EU faces difficulties over US subsidies.

Faced with rising alarm over a massive US package of green subsidies, Ursula von der Leyen has bowed to pressure from business and governments and said the EU would match Washington’s support and relax its rules on how much help member states can offer. The European Commission earlier this month said US president Joe Biden’s $369bn stab at greening the economy under the landmark Inflation Reduction Act could lead to unfair competition, closing down markets and fragmenting supply chains. «We have all heard the stories of producers that are considering to relocate future investment from Europe to the US,» von der Leyen said, adding that the commission was ready to loosen limits on subsidies within the EU and seek ways of finding new common funding. The IRA package involves a mix of subsidies and tax credits.

While the Biden administration has disregarded such rules, many EU policymakers would be reluctant to follow suit. Brussels tries to maintain a level playing field for businesses by preventing governments giving an unfair advantage. Margrethe Vestager, the EU’s competition commissioner, said she was looking at a «temporary crisis and transition framework» to make it just as attractive to invest in green technologies in Europe as it will be in the US. James Webber, partner at law firm Shearman & Sterling in Brussels, proposed a «big bang loosening option» for the production of clean hydrogen for use as fuel.

The EU could provide additional bloc-wide funding for the green transition, something von der Leyen alluded to. Fiscally conservative member states, such as Germany, oppose a fresh version of the recovery fund.

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