Where Next? - Green Subsidy War: Germany and Hungary Pioneering the EU’s TCTF Response

Hungary and Germany Leading the EU's Green Subsidy War Response

In the global fight against climate change, the European Union has taken a significant step forward with the adoption of the Temporary Crisis and Transition Framework (TCTF) in March of this year. This framework aims to facilitate support measures in sectors crucial for achieving a net-zero economy, in line with EU’s Green Deel Industrial Plan. Among the member states, Hungary and Germany are emerging as frontrunners in this 'green subsidy war response,' with both countries committing substantial funding to support strategic investments in green sector production.

The Temporary Crisis and Transition Framework (TCTF)

In reaction to the US’s $369 billion Inflation Reduction Act (IRA), the European Commission introduced the Green Deal Industrial Plan, under which a recent TCTF amendment allows for a relaxation of state aid rules. Does it mean a start of subsidy race? For the time being it certainly means that member states could offer more national support, including cash and tax benefits to entrepreneurs investing in net-zero technologies. Additional incentives are aimed not only at bolstering the efforts to reach climate neutrality by 2050, but also to attract business, which US wanted to entice with their green energy tax breaks.

TCTF serves as a catalyst for supporting sectors that play a pivotal role in achieving the ambitious climate goals set by the EU. By encouraging investments and subsidies in green technologies and industries, the TCTF aims to accelerate the shift away from carbon-intensive practices. The framework allows member states to offer aid of up to €350 million in certain regions, where previously the limit was set at €37.5 million –almost tenfold increase! Under this measure, so far, the Commission have approved six schemes in five member states – the largest of which are in Germany and Hungary, but other countries are already in line.

Germany's Green Subsidy Commitment

Germany, known for its leadership in clean energy adoption, has once again demonstrated its commitment to environmental sustainability. Under the TCTF, Germany has gained approval for a scheme that earmarks €3 billion to support strategic investments in green sector production. The funds will be directed towards projects involving the production of batteries, solar panels, wind turbines, heat pumps, electrolysers, and equipment for carbon capture usage and storage. This substantial financial commitment not only bolsters Germany's green economy but also sets an example for other EU member states to follow.

Hungary's Progressive Approach

Hungary, often seen as a nation eager to embrace change, has joined Germany in leading the way within the TCTF framework. The country's dedication to transitioning to a net-zero economy is evident through its commitment of over €2 billion to support similar strategic investments in green sector production plus a further €1.1 billion to support electrical storage facilities.  By allocating resources to areas such as batteries, solar panels, wind turbines, heat pumps, and carbon capture technology, Hungary is positioning itself as a significant player in the EU's collective efforts to combat climate change.

Tapping into TCTF Opportunities

For businesses and entrepreneurs considering projects within the green sector, the TCTF presents a unique opportunity. The substantial financial support provided by the EU and implemented by member states like Germany and Hungary can help catalyse innovative projects that contribute to a sustainable future. Whether you're involved in battery production, renewable energy technology, or carbon capture solutions, exploring TCTF funding avenues could be a game-changer for your venture. Hickey is already engaged in talks with other member states that were pondering joining Germany and Hungary in introducing TCTF measures.

Contact Hickey to Learn More

If you're inspired by Germany and Hungary's commitment to the green subsidy war response and want to explore the potential of TCTF funding for your project, we're here to help. Our team can provide insights, guidance, and support to navigate the application process and make the most of this exciting opportunity for growth in the green sector. Get in touch with us today to learn more about how you can be a part of Europe's transition to a sustainable, net-zero economy.

Guy Douetil

Guy, with over three decades of experience, is a renowned expert in location consulting, specialising in advising clients to extract value from their portfolios and execute global consolidation and optimisation strategies. Being responsible for the EMEA region, he is celebrated for his unique ability to nurture long-term client relationships and commitment to delivering high-quality service worldwide. His broad range of clients spans diverse industries such as Life Sciences, Manufacturing, Technology, Financial & Professional Services, and Consumer goods. A proud member of RICS, IAMC, and CoreNet Global, Guy often shares his insights at their events and previously served on the CoreNet Community Knowledge Advisory Panel for Manufacturing and Industrial. Guided by the belief that "Every day is a learning day," Guy continually seeks to grow and bring success to his clients.

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