Brussels targets looser state aid rules by ‘beginning of 2023’

The European Commission is pushing to loosen the bloc’s state aid regulations as soon as “the beginning of 2023” as part of efforts to compete with a green stimulus plan in the US, president Ursula von der Leyen said.

President Joe Biden’s $369bn Inflation Reduction Act (IRA) to support climate-friendly technologies has sparked anxiety in the EU over fears it will lure European companies to the US, prompting Brussels to draw up its own measures that some fear could balloon into a transatlantic trade war.

Von der Leyen told the bloc’s 27 national leaders on Wednesday that she planned to “adjust our state aid rules for some years . . . to make it easier for public investment”, adding that the changes could be implemented at the start of next year.

The letter comes ahead of a summit on Thursday that will feature a debate on how to respond to the IRA, with large divisions between EU member states on whether a fresh wave of government subsidies is the correct approach.

The proposals for a “simpler, faster and even more predictable state aid framework” include simplifying the rules for funding projects focused on renewable energy and decarbonising industrial processes.

Von der Leyen said she had also proposed to “further boost” the EU’s REPowerEU plan — an energy transition fund — “to address critical pan-European interconnectors, energy efficiency and renewables.” She did not provide details.

The commission was also “working closely with the Biden administration on the most concerning aspects of the IRA”, she added.