The European Union (EU) is preparing to abandon its longstanding restrictions on state aid in order to counter the subsidies being provided by the US and China in the area of green technology. This pledge is a cornerstone of European Commission President Ursula von der Leyen's ambition to "act decisively to ensure its long-term competitiveness, prosperity and role on the global stage". State aid is the subsidising of private companies or organisations by government entities. By providing companies with various forms of financial assistance, state aid can give them the support they need to compete on the global market. Currently, the EU's rules on state aid are strict and restrictive. The guidelines, which were established in the wake of the European Coal and Steel Community in 1952, are designed to prevent governments from distorting the market and creating a competitive advantage for certain companies. However, in the wake of US and Chinese subsidies aimed at promoting the development of green technologies, the EU has decided to relax its restrictions on state aid. In feeling the pressure of two global economic superpowers, the EU has seen the need to change and modernise its policies in order to retain its global standing. The new policy is anticipated to take effect in the summer of 2021, and is expected to be implemented in a way that does not disadvantage EU firms. This includes providing financial aid to companies that are investing in innovation and new technologies, such as those related to renewable energy and energy efficiency. This move to relax state aid restrictions is just one part of the European Commission's larger commitment to tackling climate change. President von der Leyen has announced plans to transition to a net-zero emissions economy within the next 30 years and is taking action to ensure the EU reaches this goal. The Commission has set out guidelines to ensure the EU can move towards becoming a “green superpower,” and has created a budget of €750 billion to support the transition. This funding, which will come from the European Union (EU) budget and the European Investment Bank, will be used to finance projects that are part of the European Green Deal. These projects will be focused on achieving the climate goals set out by the Paris Agreement, which is to keep the global temperature increase this century to below 2 degrees Celsius. However, the Commission is taking this a step further and is also looking at how to target US and Chinese subsidies in the green technology sector. By relaxing state aid restrictions, the EU can be in a better position to act decisively and compete with those countries in this area. This means that the EU could provide businesses and companies with subsidies to develop green technologies, such as renewable energy sources, energy efficiency, and green mobility. As well as providing financial assistance, the EU could also offer tax incentives or grants to companies that are focusing on green technology innovation. By taking this step, the EU could be in a better position to stay competitive in the global market and be in a stronger position to fight against the US and Chinese subsidies. Overall, the European Commission is taking action to ensure its long-term competitiveness, prosperity and role on the global stage. By loosening the restrictions on state aid, it can provide support to businesses and companies that are investing in green technologies, and be in a better place to stay competitive with US and Chinese subsidies. As part of its commitment to the Paris Agreement, the Commission is also investing in green technology innovation through various initiatives, such as providing financial assistance, tax incentives and grant programmes. It is this commitment that will help the EU move towards a net-zero emissions economy within the next 30 years and remain competitive in the global market.
https://www.lifetechnology.com/blogs/life-technology-technology-news/eu-poised-to-copy-us-subsidies-for-green-technology-but-new-evidence-from-china-shows-how-it-could-backfire
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