EU Set to Change Subsidy Rules for Energy Costs

National governments in the EU would soon be allowed to subsidize companies struggling with exorbitant energy costs, according to a Politico report suggesting the bloc is about to change its strict no-subsidy rules.

The change will be in the form of a new clause in the EU’s guide to low-emission energy growth, dubbed the Clean Industrial Deal State Aid Framework. Said clause is about the provision of “temporary electricity price relief”, Politico, which saw a draft of the revised document, reported.

The report noted that Germany had pitched an idea along these lines earlier but the older rules made it impossible to implement that idea in practice. Now, the rules are being changed in what some would see as acknowledgment that the transition to net zero is turning out to have a steeper than expected price tag—and it is only going to get even steeper as the subsidies start pouring into struggling companies.

“If Germany sinks, we all go with them,” one corporate lobbyist told Politico, pretty much summarizing the prevailing sentiment across the EU about its biggest economy, which has been teetering on the brink of recession, in large part because of high energy costs after it gave up cheap Russian pipeline gas and shut down its last operating nuclear reactors while doubling down on wind and solar—which are heavily subsidised.

Other European countries are struggling with energy costs for their industries as well with few options except state aid, especially now that the EU wants to rearm and the industries that this rearmament depends on happen to be the most energy-intensive ones. Ultimately, this means that European Union countries will be spending even more taxpayer money on propping up their economies and pursuing their energy agenda, which was advertised as a way to secure cheap and reliable energy.

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