s simmering debate about picking industrial winners and losers. Politicians across the EU are furious at the U.S. Inflation Reduction Act and its host of provisions which favour domestic suppliers.
The European Commission is the main gatekeeper on state aid, which the EU limits to protect fair competition in the single market. The Covid-19 pandemic and Russia’s full-scale invasion of Ukraine prompted the Commission to allow governments to temporarily support certain industries. The EU also revised itson helping out green investments in early 2022. It thus holds the power to decide whether or not countries can help out local champions.
. The government in Berlin is providing 99 billion euros to help households and small businesses weather the worst effects of spiking energy costs. The free spending has sparked concerns of a handout war with other European countries, particularly given the EU’sVon der Leyen wants to create a central pot of money to provide catch-up funds to smaller countries.
Relaxing EU state aid rules fairly won’t be easy, and Europe will need a clearer industrial policy beyond handing out cash. Though U.S. President Joe Biden has promised
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