European Investment Bank proposes new fund to counter US green subsidies

THE European Investment Bank could set up a new fund to counter subsidies offered by the US Inflation Reduction Act, which pressure companies to move their production there, its president said in an interview published on Tuesday (Feb 28).

Werner Hoyer told German news magazine Der Spiegel a fund set up to help companies stay afloat during the coronavirus pandemic could serve as a model for a fund to help safeguard European industry.

A capital increase for the bank would not be necessary for the creation of the fund, which would be used to promote technologies and industries that give Europe a competitive advantage, but financial guarantees would have to be provided by either the European Union or member states, he added.

“We hear from many of our corporate clients that they are under a lot of pressure to move their production and especially their development departments to the US,” Hoyer said.

“In principle, every investment project that has not yet received final approval is currently being put to the test.”

Volkswagen-owned Audi said last week that it may build a factory in the US in light of Washington’s scheme, the latest company to consider investments in the region to take advantage of the subsidies it offers.

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The European Commission earlier this month proposed allowing increased levels of state aid so that Europe can compete with the United States. Part of the plan includes a re-purposing of existing EU funds, faster approval of green projects and drives to boost skills and to seal trade agreements to secure supplies of critical raw materials.

The US$430-billion act was passed by US Congress last August and offers subsidies and tax incentives for a swathe of domestically produced green industry products. REUTERS