The EU has presented today its plan to promote the clean technology industry and thus react to the so-called IRA (Inflation Reduction Act) of the US, which, by establishing protectionist measures valued at 360,000 million euros, threatens to close its market to European companies. The objective is for Europe to be in a position to launch its competitive challenge not only to Washington, but also to reduce its dependence on China.
At a press conference, the president of the Commission, Ursula Von der Leyen, illustrated what has been baptized in English with the acronym “Net-Zero Industry Act”, a regulatory system that aims to help the industrial and manufacturing sector meet the objectives climatic.
The plan, which should be discussed next week with the community governments, is divided into several chapters and different measures.
First of all, less bureaucracy. It will be easier to obtain permits to build production plants in Europe. But in addition, one of the taboos is touched: the limitations on State aid. According to community law, these must be limited so as not to alter the unity of the market and avoid discrimination. Well then, when it comes to investing in the green sector, Brussels will accept that there may be more subsidies, if they serve to promote a reconversion of the European business fabric focused on the sustainable transition, making current regulations more flexible on a temporary basis until the end of 2025.
The International Energy Agency estimates that the global market for mass-produced clean energy will triple to about $650 billion annually by 2030, with manufacturing-related jobs more than doubling. The European Union wants to participate in the cake and is preparing a Critical Raw Materials Law to promote local extraction, transformation and recycling.
Indeed, the bloc is heavily dependent on China for rare earths and lithium, vital materials for the ecological transition. So the executive arm of the EU also wants to seal more free trade agreements and partnerships to make supply chains more resilient and improve access to these materials.
To launch this great green investment plan, Ursula Von der Leyen will reallocate European funds. EU members could, for example, draw on around €250 billion, much of it from the EU’s post-pandemic recovery fund. The possibility of some kind of tax advantage is also mentioned.
Despite the good intentions, this new European strategic project also arouses some suspicion among community partners, because larger countries, such as France and Germany, have a higher spending capacity when it comes to opening the faucet of state aid.
Some more austere countries also fear that ultimately this acceleration towards sustainability ends up increasing the indebtedness of all the European states. Thus, in the longer term, the Commission will propose to create a European Sovereignty Fund to invest in emerging technologies. But for now the idea is that extra money is not spent, after the effort made during the pandemic. Critics see this plan as insufficient, because it intervenes more in the regulatory body than in providing new financial resources.
