EU to allow subsidies in clean tech race with US and China, Davos told

Ursula von der Leyen says Europe faces 'aggressive attempts' to lure industry away

Ursula von der Leyen told the World Economic Forum she wants the EU to 'get ahead of the competition'. Bloomberg

The European Union plans to relax its rules on subsidising green technology in order to compete with the US and China.

European Commission president Ursula von der Leyen said the EU should “get ahead of the competition” for a share of a potential $650 billion clean tech industry.

She told the World Economic Forum in Davos that the EU was facing “aggressive attempts” to lure industry to China and vast subsidies for US manufacturers signed by President Joe Biden.

“To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU,” Ms von der Leyen said.

“This is why we will propose to temporarily adapt our state aid rules to speed up and simplify: easier calculations, simpler procedures, accelerated approvals.”

State aid is generally banned in the EU to stop members rigging the bloc’s internal market in their favour.

But “targeted aid” for companies at risk of relocation could be a “limited solution” for some EU countries, Ms von der Leyen said.

The EU wants a slice of key green industries such as solar power and hydrogen. Bloomberg

The EU is also negotiating for a slice of Mr Biden’s subsidies for renewables and electric vehicles.

In the longer run it wants to invest in key industries with an EU-wide “sovereignty fund” and become less reliant on China for key materials, dignitaries in Davos were told.

The discovery of a large deposit of rare earth minerals in Sweden has boosted hopes that Europe can diversify a supply chain that China heavily dominates at present.

Ms von der Leyen said Europe had learnt its lesson from the reliance on Russian fossil fuels that left it exposed after the invasion of Ukraine.

“We see aggressive attempts to attract our industrial capacities away to China or elsewhere. We have a compelling need to make this net-zero transition without creating new dependencies,” she said.

“We Europeans also need to get better at nurturing our own clean-tech industry. We have a small window to invest in clean tech and innovation to gain leadership before the fossil fuel economy becomes obsolete.”