EU Urges Common Criteria to Green State Aid in Recovery Package

(Bloomberg) -- A climate-friendly recovery from the viral crisis in the European Union needs an agreement on how to use state aid so that it doesn’t trigger competition concerns, according to the bloc’s climate chief Frans Timmermans.

The EU is drafting a rescue package plan for the economy that suffered from factory closures, cancellation of flights and draconian limits on public life. Top officials in the bloc have pledged the plan will be synchronized with the Green Deal, a far-reaching strategy for Europe to become the world’s first climate-neutral continent by 2050.

The European Commission, the bloc’s executive arm, is considering relaxing state-aid rules and some countries are introducing eligibility criteria for companies to use it. While national governments can also impose green conditions to state aid, such a move should be coordinated across the bloc to avoid distortions, Timmermans told members of the EU Parliament’s environment committee on Tuesday.

“We should avoid state aid becoming a competition issue between member states because obviously some member states have more breathing space, have more fiscal capacity to do state aid than others,” he said. “And this state aid should not be used as an instrument to increase the differences between member states.”

European decision-makers are coming under growing pressure from companies and non-governmental organizations to stick to the sustainability principles in designing a recovery package. A new alliance of ministers, businesses and researchers urged the EU earlier this month to build it around the Green Deal. Its 180 signatories included chief executive officers of Enel SpA, Ikea of Sweden AB, Volvo AB and Unilever NV.

Separately, environment ministers from 13 EU member states joined forces in calling on the commission to target support for activities that both stimulate economic activity and reduce emissions. The initiative is supported by nations such as Denmark, France, Sweden and Austria.

©2020 Bloomberg L.P.

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