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Chancellor Olaf Scholz and the German Social Democrats (SPD) will call on the European Union to create new joint funding instruments to help member states compete against rising US subsidies for green technology.
Scholz’s Social Democrats want a reform of the current EU state aid rules to be implemented with more funds available to counter the US environmental aid push. That’s according to a draft European industrial strategy document that Bloomberg had access to.
According to a source, the chancellor supports his party’s proposals and wants EU leaders to approve additional funding instruments so that member states with smaller budgets don’t fall behind in the green subsidies race.
$370 billion US plan
The move comes as skepticism grows in Brussels and other European capitals that President Joe Biden’s administration will decide to make significant changes to its $370 billion green investment plan. Community institutions and many governments believe the law unfairly discriminates against European companies and threatens to lure green industries across the Atlantic into sectors from renewable energy to the electric car supply chain.
“We need European industrial investments with a focus on future technologies, the expansion of renewable energies and the promotion of industrial innovations,” says the SPD document, which was completed on Monday and is expected to be published this week.
Funds from unused funds after the pandemic
To this end, the EU should redistribute unused funds from the post-pandemic recovery fund and strengthen its energy investment programme. In addition, the SPD demands that the member states use the upcoming EU budget revision to prioritize investment projects for the green transformation. “Other joint financing instruments should also be examined constructively,” says the draft of the strategy paper. However, without specifying whether this would also mean a joint EU loan, a point of contention for many Germans who fear being dependent on other countries’ uncontrolled spending.