EU Scrutinized for Green Transition Subsidy Oversight

The European Court of Auditors criticized the European Commission for inadequate assessment of public subsidies supporting the green transition, highlighting potential distortions in the EU market. Recommendations include improving oversight and data collection, while concerns persist over the long-term impact of state aid amidst ongoing green initiatives.

The European Union's fiscal watchdog delivered a stinging critique of the European Commission's handling of public subsidies earmarked for the green transition on Wednesday. The European Court of Auditors focused on the Commission's failure to assess whether such subsidies were necessary or if they jeopardized the integrity of the EU's single market.

Four significant recommendations were laid out by the ECA to enhance scrutiny, gather extensive sectoral data, and strictly condition aid on robust analysis. While these recommendations are not obligatory, they usually influence future policies. The ECA examined the EU Commission's loosened state aid rules during crises like COVID-19 and the Ukraine war, which had led to swift authorization of voluminous subsidies under the European Green Deal.

Despite the executive's quick response, it failed to track competitive impacts of assistance soaring from pre-pandemic figures to over 320 billion euros in 2020 and 2021, before reaching nearly 230 billion euros by 2022. Although greater leeway now exists for member states to bolster renewable energy, industrial decarbonization, and clean tech production until 2025, the ECA stressed that economic assessments of aid's necessity are lacking, raising questions on future public support levels.

(With inputs from agencies.)