Brussels has started a review of state aid rules as some member states push for far-reaching measures to boost support for industry in response to the new US green subsidy legislation.In a letter sent to ministers on Friday seen by the Financial Times, EU competition chief Margrethe Vestager said the “competitiveness of Europe” faced multiple challenges, including pressure to respond to the US Inflation Reduction Act. She said this “risks luring some of our EU businesses into moving investments to the US”. 

To counter this, Vestager said she was proposing changes to the current rule book on state aid, which has been repeatedly loosened in recent years, as governments poured subsidies into the sectors hit by the Covid-19 pandemic. She said the new changes were aimed at helping countries and their companies accelerate their green transitions “without jeopardising the level playing field”.

The commission’s formal consultation comes as France pushed for an aggressive response to the US legislation, saying it raises “serious concerns about the EU’s ability to attract or maintain productive investments in the key sectors of the climate transition”.