EU member states remain divided on new law on green industry
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The European Commission recently proposed a “Green Deal Industry Plan” to enhance the competitiveness of Europe’s net-zero industry and support a rapid transition to climate neutrality. The plan aims to provide a more enabling environment for the net-zero technologies and product manufacturing capabilities the bloc needs to meet its ambitious environmental goals, the EU said.
It is reported that the plan covers four key pillars of regulatory environment, financing, skills and trade: namely, a more simplified regulatory environment to support the rapid deployment of net-zero industrial capacity; increase investment and financing while avoiding single market fragmentation and obtain sufficient funds faster; Skills to ensure that the European workforce is proficient in the technologies required for green transformation; on the basis of cooperation with EU partners, open trade promotes the establishment of resilient supply chains to ensure diverse and reliable supplies and fair competition.
It took the EU more than two weeks from the presentation of the concept at the World Economic Forum in Davos to the presentation of the proposal. The reason why the EU is so active in promoting the introduction of the “Green Deal Industrial Plan” is that on the one hand, it is under pressure from the United States to issue the “Inflation Reduction Act”. The bill provides about $370 billion in subsidies for the U.S. to revive an economy plagued by persistent high inflation, to promote the production and application of electric vehicles and other green technologies in the United States. This has frustrated and disturbed European countries, fearing that European companies will relocate to North America, where energy costs are lower, due to the impact of this policy. Recently, the EU has established a special joint working group to promote the United States to provide exemptions for European companies, but no substantial results have been achieved so far. Germany and France will also continue to “discuss the impact of the Inflation Reduction Act on European industries” with the US. European Commission President Von der Leyen said that in global competition and the EU single market, it is crucial to establish and maintain a level playing field.
On the other hand, the EU also attaches great importance to the market value and scale of net-zero industries. The market for large-scale manufacturing of clean energy technologies will be worth about $650 billion a year by 2030, more than triple current levels, and related manufacturing jobs will more than double, according to the International Energy Agency. The EU also wants a piece of the action. To stay ahead of the competition, the EU needs to invest continuously in strengthening its industrial base and making Europe more conducive to innovation. Cleantech is now the fastest-growing investment sector in Europe, doubling in value between 2020 and 2021 alone. “The shape and positioning of the net-zero economy will be determined in the next few years, and Europe hopes to become an important part of the net-zero industry.” Von der Leyen said, this means that Europeans also need to better cultivate their own clean technology industry. Europe has a small window of opportunity to invest in clean technology and innovation to gain leadership before the fossil fuel economy becomes obsolete.
EU leaders are expected to make a final decision on the plan in March. At present, there are still many differences and controversies regarding this proposal. Markus Faber, a German MEP in the European Parliament, described the proposal as “old wine in a new bottle” and a “predictable disappointment”.
First, not all EU member states are buying into the plan. Some EU member states have expressed opposition to the plan, especially in terms of loosening state aid, arguing that only big countries such as France and Germany would benefit from it. “Only the wealthier member states can help their companies, leaving the single market fragmented.”
At the same time, according to the EU, the source of funds for this plan mainly involves the use of 250 billion euros from the existing REPowerEU energy plan, which is considered to be an expedient measure. EU Commissioner Thierry Breton, who is in charge of the internal market, said that competing with other countries requires 350 billion to 400 billion euros, which means that there is still a funding gap of about 100 billion euros. And the idea of a new European sovereign fund has drawn criticism from some member states, including Denmark and the Netherlands, who oppose putting in new money or borrowing more to solve the problem.
Environmentalists have also expressed dissatisfaction with the EU’s ambitious vision, arguing that the measures don’t go far enough. Luke Heywood, head of climate policy at the European Environment Agency, said green subsidies were good, but not enough to have a meaningful impact on the climate. “These fiscal efforts will be in vain without cutting fossil fuel subsidies, putting a fair price on carbon emissions, and taking steps to reduce demand.”
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