The European Commission’s state aid rules for the Clean Industrial Deal aim to stoke demand for clean-tech products and ease investments from “risk averse” pension funds, according to a draft obtained by POLITICO.
The document is due to be published on Feb. 26 as part of the European Union’s Clean Industrial Deal, a wide package of measures to help industry reduce its climate emissions. Executive Vice President Teresa Ribera had been tasked with finding ways to simplify and extend state aid to businesses.
While the Commission is set to cap subsidies for clean-tech manufacturing at €75 million per project, down from €150 million under a current program, it also opened up new options for governments to fund industry decarbonization and renewable energy production.
It also sets a €350 million limit for loans and caps state guarantees at €525 million for clean-tech businesses in some regions, part of a range of measures that also allow governments to pay up to 50 percent of investments in equipment or machinery using hydrogen and 35 percent for equipment to produce renewable energy.
It spoke of the need to incentivize investments in Europe where “considerable funds will need to be mobilised, mainly from private sources.”
“Public support will be necessary to advance decarbonisation efforts,” it said, and the framework intends to provide “a longer planning horizon and businesses with investment predictability and security” and help “the de-risking of investments in portfolios of projects” to encourage more risk-averse pension funds and insurers.
It said governments could also introduce tax incentives to help companies purchase clean-tech assets not necessarily within state aid control — as long as they didn’t favor certain companies.
Separately, the draft shows the Commission trying to funnel more help to smaller companies and disadvantaged regions.
Industry groups were positive about the updates. Stefan Sagebro, from the Confederation of Swedish Enterprise, said the clean-tech thresholds are “not unreasonable” since they are aimed at the “mass production of goods where there is intense competition” and where officials should be “more careful” about providing subsidies.
Vincent van Hoorn, of the lobbying group Cleantech for Europe, said the framework needed to “marry speed and agility to provide much more predictability to clean-tech entrepreneurs.” He was glad to see the Commission recognizing “the unique advantages of fiscally efficient tools such as guarantees.”
