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Italy says EU green subsidies plan 'can and must' be improved

FILE PHOTO: A European Union flag flutters outside the EU Commission headquarters in Brussels

ROME (Reuters) - European Union proposals on green subsidies "can and must" be improved, especially in terms of funding, Italy's Industry Minister Adolfo Urso said on Friday, ahead of talks with EU peers.

The European Commission on Wednesday proposed allowing higher levels of state aid so that Europe can compete with the United States as a manufacturing hub for electric vehicles and other green products and reduce its dependence on China.

The idea is not popular with small countries and those like Italy with tight budgets, as they fear that looser state aid rules will allow richer countries like Germany to outspend other EU members.

Brussels' proposal is "a starting point which can and must be improved, to become really effective," Urso said in a statement, adding that the plan needs to be "more ambitious, particularly in terms of funding."

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To try and ensure a level playing field, the Commission has also suggested that member states seeking to help green industries could draw on about 250 billion euros ($272.3 billion) of EU funds, mostly from the bloc's post-pandemic recovery fund.

Longer term, the Commission has talked about creating a European Sovereignty Fund to invest in emerging technologies, but amid opposition by the Netherlands and other countries to more EU spending and debt facilities, it is unclear if and when it could happen.

Urso said Italy would insist that any loosening of state aid rules should be matched by the creation of a new central EU spending facility, building on the "positive experience" of the post-pandemic fund and the SURE unemployment programme.

He also warned against unduly favouring countries with more spending power, stressed the need for EU-wide loans to support green industries and called for more clarity on the European Sovereign Fund idea.

Urso said he would talk to colleagues from the Czech Republic, Hungary, Bulgaria, Romania, Greece, Sweden, Portugal, Croatia, Spain, Austria and Cyprus, and EU Industry Commissioner Thierry Breton ahead of crunch EU summit negotiations in March.

(Reporting by Alvise Armellini, editing by Susan Fenton)