What European business makes of the green-subsidy race
Last summer European leaders began hearing a huge sucking sound. The source of the din? The Inflation Reduction Act (IRA), a 725-page doorstopper of legislation passed in August to speed up American decarbonisation. Europe’s budding clean-tech industry, they feared, would be hoovered up across the Atlantic by the promise of handouts, which amount to around $400bn over ten years. To stop this from happening, some EU politicians argued, the bloc would have at the very least to match the IRA’s sums.
So far the noise has turned out to be mostly in the politicians’ heads. Worries about a green exodus, bordering on panic in some quarters, have subsided. When the continent’s heads of government gathered for a summit last week in Brussels, they did not shower billions of euros more on the EU’s greening efforts—which are already, it turns out, comparable to the IRA in their generosity. Nor did they (for the time being) further water down rules against state aid to favoured businesses, which would have given freer rein to member states keen to splurge. Instead, they focused on making the system for doling out this money more efficient.
This is music to the ears of Europa SA. In the eyes of its European fans, the beauty of the IRA is less its size than its simplicity. Rules are the same all over America. Getting tax credits, grants or soft loans will be straightforward provided a firm meets certain criteria, such as investing in one of the targeted sectors. The law sets aside sums for specific technologies, which can create markets, such as solar energy, carbon capture and storage and “green” hydrogen, made from renewable power (see chart). Producers of such hydrogen, for example, can get tax credits of up to $3 per kilogram of the gas.
2023-02-14 14:27:39
Article from www.economist.com
The race is on to claim the vast amount of green subsidies offered by the European Union (EU). Businesses across Europe are vying for the opportunity to secure long-term investments in sustainable projects, hoping to obtain a competitive advantage in the market and secure their future success.
The European Green Deal is a key part of the European Commission’s aim to reduce the Continent’s carbon emissions and mitigate the impact of climate change. This policy encourages businesses to invest in green projects and provides the funding for them to do so. As businesses continue to receive significant green subsidies, the competition for those funds is becoming increasingly competitive.
Green subsidies are particularly attractive to businesses because they provide long-term support for their projects, aiding innovation and reduce their operating costs. This can bring immediate benefits to their margins, but also helps them stay competitive in the long-term.
Banks are also involved in the subsidy race, offering loans and financing to businesses who are investing in green projects. Many banks and other lending institutions prioritize green projects over traditional ones in order to promote sustainability and support climate action.
There are many green initiatives available for businesses to take part in. Many of these projects aim to increase the efficiency of businesses by utilizing resources more effectively or developing new sources of renewable energy. Others may focus on creating green infrastructure, such as reducing the carbon footprint of buildings or improving the energy efficiency of factories.
In addition to obtaining direct funds from the EU, businesses who are investing in green projects can also benefit from various government incentives, such as tax breaks and preferential loan terms.
The green subsidy race is becoming increasingly competitive, and businesses must ensure that they have the resources and the drive to secure the best offers available. By taking advantage of the various incentives and investments offered by the European Union, companies can obtain a competitive edge in the market and contribute to building a greener future.