The European Commission (EC) is considering whether to relax VAT rules for energy efficiency in buildings, after EU judges ruled a British lower rate for materials such as insulation and solar panels illegal, euractiv.com reports.

Energy and Climate Commissioner Miguel Arias Cañete told EurActiv that Commissioners met on Monday (13 July) to discuss removing barriers to investment, one of the three pillars of the executive’s flagship Juncker Investment Plan.

Cañete was speaking after EU judges ruled that the United Kingdom’s Green Deal initiative to reduce value added tax (VAT) on building materials for efficiency renovation to 5% illegal. Under EU law, such a reduced rate of VAT could apply to renovation materials in social housing and not all households, judges decided.

The 4 June judgment was strongly criticized by British MEPs, and could force UK Chancellor George Osborne to break a manifesto pledge by raising VAT to the usual 20%. The Juncker Plan, overseen by Commission Vice-President Jyrki Katainen, aims to unlock at least €315 billion of private investment through €21 billion of public money risk guarantees.

Cañete told EurActiv he raised the VAT issue in the Monday meeting with Katainen because, in light of the court decision, it was a barrier to investment.

“We are considering if there needs to be changes in the measurements because it is a very bad approach,” he said. “If you have a favorable tax then investment will come. When you have cheaper materials, the financing is easier.”