The European Union (EU) has decided to provide subsidies at the same level as those given to third countries in order to foster the domestic green industry in response to the United States' Inflation Reduction Act (IRA).
On the 9th (local time), the European Commission adopted and decided to implement the "Temporary Crisis and Transition Framework," which includes easing regulations related to subsidy payments until the end of 2025.
The EU plans to revise existing subsidy regulations to support smooth financing so that companies related to key clean technologies such as batteries and solar panels continue to invest in Europe.
First, the EU will introduce a "matching subsidy." The matching subsidy system refers to a method where EU member states pay companies at risk of shifting investments outside the EU the same amount that the companies would receive from third countries. However, if the "funding gap"?the amount of funding shortfall during the company's investment process in the European Economic Area (EEA)?is smaller than the matching subsidy, member states can cover the funding gap.
In addition, support conditions for clean technologies still in the development stage, such as renewable hydrogen, will be simplified, and measures such as raising support limits and simplifying subsidy calculation methods will also be implemented starting today.
Margrethe Vestager, EU Commissioner for Competition, stated in a press release regarding the measures, "This provides each member state with options to grant subsidies quickly, clearly, and predictably," adding, "While ensuring a level playing field, it will enable member states to accelerate carbon-neutral investments at this critical time."
This measure is part of the EU's comprehensive plan, the "Green Deal Industrial Plan," aimed at responding to the outflow of green industries while reducing dependence on minerals from China.
The EU is also accelerating the implementation of additional measures, such as unveiling drafts of the Carbon Neutral Industry Act to boost domestic manufacturing capacity in key sectors like solar power and batteries, and the Critical Raw Materials Act to diversify critical mineral supply chains, scheduled for release on the 14th.
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