The European Commission plans to direct $3.17 billion toward French tax credits meant to support investment in green industries.
Tax credits will be offered to companies planning to invest in solar panels, batteries, wind turbines, and heat pumps, along with manufacturing of critical components needed for these technologies’ production.
The financing was approved under the Temporary Crisis and Transition Framework, meant to support sectors considered crucial for reducing dependence on fossil fuels and accelerating the green transition.
The framework was newly adopted by the EU in March 2023 to help speed up investment in line with its Green Deal Industrial Plan, which aims to enhance Europe’s net zero industry through regulations, financing, skills development, and support of resilient supply chains. The framework allows for various types of financing, including grants, subsidized loans, aid to compensate for high energy prices, renewable energy investment, and more.
As Europe has experienced sharp increases in energy prices during the war on Ukraine, the framework also aims to help the region reduce its dependence on Russian fossil fuels.
“Thanks to the opportunities opened up by the Temporary Crisis and Transition Framework, Member States may support investment in key sectors for the transition to a net-zero economy,” said Margrethe Vestager, executive vice president of competition policy for the European Commission. “The French tax credit scheme, which is targeted at batteries, solar panels, wind turbines and heat pumps, contributes to the achievement of Europe’s ambitious climate goals.”
The new aid will reportedly be granted to France until December 2025.
With one of the most ambitious climate agendas in the world, Europe has recently taken steps to bolster domestic production of renewable energy components and new clean energy infrastructure projects. For example, at the end of 2023, the EU invested $2.38 billion to support 19 clean energy infrastructure projects in lower-income EU countries.
Some EU countries have also formed a coalition to phase-out fossil fuel subsidies, especially as renewable energy sources have become a more affordable option. Also to speed up renewable energy adoption, the EU has released emergency regulations to accelerate permitting procedures for renewables projects and power purchasing agreements.
Not only do such developments move Europe toward its decarbonization goals, they also may allow for better energy security. The region is working to move away from importing Russian fuels, especially as the practice supports continued funding for the war on Ukraine, and is generally working to generate and deliver clean energy domestically.
