France has announced it will be spending €500 million (~$504 million) annually on tax credits for power generated from renewable energy sources, batteries and heat pumps.
The funding to support the development and use of green technology will come from a new tax increase on fossil fuels.
The plan is part of a bill that was revealed earlier this week and was announced by Finance Minister Bruno Le Maire.
This new bill and the tax credits in it will make France the first country in the EU to make use of the looser European state aid regulations that took place in the last few months in response to the US Inflation Reduction Act (IRA).
Initially, the tax credit is said to be available on the temporary basis until 2025, as per the EU rules, and it may potentially be extended to 2029.
According to the Finance Ministry’s projections, the tax credit will generate €23 billion (~$24.4 billion) in private investments in the green energy sector by the end of the decade and create around 40,000 new jobs.
With the help of the tax credit, the French government hopes to encourage investment in climate-friendly projects and boost the nation’s industrial sector, as local companies start to feel the pressures of major tax breaks in the US thanks to the IRA.
“We have no reason to be embarrassed by comparisons with the United States,” Le Maire said when the plan was presented and pointed out that existing French subsidies are of similar scale to those in the US.