In a document sent to the rest of the European governments, one of the priorities is to establish accelerated procedures for projects financed with ‘Next Generation’ funds
The European Commission plans to present next week the plan that will serve as the basis for negotiation for the Twenty-seven at the extraordinary summit on February 9 and 10
The debate about theUS green subsidies and the Inflation Reduction Act (IRA), the review of european state aid and how boost competitiveness of the industry of the old continent is encouraged. In two weeks the leaders of the European Union will meet, in a extraordinary summit to negotiate a coordinated response called on February 9 and 10, and governments and institutions begin to seek alliances and take positions. Seven EU countries have publicly rejected, in a letter sent to the Vice President of the European Commission, Valdis Dombrovskis, the creation of new lines of financing, excessive subsidies or creating new “commercial tensions & rdquor; with the United States. Spain It also moves the tab and emphasizes the need to urgently reform the electricity market and promote “accelerated procedures & rdquor; for projects financed with funds Next Generation.
The document, sent to the rest of the European governments on the eve of Brussels presenting its plan next Wednesday and the subsequent debate that the Twenty-seven will hold, proposes the adoption of a pact for a green economy based on four pillars: clean energy at affordable prices, state rules adjusted to the objectives and strengthen the internal market, a coherent approach to boost green financing in public and private markets and reinforced rules of international trade. “A common European reform is urgently needed to preserve the leading role of the EU as a technological and commercial power in an increasingly complex and challenging global context,” the seven-page text, dated February 25, begins.
electricity market
According to the Government, persistently high gas prices, the high volatility that prevents long-term investment decision makinggrowing protectionism, bottlenecks and uncertainties worldwide in the supply chains of raw materials and industrial goods as well as massive subsidies from some countries are having a significant impact on the competitiveness of European industry that pays more for natural gas and electricity than its American and Asian competitors. That is why Spain understands that the most urgent thing is reform the electricity market.
“The experience of 2022 shows that the current design of the electricity market becomes highly dysfunctional with high natural gas prices. In fact, it is not prepared for episodes of high and volatile prices.” For this reason, the Government defends the reform proposal sent a few weeks ago to the Community Executive in which they are committed to basing the new model on “long-term contracts & rdquor; that ensure prices in line with average costs, security of supply, incentives for renewables, storage and demand management.
public aid
The second major pillar, and another of the elements on which the European Commission works, is the review of the rules on public aid. Spain wants there to be “accelerated procedures & rdquor; for strategic projects included in national recovery plans. Also for projects in key sectors whose objective is to increase strategic, technological or energy autonomy such as clean energy, semiconductors, electric vehicles and critical technologies. For example, he mentions the production of solar panels, renewable hydrogen generation or the production of batteries for electric cars.
“At the current juncture, efficient execution is as important as the amount of public support. Therefore, it is necessary to streamline state aid procedures so that companies can have certainty about the timing and amount of subsidies, while avoiding significant distortions in the internal market that lead to deeper imbalances,” the document points out. . According to Pedro Sánchez’s team, the new time frame for state aid should be more transparent, adapted to the duration of strategic projects (PERTE) and expected industries, which limits the scope in time and to specific sectors, and with a simpler implementation mechanism.
Financing and sovereign fund
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Refering to green financingIn the short term, Spain defends using the existing funding in the EU budget: from the Next Generation program to the Repower EU or the Just Transition Fund, among others. In this sense, the Government recalls that its intention is to take advantage of all the resources available in the recovery plan, although it admits that the EU will have to maintain its current investment effort beyond 2026. It does not comment on the creation of the new European sovereign wealth fund proposed by the President of the European Commission, Ursula von der Leyento support research, innovation and industry.
Although in the short term Brussels is also committed to taking advantage of the “hundreds of billions of euros from the recovery and reactivation mechanism”, they point out in an opinion article signed by the three vice presidents: Margrethe Vestager, Frans Timmermans, and Valdis Domvrovskis. The three admit that Joe Biden’s massive subsidy plan puts the European green industry at a disadvantage and remain concerned about some discriminatory elements of the law, but consider that entering a tug of war with the same weapons could “cause economic damage significant” and that although changes in the framework of state aid can bring relief, massively increasing subsidies, when EU countries do not have the same fiscal space, can lead to “the fragmentation of the single market”.