National governments will be given more leeway to subsidise large renewable energy infrastructure and other clean tech projects, in a potentially significant easing of European Union rules around state aid, in order to boost industry.
The changes are part of a series of big-ticket plans announced by the European Commission on Wednesday, which saw the EU executive commit to cut back on regulations, reduce energy costs and row in closer behind industry.
The commission’s “clean industrial deal” proposes changes to state-aid rules, which traditionally prohibit EU states from throwing public money behind companies and industries.
The proposals would make it easier for national governments to subsidise renewable energy projects and clean tech companies, as well as help domestic industries “decarbonise” and become more green.
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“The text of the new state-aid framework will be sent to member states in the coming days, with the hope to have it adopted by June 2025,” one EU source said.
The proposed new rules will be studied closely in EU capitals, particularly in smaller states such as Ireland that fear losing out to bigger member states in any subsidy race.
The industrial plan floats the idea of EU states clubbing together when buying critical raw materials, such as lithium and cobalt, replicating successful joint efforts to purchase vaccines during the Covid-19 pandemic.
Public contracts would also no longer be awarded solely on the basis of who offered the best price, but in future give greater preference to bids from European companies that could prove they were more sustainable.
The plan seeks to offer greater support to Europe’s industrial base, while at the same time not reneging on EU commitments to transition towards climate neutrality.
However, as part of efforts to help businesses, the commission said it was paring back regulations that would make companies report on their environmental impact. The changes mean new sustainability reporting rules will only apply to an estimated 10,000 big companies, rather than about 50,000, as intended when the law was passed by the EU in recent years.
Another law requiring companies to screen their supply chains for human rights abuses or environmental pollution is also being delayed.
Wopke Hoekstra, the EU commissioner for climate action, said the changes did not mean Europe was “turning our backs” on efforts to reduce emissions. “We know that at the same time we cannot do this without bringing business and industry much more closely on board,” he told a press conference in Brussels.
“The car manufacturing industry is one of the most important, some would say the most important sector in the European Union full stop. It is pivotal to the economic output of some six, seven, eight, nine member states, it creates millions of jobs directly and indirectly,” he said.
EU states are set to come under pressure to do more to reduce household energy bills, by lowering the amount paid in monthly bills that goes toward tax and network charges.
The commission is looking for governments to speed up the time it takes local authorities to decide on applications for renewable energy projects, from wind turbines to electric vehicle charging points. Planning authorities must make a “major effort” to make quicker permitting decisions around energy grid infrastructure and other clean energy developments, an affordable energy plan published by the commission stated.
At present it can take years or “decades” for businesses to get the green light for big energy projects, said EU energy commissioner Dan Jørgensen. This should be brought down to six months for straightforward applications, and no more than two years for bigger, more complicated projects, he said.
