The EU is seeking evidence that businesses are withdrawing investments from the bloc because of the U.S. Inflation Reduction Act, as it considers loosening state aid rules to deal with the consequences, Reuters reported, citing a European Commission document.

Earlier this week, the EC president requested feedback from member states amid concerns over a $430 billion law that gives consumers a tax break on purchases of U.S.-manufactured electric vehicles (EVs) and other environmentally friendly products.

Germany, France and several other countries have suggested that the U.S. law could disadvantage European Union companies and encourage businesses to move to the United States.

“Do you have examples where the availability of public support in third country jurisdictions has led or will lead to the relocation of investments in strategic sectors for the green transition of the EU?” the document sent to the 27 EU countries asked.

The questionnaire also asked whether state aid rules should be relaxed to provide more support for investment in new projects in sectors that are key to the bloc's environmental goals and for which public support in third country jurisdictions has led or will lead to the displacement of companies.

The Netherlands and other countries, as well as some Commissioners, have rejected the idea of injecting additional billions of euros into European companies, in addition to already solid funds, to compensate for the pandemic and the effects of the war in Ukraine.

The questionnaire goes on to ask whether sectors such as wind, solar, heat pumps, clean hydrogen, electric cars and batteries, and critical raw materials are considered strategic to the bloc's environmental goals, and whether state aid rules are adequate to promote investment in these areas.

“We should find out first how big is the problem before we come up with measures...to alleviate these issues,” a senior EU diplomat said.

“For example, we feel it’s very important to understand the decision CEOs make when it comes to big investments, because it’s not only about money,” the diplomat said, adding that he thought there were still plenty of funds available in the EU budget to back investment in the digital and green transformations.