French lawmakers propose tax credits, subsidies for green industry

(C) Reuters. FILE PHOTO: Power-generating windmill turbines are pictured at sunrise at a wind park in Avesnes-le-Sec, France, April 3, 2023. REUTERS/Pascal Rossignol

PARIS (Reuters) – France could offer tax breaks and subsidies for producing climate friendly technologies in the country, according to proposals on Monday from lawmakers preparing a green industry bill.

In the scramble to adopt more low-carbon, France’s government is concerned that its companies could fall irrevocably behind U.S. rivals, boosted by the Biden administration’s $430 billion Inflation Reduction Act.

To avoid that, Finance Minister Bruno Le Maire has tasked a group of lawmakers and business leaders to come up with proposals to keep French firms competitive and reverse a long-term disindustrialisation trend in the country.

The proposals, presented on Monday, included plans for tax credits and subsidies depending on the size of a company’s investment or how much it produces in France.

The measure could be offered as an advance payment to ensure the money flows quickly and would target producers of batteries and critical metals, electrolysers, heat pumps, next-generation nuclear plants, photovoltaic and wind generators, carbon capture and storage technologies, semiconductors and electricity networks.

“Now is the time to find financing and invest. So we want to put public money on the table,” Le Maire told a conference where the proposals were presented.

“We want to look at tax credits as a way to speed up the investments.”

The proposals, subject to a public consultation before legislation is brought to parliament this summer, would be financed by reducing favourable tax treatment that some polluting industries currently have access to.

In particular, a tax break on fuel consumption, which currently benefits the airline and shipping industry, could be reduced and tax on highly polluting car models could be raised further, the proposals said.

The lawmakers, business leaders and a finance ministry official said the exact amounts and scope would be hammered out in the coming months when the bill is prepared.