Flemish and European implications of the climate and energy crisis: government support for green industrial investments


Industrial green deal

It is commonly known that green investments are on the rise, both in Flanders but also in Europe as a whole. With the expected policy changes at EU-level, these investments might receive an additional boost in the years to come. However, these investments are no easy task for European companies in the current tumultuous climate of successive crises that began with Covid-19, directly followed by geopolitical turmoil which in turn resulted in an energy crisis and rising inflation. Governments around the world are looking for solutions to mediate these economic and societal setbacks.

As announced last week by Ursula von der Leyen at the World Economic Forum in Davos, the European Commission is planning to temporarily adapt its state-aid and investment rules. As a result, it is expected to ensure a steady growth in the number of green investments that will remain within the EU single market. Indeed, the policy shift was triggered not only by the ongoing climate and energy crisis, but also in response to the US Inflation Reduction Act (IRA) that might divert investments from the EU to the US. According to the American Clean Power Association, the first signs of this shift in investment location is already showing(1)

According to Thierry Breton – industry chief of the European Commission – the loosening of EU state aid rules will allow Member States to boost green technology and industrial innovation by providing public funding to a sector that was hardly hit by the energy crisis(2). Expectedly, private investments will follow, allowing the EU green-industry sector to grow significantly and refraining European companies from moving their activities abroad; to the US, China or elsewhere. These policy changes are still at an early stage and are expected to be bundled under a package that has been referred to under several different names, from “Industrial Green Deal”, to the ‘Net-zero Industry Act’ and “Made in Europe Strategy”.

With regards to financing this stimulus package, smaller EU Member States already raised concerns that they might struggle to subsidise their industry at a comparable level of EU countries with a strong economy such as Germany and France. For this reason, Von der Leyen also vowed to set up a ‘Sovereignty Fund’ to create a level playing field at EU-level and protect the integrity of the Single Market. The financing of the Sovereignty Fund is still a matter of discussion, with some Member States (MS) advocating for a EU joint debt issuance, while fiscally conservative MS prefer to pick money from the EU’s existing budget and the remnants of the Recovery and Resilience Facility. An agreement is expected to be reached by EU leaders at the summit that will be held in Brussels on 9 and 10 February 2023.

Foreign investments in Flanders

Despite the ongoing geopolitical crisis and ensuing financial difficulties for many European businesses, Flanders still remains a very attractive region for foreign companies to invest in. According to an analysis of Flanders Investment and Trade (FIT), foreign companies invested over € 5,26 billion in Flanders last year, an all time record in terms of foreign investments. As a result, a staggering 278 new investment projects were initiated, generating over 6,500 additional jobs for Flanders. A closer look on these numbers revealed that most of these investments are in key strategic sectors such as the chemical and pharmaceutical industries. In addition, climate tech and energy transition related investments are also on the rise, which is a logical result considering the current energy climate. 

Closing remark

Although further details on the expected EU green-industry strategy, such as timing or grant amounts, remain unknown at this time, these are without a doubt interesting times bringing risks but also opportunities for companies that want to invest and innovate during this crisis. 

If you want to find out more about relevant grants and incentives for your investment projects and on how we can assist you, please reach out to Tom Wallyn (tom.wallyn@pwc.com), Alexis De Méyère (alexis.de.meyere@pwc.com) or Bart Wyns (bart.wyns@pwc.com). We are happy to support you every step of the way!


(1) https://www.afr.com/world/europe/us-states-recruit-european-clean-tech-groups-with-green-subsidies-20230124-p5cf5l

(2) https://www.politico.eu/article/eu-industry-commissioner-thierry-breton-clean-tech-act-america-green-subsidies/