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EU rules threaten to block US subsidy to Ireland


A proposed major green manufacturing investment in Ireland has run into problems between the Irish government and the Biden administration over state aid rules of the European Union. Wicklow company, Cool Planet – run by entrepreneur Norman Crowley – is finalising a joint venture with “two tier-one” vehicle manufacturers to convert thousands of mining industry vehicles to electric.

Asked to comment about the proposed investment and new US subsidies that threaten to lure the facility from Ireland, the Department of Enterprise said that “discriminatory measures” by the Americans “could interfere with the overall intention of working together.”

The manufacturing facility for thousands of vehicles – likely to involve “high hundreds of jobs” – may now go to the US because of EU state aid rules, said Crowley. Since US President Joe Biden signed his Inflation Reduction Act into law in August, introducing massive subsidies for green projects, there is now increased appeal for a range of business to locate in the US.

The location of the facility is due to be finalised over the next two months with orders already coming in. Crawley said changes to EU state aid rules would be required to allow the Irish Government to compete with the generous US subsidies on offer. The firm has developed a specialised software platform that facilitates the conversion of light mining industry vehicles – often Toyota-made four-wheel drives – from diesel to electric.

The proposed partnership with two major manufacturers is “a joint venture on a very large scale to deliver ultimately hundreds of thousands of electric mining vehicles,” said Crawley. The deal would mark a massive breakthrough for Cool Planet, which is part-owned by a French private equity firm. It suffered pandemic related losses of about 10m euros in 2020 but since focused on developing a software platform for controlling specialised electric vehicles.

Because of these losses, under EU law the Irish government is precluded from supporting the firm with grants for a number of years. No such restrictions apply to the new US subsidy regime and restrictions are less onerous in other EU states such as Portugal, he said. Both countries are now in the running to win the manufacturing plant, although the software element will still be based in Ireland.

Last month the Financial Times reported that European Commission President Ursula von der Leyen had promised the EU would “simplify and adapt” its rules for companies lured by US green subsidies but this may come too late. A Department of Enterprise spokesman said “the Irish Government attaches great importance to a positive EU-US relationship.”

He added: “We welcome the US’s ambitions for climate change with public investment for the green transition. However, some of the discriminatory measures in the Inflation Reduction Act could interfere with the overall intention of working together as like-minded partners to address common challenges. We are hopeful that the EU-US taskforce will be able to address these issues.”

“The EU and US have a long history of friendship and mutual respect. As is often the case, friends can have difference of opinion and Ireland is in favour of continued engagement by the commission with the US on the Inflation Reduction Act including through the taskforce, with the aim of ensuring that the EU is not unfairly disadvantaged by the US approach.

“A subsidies race is ultimately in no-one’s interest. Indeed, as a small member state Ireland has benefitted from a robust State aid regime which underpins a level playing field,” said the spokesman.

An Enterprise Ireland spokesman said it was “aware of issues facing Irish companies in relation to EU state aid rules in the context of international industrial policies and are engaging on behalf of our clients with the Department of Enterprise, Trade & Employment (DETE) who have responsibility for EU state aid oversight in Ireland.”

The writer is our foreign correspondent based in the UK

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