EU relaxes rules on state aid to promote green projects and reduce carbon footprint

The European Commission announced Wednesday that it would make it easier for businesses to receive state aids to support projects to reduce carbon emissions or to switch to "green" projects. Heavy industries will also benefit from temporary price reductions in electricity under the new rules. The Commission announced Wednesday that the new rules for state aid, which are valid until December 2020, will help revitalise Europe’s industries through its Clean Industrial Deal. They also aim to encourage heavy industry to remain in Europe and compete better with U.S.

New rules will simplify the process for pension funds, insurance companies and other private investors who wish to invest in green projects.

Eurometaux, an industry association, said that more could be done to support European businesses. The new legislation also did not simplify the regulatory environment.

State support under the new rules can take many forms, including direct grants, tax benefits, such as tax credits, accelerated depreciation and subsidised interest rates for new loans, or even guarantees.

The amount of the state aid may be as high as 200 million euros (232 million dollars) or it can be based on a funding gap, or result from a competitive bid process.

Projects to implement renewable energy and low-carbon fuels, investment assistance schemes, direct price supports schemes and capacity mechanisms are beneficiaries.

Heavy industries, such as chemical or cement manufacturers applying for temporary electricity rate relief will need to invest in carbonisation.

In a press release, Vice-President Teresa Ribera stated that the new framework "simplifies and accelerates support for decarbonisation" but went further to recognize the state as an investor in our future.

She said: "It is a tool that will drive climate ambitions, strengthen Europe's resilient, and ensure that our industry remains competitive globally."

Eurometaux's Director General James Watson stated that the Clean Industrial Deal State Aid Framework failed to live up to political promises made by the Commission of "prosperity and competition".

He added: "While we are pleased with the support provided for production of critical raw materials, it's important to make sure that all conditions are met to create a strong metals industry in Europe."

(source: Reuters)