Clean-tech has been an area of investment many governments and nations are focusing on, in line with the UN’s sustainable development goals and a general need for eco-friendly systems. The EU seems to have finally joined the bandwagon. The European Union is relaxing rules on government tax breaks and other benefits for clean-tech companies, part of an effort to prevent businesses from being lured to the US by new subsidies offered under the Inflation Reduction Act.

The EU’s highly awaited first move to counter the IRA’s impact was unveiled a day before European Commission President Ursula von der Leyen was set to meet President Biden at the White House for discussions centered largely on strained economic relations between the two allied economies. The Biden administration has also encouraged EU officials to increase support for clean-tech businesses.

The European Commission, the bloc’s executive body, said that it would allow governments to match the level of aid that is on offer in the US or another non-EU country if the projects meet certain criteria. The measure is meant to be used only in exceptional circumstances, the commission said, where investments might otherwise be diverted away from Europe. Other changes include increasing the value of certain subsidies that EU governments can offer without first seeking approval from the commission, and allowing for more money to flow to clean-tech companies that operate in less-wealthy regions of Europe.

Some of the new rules, including the matching-aid provision, will apply only to certain sectors of clean-tech manufacturing that the commission deems to be most at risk from Washington’s new subsidies. Those include the manufacturing of batteries, solar panels, and wind turbines, as well as the raw materials needed to make those products.

The change to EU subsidy rules comes amid concern that some companies could pause or slow down their investments in Europe in favor of moving more quickly to the US to take advantage of American clean-tech benefits. The changes announced by the EU are part of the bloc’s broader response to the IRA, which includes $369 billion in incentives and funding for clean energy. Some of the IRA’s benefits are contingent on a product being made or having its components sourced in the US or in North America, provisions EU officials have decried as protectionist. It remains to be seen just how clean-tech companies will actually benefit and what impact they will have at large.