Europe responds to subsidy race with Green Deal Industrial Plan
In the legislative race towards a net zero future, the European Commission has announced the Green Deal Industrial Plan – Europe’s bid to remain a competitive green energy leader as legislation such as the US Inflation Reduction Act (IRA) continues to make its mark on the market.
Today, the Commission presented the Green Deal Industrial Plan to enhance the competitiveness of Europe’s net-zero industry and support the transition to climate neutrality.
The Plan aims to provide a more supportive environment for the scaling up of the EU’s manufacturing capacity for net-zero technologies and products required to meet Europe’s ambitious climate targets.
The Plan is based on four pillars: a predictable and simplified regulatory environment, speeding up access to finance, enhancing skills and open trade for resilient supply chains.
Staying competitive
The plan is the EU’s response to global legislative developments within the clean energy industry.
In announcing the plan, Ursula von der Leyen, president of the European Commission, said: “We see that major economies – rightfully so – are stepping up their investment in the net zero industry…”
Von der Leyen cited Japan’s green transformation plans, India’s production-linked incentive scheme – “a massive investment for pv and…batteries”, as well as the Inflation Reduction Act in the US and investments across the UK, Canada and other countries.
However, stated von der Leyen, while the plan comes as a European competitive response, she emphasized during a media briefing the importance of all plans that aim to advance a net zero future: “Let me be very clear: We welcome this.
“This is good news. We have long argued that the fight against climate change is a [necessity]…We are competitive, we need competition [and] what we are looking at is that we have a level playing field in global competition…”
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Regulation
The first pillar of the plan is about a simpler regulatory framework.
The Commission will propose a Net-Zero Industry Act to identify goals for industrial capacity and provide a regulatory framework suited for its quick deployment.
This is hoped to ensure simplified and fast-track permitting, promoting European strategic projects and developing standards to support the scale-up of technologies across the Single Market.
The framework will be complemented by the Critical Raw Materials Act, to ensure sufficient access to those materials, like rare earths that are vital for manufacturing key technologies, and the reform of the electricity market design, to make consumers benefit from the lower costs of renewables.
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The second pillar of the plan will speed up investment and financing for clean tech production in Europe.
Under competition policy, the Commission aims to guarantee a level playing field within the Single Market while making it easier for Member States to grant necessary aid to fast-track the green transition.
Stated von der Leyen: “We should refrain from thinking in stove pipes that member countries are islands. They are not.
To speed up and simplify aid granting, the Commission will consult Member States on an amended Temporary State aid Crisis and Transition Framework and it will revise the General Block Exemption Regulation in light of the Green Deal, increasing notification thresholds for support for green investments.
This aims to streamline and simplify the approval of Important Projects of Common European Interest (IPCEI)-related projects.
The Commission will also facilitate the use of existing EU funds for financing clean tech innovation, manufacturing and deployment.
The Commission is exploring avenues to achieve greater common financing at EU level to support investments in manufacturing of net-zero technologies, based on an ongoing investment needs assessment.
The Commission will work with Member States in the short term, with a focus on REPowerEU, InvestEU and the Innovation Fund, on a bridging solution to provide fast and targeted support.
As between 35% and 40% of all jobs could be affected by the green transition, developing net-zero minded skills will be a priority for the European Year of Skills, and the third pillar of the plan will focus on this.
To develop these skills, the Commission will propose to establish Net-Zero Industry Academies to roll out up-skilling and re-skilling programmes in strategic industries.
It will also consider how to combine a ‘skills-first’ approach, recognising actual skills, with existing approaches based on qualifications, and facilitate access of third country nationals to EU labour markets in priority sectors, as well as promote measures to foster and align public and private funding for skills development.
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Supply and trade
The fourth pillar looks at global cooperation and making trade work for the green transition under the principles of fair competition and open trade, building on engagements with EU partners and the work of the World Trade Organization.
To that end, the Commission will continue to develop the EU’s network of Free Trade Agreements and other forms of cooperation with partners to support the green transition.
The Commission will also protect the Single Market from unfair trade in the clean tech sector and will use its instruments to ensure that foreign subsidies do not distort competition in the Single Market, also in the clean-tech sector.
The European Green Deal Industrial Plan was announced by President von der Leyen in her speech at the World Economic Forum in Davos in January 2023.
Said von der Leyen: “We have a once in a generation opportunity to show the way with speed, ambition and a sense of purpose to secure the EU’s industrial lead in the fast-growing net-zero technology sector.
“Europe is determined to lead the clean tech revolution. For our companies and people, it means turning skills into quality jobs and innovation into mass production, thanks to a simpler and faster framework. Better access to finance will allow our key clean tech industries to scale up quickly.”
