The European Commission has reiterated this Thursday that the future fiscal relaxation aimed at boosting investments in the energy sector will be temporary, have a limited budgetary scope, and will not call into question the solidity of the European Union's renewed fiscal discipline framework.
"What we are doing is contained both in terms of fiscal impact and in terms of calendar," stated the European Commissioner for Economy, Valdis Dombrovskis, at the end of the Eurogroup meeting in Luxembourg.
The economic official indicated that Brussels is currently preparing additional guidance to specify how the so-called energy escape clause will be applied, an instrument intended to expand fiscal margin in a limited way to finance investments that reduce dependence on fossil fuels.
Dombrovskis stressed that the initiative incorporates safeguards to contain its effect on public finances and highlighted that the Commission proposes that energy actions covered by this flexibility respect an annual ceiling of 0.3% of GDP and a maximum cumulative of 0.6% of GDP over a three-year period.
With these clarifications, the commissioner responded to those who fear that this new avenue of flexibility could undermine the credibility of the EU's reformed fiscal framework or displace other spending areas considered priorities, such as strengthening defense investments.
As he detailed, in general, energy measures will be integrated into the margin equivalent to 1.5% of GDP provided for in the national escape clause for defense, a threshold that has already been analyzed from the perspective of debt sustainability and which, according to Brussels, most Member States have not yet fully utilized.
"The basic concepts and parameters of the escape clause are known," said Dombrovskis, adding that the Commission is preparing a note for the Economic and Financial Committee with additional information on its practical application.
The proposal will support both large investment projects in renewable energies and grid reinforcement, as well as support programs for households and businesses to reduce their exposure to fossil fuels.
Among the actions that could benefit from this flexibility are the replacement of gas or diesel boilers with heat pumps, the installation of solar panels, storage batteries, energy efficiency measures, or incentives for electric mobility.
Dombrovskis has argued that the initiative aligns with the recommendations to maintain energy measures that are "highly specific, temporary, fiscally sustainable, and aimed at reducing dependence on fossil fuels."