EU scales up green subsidies – How you can benefit from new support for clean investments

On June 23, 2023, the European Commission (EC) adopted changes to its State aid framework to support its February 2023 “Green Deal Industrial Plan for the Net-Zero Age” (the Net Zero Plan). The Net Zero Plan is part of the broader European Green Deal, which aims to make Europe the world’s first climate-neutral continent by 2050. Relatedly, the European Commission is proposing to champion global hydrogen production, as it did for renewable and energy efficiency goals in the run-up to the COP28 talks.

The Net Zero Plan sets out a significant number of legislative proposals and other non-legislative initiatives, including revisions to the EU State Aid framework and proposals for new legislation. However, the four goals of the various elements of the Net Zero Plan are:

A predictable and simplified regulatory environment;
Faster access to sufficient funding;
Building and enhancing skills for the net-zero transition; and
Open trade for resilient supply chains.
The changes to the State Aid framework for net-zero industry should also be seen as a response to the cleantech-related investment incentives created by the US Inflation Reduction Act (IRA), offering new opportunities for companies to benefit from State aid and other financial support. They are in part a response to increasing economic competition between trading blocs in the context of the limited supply of raw materials and products necessary for the transition to a net-zero economy.

The EC proposal for a Net-Zero Industry Act (NZIA) is currently in the trilogue phase of the legislative process, and the Critical Raw Materials Act (CRMA) is due to be formally adopted (after the European Parliament and the Council reached agreement on its text in November 2023). In March 2023, the EC also published its thinking about the design and operation of the European Hydrogen Bank (EHB), intended to facilitate and support the production, import and uptake of renewable hydrogen in the EU (see our briefing here), and on August 30 published terms and conditions for the upcoming EU Hydrogen Bank pilot auction. The accompanying reform of the electricity market design aims to increase the use of long-term contracts to shield companies and consumers from price spikes, requiring revisions to several pieces of EU legislation – notably the Electricity Regulation, the Electricity Directive, and the Wholesale Energy Market Integrity and Transparency (REMIT) Regulation.

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