The U.S. government and the EU are engaging in a classic battle to see who can subsidize uneconomical technologies the most. The loser wins. From Felicity Bradstock at oilprice.com:
- ollowing the passing of the Inflation Reduction Act in the U.S., pressure grew on the EU to introduce its own legislation to help fund the clean energy push on the continent.
- Russia’s invasion of Ukraine and the resultant energy security issues in Europe have only added to the pressure on EU politicians to solve the bloc’s energy problems.
- The EC’s new draft proposal is designed to encourage companies to remain in the EU rather than move operations to the U.S. to take advantage of IRA-related benefits.
Since the Russian invasion of Ukraine and subsequent sanctions on Russian energy, the EU and many other parts of the world have experienced severe energy shortages and rising consumer costs. This has led to greater pressure from the public and policymakers to accelerate the green transition, to ensure the future of the region’s energy security. The EC’s draft proposal reportedly proposes the redirection of some of the $869.8 billion in Covid-19 recovery funding to green tax credits. It states: “The provisions on tax benefits would enable member states to align their national fiscal incentives on a common scheme, and thereby offer greater transparency and predictability to businesses across the EU.”